Wespath Joins Institutional Investors in Opposing Bill to Tighten Regulations on Proxy Firms
June 21, 2016
Wespath has co-signed a letter to the House Financial Services Committee opposing a bill to impose additional regulations on proxy advisory firms. We believe the bill—Corporate Governance Reform and Transparency Act (HR 5311)—could weaken public company corporate governance and shareholder rights. Of particular concern is a provision in the bill that allows companies access to a proxy advisory firm's recommendations ahead of a shareholder vote. It also asks that proxy firms "employ an ombudsman to receive complaints about the accuracy of voting information used in making recommendations," and that any complaints be resolved before shareholders vote on the matter. We believe these provisions could allow companies to exercise undue influence on the proxy voting process with adverse consequences for shareholders that rely on the research and advice of proxy voting firms.
The House Financial Services Committee approved the bill on June 16, 2016 and it will now go to the full House for a vote.
In exercising our role as active owners in the companies in which we invest, we seek to improve company performance relating to material environmental, social and governance issues in part through our comprehensive proxy voting activity. Therefore, we oppose regulation that could lessen the ability of proxy advisory firms to provide the independent research, analysis and advice that helps shareholders promote sound corporate governance policies.
Read more about this bill in Pensions & Investments.