Coalition Letter Sent to the SEC in Follow Up to the Roundtable on the Proxy Process

Thursday, January 16, 2020 - 12:00pm

The Honorable Jay Clayton
Chairman
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
 

Dear Chairman Clayton:

We, the undersigned publicly traded companies, want to thank you for conducting the Roundtable on the Proxy Process on November 15, 2018. The U.S. proxy process is critical to public company governance, and we appreciate the Commission’s recognition that areas within the process need to be reformed.

These issues have real effects on the economy, job creation and global competitiveness. As many have communicated to the SEC in the past several years, these issues are part of a poorly-calibrated regulatory ecosystem that is producing fewer IPOs and driving many companies out of the public markets.

The proxy process is a key opportunity for companies to communicate with shareholders. A transparent, accurate and verifiable proxy system that is oriented toward long-term value creation is vital to constructive shareholder engagement and the successful operation of public companies. The Commission emphasized this point in the 2010 Concept Release on the U.S. Proxy System, which noted: “With 600 billion shares voted every year at more than 13,000 shareholder meetings, shareholders should be served by a well-functioning proxy system that promotes efficient and accurate voting.”

The November 15th Roundtable provided for open discussion on several issues where reform is necessary for a more useful and efficient proxy system. As publicly traded companies, we urge the SEC to address the following critical items:

Proxy Advisory Firms: The SEC must take strong action to regulate proxy advisory firms to address three critical frustrations with their current operations:

Conflicts of Interest: The SEC should adopt strong protections for both companies and users of proxy advisory services to ensure that conflicts of interest are eliminated where possible, minimized and/or mitigated where appropriate, and transparent to the users and subjects of reports. Conflicts should be disclosed on the front page of proxy advisor reports on companies so that investors make fully informed voting decisions.

Accuracy: The SEC should require transparent processes and practices that allow ALL public companies, regardless of their market capitalization, to engage with proxy advisory firms on matters of mistakes, misstatements of fact and other significant disputes so that timely resolution of those disputes and corrections to the record can be made to minimize the negative impacts that such mistakes can have on the subject company’s proxy voting outreach and its shareholders. Such policies and procedures are absolutely critical to any reforms considered by the SEC. Given the impact of the proxy advisory firms’ decision-making and recommendations on the capital markets, and the large percentage of institutional voting that follows their recommendations, the ability to identify and correct errors is crucial for accuracy and accountability. 

Transparency of proxy voting standards: Proxy advisors currently play a critical role in the development of de facto market rules through their policies and recommendations. The SEC should require public transparency, including a formal public comment period, when a proxy advisory firm intends to change its voting policies from one proxy season to the next and ensure that companies have the ability to determine, on their own, whether they can satisfy those policies. Proxy advisory firms should not be allowed to significantly affect voting recommendations using opaque rules, which require paid services to interpret. Moreover, in the absence of transparent policies, neither the proxy advisory firms’ clients, nor the companies they report on, can determine whether a policy is applied correctly or if a recommendation is based on factual errors.

Shareholder Proposals: The SEC should modernize the shareholder proposal process so that it reflects more reasonable standards for submission and resubmission of shareholder proposals and is oriented toward creating long-term value for all shareholders. Reasonable standards for resubmissions were previously proposed by the SEC in 1997, which would have required 6 percent support for the first resubmission, 15 percent for the second, and 30 percent for the third. Shareholder Communications:

The SEC should focus on streamlining shareholder communications to enable companies to directly and cost-effectively communicate with their shareholders. The Commission should repeal the distinction between objecting and non-objecting beneficial owners (OBOs and NOBOs), which inhibits the ability of companies to communicate with the majority of investors who are not registered shareholders.

Proxy Process: The SEC needs to update the proxy voting process to make voting more transparent and verifiable and to increase retail investor participation.

Maintaining a viable public company model is of the upmost importance for companies that need capital, but also for Main Street investors and the overall economy. Addressing these critical proxy process issues will make our capital markets stronger and improve the experience for public companies and benefit their long-term investors.

Sincerely,

Nasdaq, Inc. 

Abraxas Petroleum Corporation 

Achieve Life Sciences, Inc. 

Aclaris Therapeutics, Inc. 

Acorda Therapeutics, Inc. 

Adial Pharmaceuticals, Inc. 

Advanced Emissions Solutions, Inc. 

Advanced Energy Industries, Inc. 

Aemetis, Inc. 

AgroFresh Solutions, Inc. 

Air T, Inc. 

Allegiant Travel Company 

AMAG Pharmaceuticals, Inc. 

Ambac Financial Group, Inc. 

Ambarella, Inc. 

American Outdoor Brands Corporation 

ANGI Homeservices Inc. 

Apogee Enterprises, Inc. 

Apollo Endosurgery, Inc. 

Approach Resources Inc. 

Aquinox Pharmaceuticals, Inc. 

ArcBest Corporation 

Arch Capital Group Ltd. 

Aridis Pharmaceuticals, Inc. 

Artesian Resources Corporation 

Arthur J. Gallagher & Company 

Ascena Retail Group, Inc. 

