During a House Financial Services Committee oversight hearing, SEC Chairman Jay Clayton again signaled the re-opening of the public comment period on the 2010 “Proxy Plumbing Concept Release,” which would examine every issue in the proxy voting process, including proxy advisory firms and shareholder proposal issues. House Republicans have acted on multiple bills focusing on the proxy process and related corporate governance issues, including bills requiring greater SEC oversight of proxy advisory firms and, more recently, updating shareholder proposal resubmission thresholds. However, given the legislative gridlock, several members of the GOP prodded Mr. Clayton on whether the SEC would act on proxy issues in the near future. Chair Clayton responded directly: “[Proxy advisors] have a very important role in our regulatory ecosystem and because of that we have to look at them.” ]
The most likely path to reform is the reopening of the SEC's 2010 Proxy Plumbing Concept Release. That release sought public comments on needed fixes to the proxy system, including the role of the proxy advisory firm industry, shareholder resubmission thresholds, and shareholder proposal eligibility requirements. The Center On Executive Compensation filed detailed comments on the 2010 proposal and is actively engaging on both the Hill and at the SEC on these issues.