In an article published yesterday in Corporate Board Member, Ani Huang, HRPA Senior Executive Vice President and the Center on Executive Compensation’s CEO, made the case for finishing the job on proxy oversight reform.
Why it matters: After the demise of the SEC’s 2020 reforms designed to make the proxy advisory process more transparent and accurate, companies still have no power to review or respond to proxy research reports before they are presented to investors.
By the numbers:
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When recommended to do so by a proxy advisory firm, 28% more investors, on average, vote against a proposal.
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A large percentage of investor votes are cast within 24–48 hours following the final report, giving issuers and investors little time to review or respond.
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A recent report found 64 instances in which a company had alerted investors to a proxy report error via a supplemental filing.
What’s next: HR Policy Association is advocating for the reforms identified in the article:
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Allow issuers to review, not change, draft proxy reports before investors use them to make voting decisions.
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Require proxy advisors to disclose conflicts of interest in each proxy report, including consulting services provided to issuers and/or shareholder proponents.
The bottom line: The reasonable 2020 SEC rules should be reinstated or Congress should take action to enact similar reforms. The House passed such legislation last fall, and action is likely to resume.
For more information, read the Center’s full article, “Time to Finish the Job on Proxy Advisory Oversight.”
