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 November 2018, the SEC hosted a roundtable on proxy voting; NIRI submitted a comment letter that included various suggested improvements to the proxy system (see pp. 4-7). 

In an April 2015 comment letter, NIRI and the coalition called on the SEC to repeal its outdated OBO-NOBO (Objecting Beneficial Owner/Non-Objecting Beneficial Owner) rules that make it more difficult and costly for companies to communicate with their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 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 advisory firms to ensure greater proxy report accuracy, public disclosure of conflicts of interest, and the fair treatment of all issuers. NIRI supports H.R. 4015, "The Corporate Governance Reform and Transparency Act," a bill sponsored by Rep. Sean Duffy (R-WI) and Rep. Gregory Meeks (D-NY), that would direct the SEC to regulate proxy advisors and mandate a review process so all issuers can review draft proxy reports. Please click here for a briefing paper on this legislation, which passed the U.S. House in December 2017. 

NIRI is part of a broad coalition of organizations that is urging the Senate to pass a proxy reform bill. The Senate Banking Committee held a hearing in June 2018 on this bill and other governance legislation, and NIRI submitted a statement in support of proxy advisor reform.  

In November 2018, NIRI submitted a letter to the SEC that outlined how the Commission could use its existing authority to provide more oversight over proxy advisors. 

In an August 2017 comment letter, NIRI expressed concern over the automated proxy voting systems used by investment managers and asked the SEC to investigate whether those systems are consistent with agency guidance.  In October 2018, the American Council for Capital Formation (ACCF) published a report that indicates that a significant number of ISS clients are using automated voting platforms to vote soon after ISS reports are published. In November 2018, ACCF published a second report that provides more evidence of the prevalence of "robo-voting." 

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.

NIRI encourages its members to bring specific examples of proxy report inaccuracies and other concerns to the SEC's Division of Corporation Finance. Members should also may share their concerns confidentially with NIRI staff.

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

NIRI, Letter in Support of H.R. 4015, November 2017.

American Council for Capital Formation, "The Realities of Robo-Voting," November 2018.

American Council for Capital Formation, "Are Proxy Advisors Really a Problem?" October 2018.

U.S. Chamber of Commerce-Nasdaq, "2018 Proxy Season Survey," October 2018.  

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 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.