Immediate steps are essential from the US Securities and Exchange Commission (SEC) and Congress to update obsolete proxy-voting processes, according to a report issued by the lobbyist association Business Roundtable (BRT).
The non-profit organization is located in Washington, DC and consists solely of chief executives from major US companies. BRT has called on the SEC to revamp the shareholder proposal process for public institutions, aiming to make it harder for activist suggestions to appear on business proxy ballots.
The BRT’s whitepaper, The Need for Bold Proxy Process Reforms, clearly advocates for stronger oversight of proxy advisory companies to curb their power and suggests reforming the proxy process to align with what it identifies as the long-term interests of shareholders. The report highlights recent cases where savvy investors, often with only the tiniest financial investments, have leveraged the proxy process to advance their own public approach goals unrelated to company performance.
The shift has caused proxy statements to turn into “battlegrounds for contentious social debates,” detracting from discussions about strategic preferences and the planned purposes of stakeholder arrangement.
The BRT’s report specifies the following targeted policy recommendations:
- – Disallowing shareholder proposals that promote wide-reaching ideological agendas.
- – Stopping the misuse of proxy rules by reinforcing submission and resubmission thresholds for shareholder proposals.
- – Banning ‘robovoting’ where votes align automatically with proxy advisor recommendations.
- – Supporting the SEC’s power to oversee proxy advisory firms.
- – Implementing standards for transparency and accountability.
The recommendations aim to address a regulatory process at the SEC described in the report as “inconsistent, opaque, and unpredictable.” Additionally, it focuses on unaccountable proxy advisory companies that significantly influence vote outcomes and corporate governance. BRT emphasized the need for broader structural reforms to shield investors and to ensure that US capital markets remain a catalyst for economic growth and opportunity.
