Industry Insights

SEC’s Upcoming Proxy Roundtable: Discussion Topics & Expectations


The SEC is scheduled to host a long awaited Proxy Roundtable on November 15 to discuss a wide range of topics spanning everything from proxy advisory firms to technology and innovation. Our subject matter experts are anticipating a few expectations for the roundtable:


  1. The SEC will participate in discussions around potentially regulating proxy advisory firms. Many of the public comments regarding the Proxy Roundtable reflect concern about the role of these firms, such as ISS and Glass Lewis. Last year, the House of Representatives proposed HR 4015 “Corporate Goverance Reform and Transparency Act of 2017”  to regulate proxy advisory firms.  If Congress does not pass a bill to oversee proxy advisory firms, then the SEC is likely to propose a rule for public comment potentially next year.
  2. Based on Commissioner Robert Jackson’s recent blistering statement on shareholder voting, shareholder activism and access is likely to be a very hot topic.
    1. The role of institutional investors voting the proxy they hold for retail investors has come under some fire and will be debated.
    2. The role of technology to improve shareholder access and ensure security voting will be considered. The SEC even suggested the possible use of “blockchain” to streamline and make the proxy process more accountable.
  3. The SEC issued a Proxy Concept release in 2010 that advocated for the overhaul of many issues, including improved shareholder access and tagging sections of the proxy statement in XBRL to improve disclosure. That release connects to the two open proposed rules on Pay vs. Performance and “Clawbacks” that would require XBRL in the proxy statement. The SEC backlogged these last year, but the roundtable is refocusing attention on them once again.
  4. The SEC also recently issued staff guidance letters regarding the role of proxy advisory firms and brokers, which will be discussed during the roundtable.


Potential SEC Proxy Roundtable Agenda Topics:  

  • Voting Process
    • Potential for over-voting and under-voting of securities by broker-dealers, the reasons this may occur, and ways to address it.
    • Practical difficulties in confirming whether an investor’s shares have been voted in accordance with the investor’s instructions.
    • Costs and challenges associated with distributing proxy and other materials to beneficial owners who hold in “street name,” as well as the costs and other challenges of communicating with such shareholders more generally.
  • Retail Shareholder Participation – In the 2017 proxy season, retail shareholders voted approximately 29% of their shares, while institutional investors voted approximately 91% of their shares.
    • Reasons for this relatively low retail participation rate and whether better communication and coordination among proxy participants, increased use of technology, changes to rules, or investor education could increase participation.
    • How existing rules or market practices affect the ability of individuals who invest in the public markets through investment vehicles such as mutual funds and pension funds to participate in the governance of public companies in which they have an interest.
    • And, more generally, the extent to which relatively low retail investor participation should be of concern and should inform analysis of existing regulation.
  • Shareholder Proposals
    • Whether the current thresholds for minimum ownership (e.g., shares held and length of time) to submit a proposal to be included in the company’s proxy statement appropriately consider the interests of all shareholders, taking into account the potential benefits to shareholders of a proposal (or resubmission) being considered or adopted, as well as the costs associated with the inclusion of a proposal (or resubmission) in the proxy statement.
    • Whether meaningful ownership in the company can be demonstrated by factors other than the amount invested and the length of time shares are held.
    • Whether the voices of long-term retail investors (who invest directly and indirectly through mutual funds, ETFs, and other products) are appropriately represented in the shareholder proposal process and in the shareholder engagement dynamic more generally.
  • Proxy Advisory Firms
    • Whether various factors, including legal requirements, have resulted in investment advisers to funds and other clients relying on proxy advisory firms for information aggregation and voting recommendations to a greater extent than they should, and whether the extent of reliance on these firms is in the best interests of investment advisers and their clients, including funds and fund shareholders.
    • Whether issuers are being given an appropriate opportunity to raise concerns if they disagree with a proxy advisory firm’s recommendations, including, in particular, if the recommendation is based on erroneous, materially incomplete, or outdated information.
    • Whether there is sufficient transparency about a proxy advisory firm’s voting policies and procedures so that companies, investors, and other market participants can understand how the advisory firm reached its voting recommendations on a particular matter, and whether comparisons of recommendations across similarly situated companies have value.
    • Whether there are conflicts of interest, including with respect to related consulting services provided by proxy advisory firms, and, if so, whether those conflicts are adequately disclosed and mitigated.
    • The appropriate regulatory regime for proxy advisory firms and whether prior staff guidance about investment advisers’ responsibilities in voting client proxies and retaining proxy advisory firms should be modified, rescinded, or supplemented.
  • Technology and Innovation
    • As technology continues to evolve, whether it can be used to make the proxy process more efficient and effective for participants.
    • The potential benefits and consequences that could result from further reliance on, and changes in, technology. For example, whether technology, such as “blockchain” or distributed ledger technology, could be used to streamline or create more accountability in the proxy process.
  • Commission Action on Proxy Rules-Public discussion and sentiment at the Roundtable will help to establish proxy rule priorities for the SEC. Historically, meetings such as this lay the groundwork prior to any new SEC initiatives. As we approach the fiscal year end for many companies, issuers should consider how the topics discussed at the Proxy Roundtable are reflected in their upcoming annual proxy statement, prior to any mandates.

Toppan Vintage

Toppan Vintage is a leading international financial printing, communications and technology company dedicated to delivering a hassle-free experience with the highest quality accuracy, reliability and value for your organization’s financial printing and communications needs.

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