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E-MailJeff Mahoney is General Counsel of the Council of Institutional Investors. This post is based on an open letter from CII, sent on behalf of over 50 co-signatories.
May 17, 2017
The Honorable Paul Ryan
Longworth House Office Building, Room 1233
United States House of Representatives
Washington, DC 20515-4901
Re: The Financial CHOICE Act of 2017
Dear Speaker Ryan:
On behalf of the Council of Institutional Investors and the undersigned investors, I am writing to share with you our concerns about several provisions currently included in the Financial CHOICE Act of 2017 (Act).
The Council of Institutional Investors (CII) is a nonprofit, nonpartisan association of corporate, public and union employee benefit funds and endowments with more than 120 members with combined assets that exceed $3 trillion. In addition, our associate (nonvoting) members include more than 50 asset management firms that manage assets in excess of $20 trillion.
Member funds include major long-term shareowners with a duty to protect the retirement assets of millions of American workers. CII strives to educate it members and the public about good corporate governance, shareowner rights and related investment issues, and to advocate on our members’ behalf.
As significant long-term investors, CII member funds have a deep, abiding interest in ensuring that the U.S. capital markets are on a sound footing. Americans suffered enormously from the 2001 Enron scandal and the 2008 financial crisis—they lost jobs, homes and retirement savings—and we can’t go back.
We are deeply troubled by provisions of the Act that would threaten prudent safeguards for oversight of companies and markets, including sensible reforms that investors need to hold management and boards of public companies accountable, and that foster trust in the integrity of the markets.
We stand ready to work with you and your colleagues in Congress to ensure that U.S. markets are safe, vibrant and fair for all investors and all Americans. Our concerns with the Act include the following five key areas:
The bill would:
- Set prohibitively costly hurdles on shareholder proposals. The bill would require a shareholder wishing to put a proposal on a company’s annual meeting ballot to own at least 1% of the stock for three years (the current requirement is $2,000 worth of stock for one year). That would raise the ownership threshold to file a shareholder proposal to $7.5 billion at Apple, $3.4 billion at Exxon Mobil and $2.6 billion at Wells Fargo, for example.
- Roll back curbs on abusive pay practices. Shareholders would get an advisory vote on executive compensation only when there is undefined “material” change in CEO pay; most U.S. public companies offer investors say-on-pay votes annually. Clawbacks of unearned executive compensation would be limited.
- Restrict the right of shareholders to vote for directors in contested elections for board seats. The bill would bar the use of “universal proxy” cards that give investors freedom of choice to vote for the specific combination of director nominees they believe best serves their interests.
- Create an intrusive new regulatory scheme for proxy advisors that provide shareholders with independent research they need to vote responsibly. The bill would drive up costs for investors, and potentially would muzzle critical commentary from proxy advisory firms, and even drive some proxy advisors out of business.
- Shackle the Securities and Exchange Commission (SEC), including with excessive cost-benefit analysis requirements, unwise limits on enforcement and Congressional review requirements that appear designed to foster the ability of special interests to block needed rules. These provisions would severely undercut the SEC’s ability to fulfill its mission to protect investors, police markets and foster capital formation.
Sincerely,
General Counsel
Council of Institutional Investors
Marcie Frost
Chief Executive Officer
California Public Employees’ Retirement System
Gail H. Stone
Executive Director
Arkansas Public Employees Retirement System
Anne Sheehan
Director of Corporate Governance
California State Teachers’ Retirement System
Gregory W. Smith
Executive Director
Colorado Public Employees’ Retirement Association
Nancy K. Kopp
Maryland State Treasurer
Maryland State Treasurer’s Officer
Denise L. Nappier
Connecticut State Treasurer
Connecticut Retirement Plans and Trust Funds
Mansco Perry III
Executive Director and CIO
Minnesota State Board of Investment
Sheila Morgan-Johnson
Interim Executive Director/CIO
District of Columbia Retirement Board
Thomas Lee
Executive Director and CIO
New York State Teachers’ Retirement System
Michael McCauley
Senior Officer
Investment Programs & Governance
Florida State Board of Administration
Scott Stringer
New York City Comptroller
Scott Zdrazil
Senior Investment Officer
Corporate Governance
Los Angeles County Employees Retirement Association
Thomas P. DiNapoli
New York State Comptroller
R. Dean Kenderdine
Executive Director
Secretary to the Board
Maryland State Retirement and Pension System
Karen Carraher
Executive Director
Ohio Public Employees Retirement System
Tobias Read
Oregon State Treasurer
Oregon State Treasury
Jay Huish
Executive Director
San Francisco Employees’ Retirement System
Randi Weingarten
President
American Federation of Teachers Pension Plan
Mindy Lubber
President and CEO
Ceres
Helen Ninos
Interim Executive Director
School Employees Retirement System of Ohio
Dieter Waizenegger
Executive Director
CtW Investment Group
Jeff Davis
Executive Director
Seattle City Employees’ Retirement System
Theresa Whitmarsh
Executive Director
Washington State Investment Board
Tim Driscoll
Executive Vice President
International Union of Bricklayers & Allied Craftworkers
Alfred Campos
Federal Lobbyist
National Education Association
Heather Slavkin Corzo
Director, Office of Investment
AFL-CIO
Janice J. Fueser
Research Coordinator, Corporate Governance
UNITE HERE
Charles Jurgonis
Plan Secretary
AFSCME Employees Pension Plan
Kurt Kreienbrink, CFA
Manager, Socially Responsible Investing & Investor Advocacy
Portico Benefit Services
Anita Skipper
Senior Analyst – Corporate Governance
Aviva Investors
David H. Zellner
Chief Investment Officer
Wespath Benefits and Investments
Brian Minns
Manager, Sustainable Investing
Addenda Capital
Kathleen Woods
Chair, Corporate Responsibility Committee
Adrian Dominican Sisters, Portfolio Advisory Board
Andrew Behar
Chief Executive Officer
As You Sow
Bryan Thomson
SVP, Public Equities
British Columbia Investment Management Corporation
Karen Watson
CFA Chief Investment Officer
Congregation of St. Joseph
Sister Teresa George, D.C.
Provincial Treasurer and Chair of Investment Committee
Daughters of Charity, Province of St. Louise
Tim Goodman
Director – Engagement
Hermes Investment Management
Louise Davidson
Chief Executive Officer
Australian Council of Superannuation Investors
Andrew Shapiro
Managing Member & President
Lawndale Capital Management, LLC
Clare Payn
Head of Corporate Governance
Legal & General Investment Management
Kwai San Wong, CFA
Stewardship Analyst
Sarasin & Partners
Cllr Kieran Quinn
Chair
Local Authority Pension Fund Forum
Euan A. Stirling
Head of Stewardship and ESG Investment
Standard Life Investments
Jerry Judd
Senior Vice President & Treasurer
Mercy Health
Susan Makos
Vice President of Social Responsibility
Mercy Investment Services
Michelle de Cordova
Director, Corporate Engagement and Public Policy
NEI Investments
Larisa Ruoff
Director of Shareholder Advocacy
and Corporate Engagement
The Sustainability Group of Loring, Wolcott & Coolidge
Jonas D. Kron
Senior Vice President
Trillium Asset Management
Freddie Woolfe
Responsible Investment Analyst
Newton Investment Management
Paul Clark
Head, Corporate Governance
UBS Asset Management
Bess Joffe
Managing Director
Head of Stewardship & Corporate Governance
Nuveen, the investment management arm of TIAA
Elizabeth Fernando
Head of Equities
USS Investment Management Ltd
