Business Roundtable Welcomes House Financial Services Committee’s Hearings on Reforming the Proxy Process and Oversight of the Proxy Advisory Industry

July 13, 2023

Washington – Business Roundtable applauded the House Financial Services Committee for providing ongoing, vital oversight of the Securities and Exchange Commission and the proxy advisory industry.

In a letter to the Chairs and Ranking Members of the Subcommittee on Oversight and Investigations and Subcommittee on Capital Markets, Business Roundtable President and COO Kristen Silverberg outlined the organization’s ongoing concerns with the proxy process and the growing influence of the proxy advisory industry under the Biden Administration.

“Business Roundtable has long been concerned about the outsized influence proxy advisory firms wield in the shareholder voting process.... Indeed, a survey of Business Roundtable CEOs found that 95% of respondents identified factual errors in proxy advisory reports about their companies. The recommendations of proxy advisory firms often dictate the outcome of shareholder votes, and with them, some of the most important decisions facing public companies. Yet, proxy advisory firms are subject to little oversight or accountability.”

Additionally, Silverberg noted Business Roundtable’s disappointment with the SEC’s rollback of proxy advisory transparency and accountability reforms and its reversal of reforms to improve the shareholder proposal process.

“Business Roundtable was extremely disappointed when the SEC, under its current Chair, rolled back those reforms before they were allowed to take effect, and we have challenged the SEC in court. The SEC’s decision to prevent these modest, commonsense reforms from taking effect makes it more difficult for investors to differentiate fact from fiction when considering critical proposals.
“Business Roundtable also supported reforms to Rule 14a-8, the shareholder proposal process, that were adopted in 2020 following a thoughtful rulemaking process. Unfortunately, these needed reforms were largely undercut by reversals of multiple SEC staff positions and would be further weakened by the SEC proposal issued on July 13, 2022, to further amend Rule 14a-8.”

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