Aspen Technology, Inc. 

Assembly Biosciences, Inc. 

Atara Biotherapeutics Inc. 

Athersys, Inc. 

Atomera Incorporated 

Attis Industries, Inc. 

Automatic Data Processing, Inc. (ADP) 

Avadel Pharmaceuticals Plc 

Avid Bioservices, Inc. 

Axon Enterprise, Inc. 

Axonics Modulation Technologies, Inc. 

Balchem Corporation 

Biogen Inc. 

BIO-key International, Inc. 

BioMarin Pharmaceutical Inc. 

Boingo Wireless, Inc. 

Box 

Boxlight Corporation 

Brainstorm Cell Therapeutics Inc. 

Brightcove Inc. 

Bryn Mawr Bank Corporation 

CaCanterbury Park Holding Corp 

Cadiz Inc. 

Caladrius Biosciences, Inc. 

Calithera Biosciences, Inc. 

Cardtronics plc 

Career Education Corporation 

Carrizo Oil & Gas, Inc. 

Casella Waste Systems, Inc. 

Century Communities 

Charles & Colvard, Ltd. 

Chart Industries, Inc. 

Chefs' Warehouse, Inc. 

Chevron Corp. 

ChromaDex Corporation 

Ciena Corporation 

Cimpress N.V. 

Cincinnati Financial Corporation 

City Holding Company 

Clean Energy Fuels Corp. 

Cloud Peak Energy, Inc. 

Colliers International Group Inc. 

Colony Bankcorp, Inc. 

CommVault Systems, Inc. 

Computer Programs and Systems, Inc. (CPSI) 

Conformis, Inc. 

CONMED Corporation 

Core-Mark Holding Company, Inc. 

Core-Mark Holding Company, Inc. 

Coupa Software, Inc. 

Covenant Transportation Group, Inc. 

Cowen Inc. 

Criteo 

Crocs, Inc. 

Crown Crafts, Inc. 

CSW Industrials, Inc. 

CTI Industries Corporation 

CUI Global, Inc. 

CytomX Therapeutics, Inc. 

Dael Victoria Reyes Trust 

Data I/O Corporation 

Denny's Corporation 

Destination XL Group, Inc. 

DiaMedica Therapeutics Inc. 

Diodes Incorporated 

Dixie Group, Inc. 

Dollar Tree, Inc. 

Domo, Inc. 

Dynamic Signal 

E.W. Scripps Company 

Eagle Bancorp Montana, Inc. 

Eagle Bancorp, Inc. 

Ecolab Inc. 

EdtechX Holdings Acquisition Corp 

Encana Corporation 

Endo International Plc 

ENGlobal Corporation 

Ensign Group, Inc. 

Esperion Therapeutics, Inc. 

Esquire Financial Holdings, Inc. 

Euronet Worldwide, Inc. 

EZCORP, Inc. 

Finjan Holdings, Inc. 

First Mid-Illinois Bancshares, Inc. 

First Solar, Inc. 

FirstCash, Inc. 

Five Star Senior Living Inc. 

Flexion Therapeutics, Inc. 

Flushing Financial Corporation 

FMC Corporation 

FNCB Bancorp, Inc. 

Franklin Templeton 

Fuel Tech, Inc. 

Full House Resorts, Inc. 

Funko, Inc. 

Gaia, Inc. 

Gaming and Leisure Properties, Inc. 

Genius Brands International, Inc. 

Genocea Biosciences, Inc. 

Geospace Technologies Corporation 

Gilead Sciences, Inc. 

Glacier Bancorp, Inc. 

Global Blood Therapeutics, Inc. 

Goosehead Insurance, Inc. 

Government Properties Income Trust 

Green Plains Inc. 

Grindrod Shipping Holdings Ltd. 

Hallador Energy Company 

Hamilton Bancorp, Inc. 

Healthcare Services Group, Inc. 

Hennessy Advisors, Inc. 

Hercules Capital, Inc. 

Heritage Financial Corporation 

Home Federal Savings Bank 

HomeStreet, Inc. 

Hooker Furniture Corporation 

Hospitality Properties Trust 

Howard Bancorp, Inc. 

IAC 

ICU Medical, Inc. 

ImmunoGen, Inc. 

Incyte Corporation 

Independent Bank Group, Inc. 

Industrial Logistics Properties Trust 

Innospec Inc. 

Inogen, Inc. 

Inseego Corp. 

Insteel Industries, Inc. 

Internap Corporation 

International Bancshares Corporation 

Investors Bancorp, Inc. 

Investors Title Company 

Itron, Inc. 

IZEA Worldwide, Inc. 

Jack Henry & Associates, Inc. 

Jack in the Box Inc. 

Kforce Inc. 

Kindred Biosciences, Inc. 

Kinsale Capital Group, Inc. 

Kirby Corporation 

Kirkland’s, Inc. 

Lake City Bank 

Lamar Advertising Company 

Landmark Bancorp, Inc. 

Lazydays Holdings, Inc. 

LCNB Corp. 

