Steve Seelig and Puneet Arora are regulatory advisors at Willis Towers Watson. This post is based on a Willis Towers Watson memorandum by Mr. Seelig and Mr. Arora.
What’s clear from the recent Securities and Exchange (SEC) roundtable on the proxy voting process and subsequent press accounts is that concerned parties have very different agendas for possible next steps. So we’re hesitant to believe predictions that regulation of proxy advisory firms is imminent or that the entire shareholder proposal process needs to be revamped. Many stakeholders are content with the current state of affairs. That said, the roundtable enables the SEC to build a record of public comments to support its rulemaking decisions, increasing the odds of new regulations forthcoming on the three topics covered.
Proxy Advisor Discussion
Prior to the roundtable, the proxy advisor topic appeared to be the most controversial, so it seemed appropriate for the SEC to place it last on the agenda. Yet, we heard little appetite from attendees for changing how advisors participate in the proxy voting process based on the important role they play in assisting institutional investors with voting recommendations. The roundtable also avoided a deep examination of whether ISS’ simultaneous work with clients and issuance of proxy recommendations is a potential conflict of interest. ISS, however, noted that it makes available to its clients revenue data earned from consulting services to issuers to whom it makes voting recommendations.