WASHINGTON, D.C. – Tom Quaadman, Executive Vice President of the U.S. Chamber’s Center for Capital Markets Competitiveness (CCMC) issued the following statement today after the Securities and Exchange Commission (SEC) released commission guidance regarding the fiduciary duties of investment fund managers and their proxy voting recommendations.
“For too long proxy advisory firms have exploited current SEC regulations to overwhelm public companies with voting recommendations that investors have no interest in advancing as part of the annual shareholder voting process. Proxy advisory firm reform is critical to reversing the decline of companies going and staying public in the United States and boosting American competitiveness in a global economy.
“Proxy advisory firms have been riddled with conflicts of interest, failed to link advice with economic return or company specific information, and lack process and transparency. We commend the SEC for taking a critical first step in bringing much-needed oversight to proxy advisory firms, and we hope the SEC and other regulators take further action to ensure that proxy advisory firms provide ‘decision useful’ information to investors. Today’s action advances SEC’s mission of investor protection and promoting competition and capital formation.”
In the Chamber’s 2018 Proxy Season Survey of over 160 companies of varying sizes and across several industries, we found that when companies requested the opportunity to meet with a proxy advisory firm to discuss issues subject to a shareholder vote, the request was denied 57% of the time. Additionally, companies reported that the time granted to provide input was most commonly 1-2 days. As a result, vote recommendations often are based on inaccurate data and shareholders end up suffering. In 2013 the Chamber released Best Practices and Core Principles for the Development, Dispensation and Release of Proxy Advice.