Liberty Global, Inc. 

Lifetime Brands, Inc. 

Lifeway Foods, Inc. 

Live Ventures Incorporated 

Lumentum Holdings, Inc. 

Madrigal Pharmaceuticals, Inc. 

Magyar Bancorp, Inc. 

Manhattan Associates, Inc. 

Marathon Petroleum Corp. 

Marin Software, Inc. 

Marrone Bio Innovations, Inc. 

Marvell Semiconductor 

Masimo Corporation 

Maxim Integrated Products, Inc. 

Medical Transcription Billing Corp. (MTBC) 

Melrose Bancorp Inc. 

Meta Financial Group, Inc. 

Micron Technology, Inc. 

Middlefield Banc Corp. 

MidWestOne Financial Group, Inc. 

Misonix, Inc. 

MKS Instruments, Inc. 

Monmouth Real Estate Investment Corporation 

Monolithic Power Systems, Inc. 

MyoKardia, Inc. 

MYOS RENS Technology Inc. 

NantKwest, Inc. 

Nature’s Sunshine Products, Inc. 

NetScout Systems, Inc. 

NI Holdings, Inc. 

Novan, Inc. 

NutriSystem, Inc. 

Obalon Therapeutics, Inc. 

Old Line Bancshares, Inc. 

Old National Bancorp 

OneSpan Inc. 

OptiNose, Inc. 

Oracle 

Organovo Holdings, Inc. 

Orthofix Medical, Inc. 

Otter Tail Corporation 

Overstock.com, Inc. 

Oxbridge Re Holdings Limited 

Pacific Premier Bancorp, Inc. 

Pacira Pharmaceuticals, Inc. 

PayPal Holdings Inc. 

Penn National Gaming, Inc. 

People’s Utah Bancorp 

Perma-Pipe International Holdings Inc. 

Plexus Corp. 

Pluralsight, Inc. 

Pool Corporation 

Power Integrations Inc. 

PRA Group Inc. 

Premier, Inc. 

PriceSmart, Inc. 

Principal Financial Group, Inc. 

Principia Biopharma, Inc. 

Profire Energy, Inc. 

Progress Software Corporation 

Proofpoint, Inc. 

Prothena Corp. Plc 

QIWI plc 

QuinStreet, Inc. 

Rambus Inc. 

Real Goods Solar, Inc. 

Red Rock Resorts, Inc. 

Rimini Street, Inc. 

Riverview Community Bank 

Rocky Mountain Chocolate Factory, Inc. 

Royal Gold, Inc. 

Ryanair 

Ryder System, Inc. 

S&T Bancorp, Inc. 

Salisbury Bancorp, Inc. 

Seagate Technology PLC 

Select Income REIT 

Senior Housing Properties Trust 

Shore Bancshares, Inc. 

SI-BONE, Inc. 

Sierra Oncology, Inc. 

Signature Bank 

Simmons First National Corporation 

SINA Corp. 

SINTX Technologies, Inc. 

Spectrum Pharmaceuticals, Inc. 

Splunk Inc. 

Spok Holdings, Inc. 

SSR Mining Inc. 

STAAR Surgical Company 

Star Bulk Carriers Corp. 

Stein Mart, Inc. 

Steven Madden, Ltd. 

StoneCastle Financial Corp. 

Strategic Education, Inc. 

Streamline Health Solutions, Inc. 

Sunesis Pharmaceuticals, Inc. 

Sunrun Inc. 

SurveyMonkey 

Sutro Biopharma, Inc. 

Sykes Enterprises, Incorporated 

Symantec Corporation 

Synaptics Incorporated 

Tactile Systems Technology, Inc. 

Tech Data Corporation 

TechNet 

Teligent, Inc. 

Tenable Holdings, Inc. 

Tenax Therapeutics, Inc. 

Teradyne, Inc. 

Territorial Bancorp Inc. 

The Bancorp, Inc. 

The Eastern Company 

The First of Long Island Corporation 

The Michaels Company, Inc. 

The RMR Group Inc. 

Tilray, Inc. 

Tractor Supply Company 

Transcat, Inc. 

TravelCenters of America LLC 

Tremont Mortgage Trust 

TTM Technologies, Inc. 

Union Bankshares Corporation 

United Insurance Holdings Corp. 

Urban Outfitters, Inc. 

U.S. Chamber of Commerce 

Utah Medical Products, Inc. 

Verisk Analytics Inc. 

Viking Therapeutics, Inc.  

W. R. Berkley Corporation 

Walgreens Boots Alliance, Inc. 

Washington Federal, Inc. 

Weibo Corp. 

Werner Enterprises, Inc. 

Westfield Bank 

Willamette Valley Vineyards, Inc. 

Willis Towers Watson Public Limited Company 

Windstream Holdings, Inc. 

WVS Financial Corp. 

Wynn Resorts, Limited 

Yum! Brands, Inc. 

Zafgen, Inc. 

Zagg Inc. 

Zebra Technologies Corporation 

Zions Bancorporation 

Zynerba Pharmaceuticals Inc.