Proxy System Modernization

NIRI is a member of the Shareholder Communications Coalition, which is urging the SEC and lawmakers to push for the modernization of the U.S. proxy system.

In October 2016, the SEC proposed draft rules that would require companies to provide universal proxy cards (that list both management and dissident nominees) in contested board elections. NIRI and/or the Coalition likely will submit a comment letter on these rules. If you have specific concerns that you would like NIRI to include in a comment letter, please contact Ted Allen, NIRI's director of regulatory affairs, at tallen@niri.org.  

In an April 2015 comment letter, NIRI and the coalition called on the SEC to repeal its outdated OBO-NOBO (Objecting Beneficial Owner/Non-Objecting Beneficial Owner) rules that make it more difficult and costly for companies to communicate with their "street name" shareholders. The coalition reiterated these points in an April 2016 comment letter in response to the SEC's rulemaking on transfer agents.  

NIRI also wrote a commentary for CFO.com in 2014 on the need for these important reforms: "Shareholder Engagement Should Be a Two-Way Street," April 2014. In June 2013, NIRI's CEO testified before the House Financial Services Committee on proxy reform issues.

In 2010, the SEC published a concept release on the U.S. proxy system that addressed OBO-NOBO, "empty voting" and "over voting," vote confirmation, and other proxy voting issues. Here is a link to the comment letter that NIRI submitted on these issues. NIRI also prepared a comment letter in 2013 regarding proposed changes to proxy distribution fees. 

Greater Oversight of Proxy Advisors

NIRI and the Shareholder Communications Coalition have been urging the SEC to provide greater oversight of proxy advisors to ensure greater proxy report accuracy, public disclosure of conflicts of interest, and the fair treatment of all issuers. NIRI encourages its members to bring specific examples of proxy report inaccuracies and other proxy advisory concerns to the attention of Raymond Be in the SEC's Division of Corporation Finance. Members should also may share their concerns with NIRI staff

In June 2016, the U.S. House Financial Services Committee approved bipartisan legislation to regulate proxy advisory firms. NIRI welcomes this legislation, which can be found here. NIRI and the Society of Corporate Secretaries have submitted a joint statement in support of the reforms in this bill. Nasdaq has been encouraging its member companies to join a issuer letter to House Speaker Paul Ryan that expresses support for this bill.

In a December 2015 comment letter, NIRI expressed concern over the selective disclosure of excerpts from proxy advisory reports and asked the SEC to require the public disclosure of full proxy advisor reports when excerpts are leaked into the public domain.

Here are other comment letters and testimony that NIRI and other corporate groups have submitted on proxy advisory firms:

Shareholder Communications Coalition, Comment Letter on the SEC's Proxy Advisory Services Roundtable, December 2013.

Shareholder Communications Coalition, Comment Letter on Best Practice Principles for Governance Research, December 2013

NIRI Testimony to the House Financial Services Committee on Proxy System Reforms and Proxy Advisors, June 2013.

Shareholder Communications Coalition, Comment Letter on Proposed Regulatory Framework for Proxy Advisory Firms, January 2012.

In addition, here is a link to a 2015 report from the U.S. Chamber of Commerce and Nasdaq on issuers' experiences with proxy advisors.

In November 2016, the U.S. Government Accountability Office (GAO) issued a report on proxy advisory firms. NIRI was one of the organizations that provided input to the GAO researchers who prepared this report.