November 14, 2018
Today, the National Association of Manufacturers (NAM) and the U.S. Chamber of Commerce launched the second part of a six-figure ad campaign geared toward the Securities and Exchange Commission’s (SEC) roundtable on the proxy process. The ads draw attention to the threats that unrestrained proxy advisory firms pose to the savings and investment accounts of workers and retail investors.
In the first leg of the campaign, NAM and the Chamber published ads in major papers and across social media emphasizing the threat powerful but little-known proxy advisory firms pose to the retirement incomes of millions of Americans.
This second phase entails an open letter on behalf of American workers and retirees, signed by the CEOs of NAM and the Chamber, pointing out key issues with proxy advisory firms and how the existing process threatens the savings of millions of retail investors. The letter was published today in Politico, Washington Post, The Hill and The Wall Street Journal. Additional information about the campaign is available at www.proxyreforms.com.
The letter reads:
Proxy advisory firms make recommendations and often automatically cast votes in corporate elections and important company decisions. But proxy advisory firms operate without transparency, have rampant conflicts of interest, and are prone to making errors that ultimately can impair decision-making and harm investors. Even worse, proxy advisory firms have advocated for politically motivated policies that actually reduce shareholder returns, which means less money for hardworking Americans.
The letter rehashes points made in several recent papers, including evidence that proxy advisory firm recommendations are often riddled with factual and analytical errors and marred by cursory analysis and lack of attentiveness. The resulting poor recommendations destroy value, impacting all investors – from large institutional firms to individual retail investors saving for retirement or kids’ college funds.
Even though proxy advisors directly impact millions of retail investors, they have traditionally operated with little oversight and stayed outside of the public eye. But a growing chorus of voices from academia, industry, congress and investors are calling for a re-evaluation of the process. The Coalition is hopeful that the push for reform will continue the much-needed scrutiny of proxy advisors.