This report offers a examination of supplemental filings from last year’s 2024 proxy season to shed light on persistent challenges associated with proxy advisors. Over the last decade, proxy advisors have become subject to intense scrutiny by policymakers due to the concentrated nature of the industry and the conflicts of interest inherent to the business models of the two largest proxy advisory firms.
In 2020, the Securities and Exchange Commission adopted substantial reforms that were intended to enhance the accuracy and objectivity of proxy advisor recommendations and to hold proxy advisors accountable when they make statements that are false or misleading. Before these reforms went into effect – and without any evidence that they would somehow weaken the proxy process – the SEC reversed course and rescinded many of the reforms in 2022. However, the Fifth Circuit’s June 2024 decision to overturn the SEC’s rollback of the 2020 proxy advisory rule is a positive sign that the SEC’s process to improve how information becomes available to investors regarding companies’ views on proxy advisor recommendations may be restored.
This report aims to highlight the issues companies face with proxy advisor recommendations to illustrate the need for greater transparency and oversight of proxy advisors as well as a better process to communicate proxy advisor recommendations to their shareholders. Such reforms would strengthen the integrity of the proxy process and ensure investors are voting in their clients’ best interest on issues where there is disagreement.
DOWNLOAD REPORT: PROXY ADVISORS REMAIN A PROBLEM: 2024 PROXY SEASON ANALYSIS SHOWS COMPANIES REPORT PERSISTENT ERRORS IN PROXY ADVISORS’ ANALYSES
