Earlier today, the Shareholder Communications Coalition, composed of organizations not generally associated with shareholder advocates (Business Roundtable, National Investor Relations Institute, Securities Transfer Association, and The Society of Corporate Secretaries and Governance Professionals), sent a letter to the SEC with its suggestions for a proposed regulatory framework for proxy advisory firms.
This letter advocates for new regulatory rules to address: (1) conflicts of interest by proxy advisory firms; (2) disclosures by these firms regarding the standards, procedures, and methodologies used to formulate voting recommendations; and (3) correction of the factual errors in the information used by these firms to develop their recommendations.
My comments on that release mostly addressed other issues that generally tip the scales in favor of management. I hope those issues will get addressed as well. See also letters from Steven Towns, and Glyn Holton, two other members of the United States Proxy Exchange. Regarding proxy advisors, we need to be careful to not clip there independence with what appear to be measures aimed at reducing conflicts of interest and greater transparency. The devil is in the details.