Washington, DC—The obligations of public corporations to shareholders and other stakeholders is a topic of significant debate. This week the U.S. Securities and Exchange Commission (SEC) voted 3 to 2 on two proposed rules that address how investors and their representatives engage with corporate boards and management. The first rule updates both the ownership requirement for submitting shareholder proposals at annual meetings as well as increases the support needed to resubmit proposals that have previously failed. The second rule addresses oversight of proxy advisory firms by requiring disclosure of material conflicts of interest with their proxy advice as well as provides the framework for engagement with corporations regarding mistakes and errors in their recommendations.
Corporations and investors need durable, bipartisan solutions that have the support necessary to survive changes in Administrations. BPC encourages the SEC to continue in its effort to conduct a deliberate and open dialogue that ensures that all stakeholders have an opportunity to weigh in on these important issues.
While large segments of the population presumably have little idea about the role of proxy advisors or how corporations conduct their annual meetings, all investors care about the performance of their holdings and many have strong views about corporate behavior. These SEC proposals have the potential to directly impact both these bottom lines.
In recent years, investors and advocacy organizations have become more active in using corporate governance structures to affect business decisions on a broad array of policy issues. Now is the time for a thoughtful discussion about whether the current corporate governance structure is the most appropriate forum to effectively facilitate these important debates.
On November 19, former SEC Commissioners Dan Gallagher and Roel C. Campos will be at the Bipartisan Policy Center from 10:00 a.m. – 11:00 a.m. to discuss the SEC’s proposed rulemaking and the broader role of a corporation in society