SEC Proxy Advisor Rule Rescission & Shareholder Proposal Patterns
Back and Forth
Welcome to this week's news brief.
Amid the flurry of court rulings released last week,?there's one that board members may have missed. The?5th Circuit Court of Appeals?reversed an?SEC?rule that rescinded another rule, which required proxy advisors to share their voting recommendations with companies at the same time they provide them to customers and to share feedback from the companies with customers.
The initial rule was put forward under then-Chair?Jay Clayton?and then reversed by Chair?Gary Gensler?before going into effect. The SEC said it's reviewing the ruling; it's unclear whether it will try again with the rescission.
If the Clayton-era proxy advisor rule stands, boards should consider what they see in the reports carefully; opportunities for boards to get independent feedback are rare, one source told Agenda. "If they are smart, they will use this as an opportunity to engage more productively with their investors."
Proposal Plateau
Investors backed shareholder proposals at roughly the same rate as last year, according to new data from?ISS-Corporate. That's even after the SEC reversed course on its no-action process, allowing companies to omit many more proposals from their proxies than in recent years. The wave of "low-quality" proposals was blamed for sinking support rates in the last few years.?New shifts in the ESG landscape explain why numbers stayed the same.
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