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SEC Roundtable Letter Recap:

Updated: Nov 21, 2018

REAL Champions of Working American Investors Speak Out About Importance of Proxy Advisers Amid Special Interest Campaign to Undermine System


As the Securities & Exchange Commission (SEC) geared up to host its much-anticipated roundtable on the Proxy Process, organizations representing the true interests of American investors have spoken out against the false and misleading rhetoric spread by special interests and Washington lobbyists seeking to “reform” the long-established and invaluable proxy advisory system. These organizations, as institutional investors, represent millions of working American investors. Here is a sampling of comments made to the SEC:

Office of the New York State Comptroller

“The [New York State Common Retirement] Fund believes that the proposed actions intended to alter the current business operations of proxy advisory firms, including the creation of a new federal regulatory scheme, are unnecessary and would weaken corporate accountability to shareowners, undercut the invaluable independence of the proxy advisory firms that investors retain, and could dramatically increase the cost of research to investors like the Fund… These [proxy advisory] firms provide cost-efficient, informed and independent research, analysis and advice for institutional shareowners, which often hold thousands of companies in their investment portfolios.”

Read the full comment letter here.

Neuberger Berman

“We have found proxy advisory firms to be important data aggregation and workflow service providers that enable us to effectively fulfill our fiduciary obligations to clients who have given us authority to vote their proxies based on our firms’ internal proxy voting policies and procedures.”

“As we execute votes consistent with our own proxy voting policies, we have not observed any evidence that the general policies or voting recommendations published by proxy advisory firms have been influenced by actual or potential conflicts of interests, or that there are inadequate controls in place to manage such conflicts.”

Read the full comment letter here.

American Federation of Labor and Congress of Industrial Organizations (AFL-CIO)

“Union members' pension and employee benefit plans routinely participate in the proxy process when exercising their fiduciary duty to vote proxies. Many of these plans also submit shareholder proposals as part of their shareholder engagement activities to promote long-term value creation… The SEC should hold proxy advisory firms to the same standards as other registered investment advisors who owe a duty of loyalty to their clients, not to the managers of the companies that they invest.”

"...[I]nstitutional investors do not blindly follow proxy advisory firm recommendations as "robo- voters." In reality, the clients of proxy advisory firms use this research as a supplement to their own proxy voting process… Any changes to the proxy process must be guided by the need to protect shareholder democracy."

Read the full comment letter here.

MFS Investment Management

“We believe the proxy voting advisory firms have taken appropriate steps to understand the viewpoints of corporate management teams. Furthermore, as a large active manager, our competitive advantage is based on our in-depth research process. Our global team of analysts and portfolios managers, in addition to our proxy voting team, consistently engages with management of our portfolio companies to understand their views on a variety of competitive, strategic, and voting topics, so we are able to compare the advisory firms' views against those of management.”

“We believe the proxy voting advisory firms are sufficiently transparent about their voting policies and procedures. They apply a consistent analytical approach when assessing issues like executive compensation, and they offer an annual survey that outlines and requests feedback on proposed changes to their policies that is available to both investors and issuers.”

“The proxy voting advisory firms also help us automate back end processes, which is extremely cost efficient for MFS and allows us to focus on performing more analytical tasks.”

Read the full comment letter here.

The Forum for Sustainable and Responsible Investment

“The US system of corporate governance relies on the accountability of boards of directors to their shareholders, and the proxy system is an important means by which shareowners communicate with companies and with one another on substantive issues… We believe that attempts to constrain the important work of proxy advisory firms also weakens the ability of investors to fulfill their fiduciary duties. Therefore, we urge you not to consider any further attempts to restrict the work of proxy advisory firms."

Read the full comment letter here.

Center for American Progress

“The proxy process continues to offer core channels for market forces to drive greater corporate long-termism... investors should have access to the free flow of information that they demand, such as from proxy advisors.”

Read the full comment letter here.

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