Congress Urged to Force SEC's Hand on Proxy Advisor Regulation
Barlas, Stephen, Strategic Finance
Business groups are trying to clip the wings of proxy advisors who have been successful at convincing institutional shareholders to demand restrictions on corporate pay. The SEC published a concept release on the U.S. proxy system in July 2010 but hasn't taken a second step. In its report for fiscal year 2012, the SEC said it would be developing interpretative guidance on conflicts of interest in fiscal 2013. But that hasn't happened yet either. The U.S. government's fiscal year 2013 ended on September 30.
The Chamber of Commerce, Society of Corporate Secretaries and Governance Professionals, and Center on Executive Compensation are among those asking Congress to force the SEC to move forward with new rules limiting perceived conflicts of interest at firms such as Institutional Shareholder Services (ISS) and Glass, Lewis & Co. Those two are the dominant proxy advisory firms and have been successful in persuading shareholders to vote against a relatively small number of pay packages during the "Say on Pay" votes companies have been conducting for the past three years. Those votes were established by the Dodd-Frank Act. Shareholders vote for or against pay packages for the CEO and four other top-paid executives. …