CLS Blue Sky Blog

SEC Chair Issues Statement on Proxy Process Roundtable

Shareholder engagement is a hallmark of our public capital markets, and the proxy process is a fundamental component of that engagement. In 2010, the Commission issued a concept release seeking public comment on whether the U.S. proxy system as a whole operates with the accuracy, reliability, transparency, accountability, and integrity that shareholders and companies should expect.[1] In light of the many changes in our markets, technology, and how companies operate since then, SEC staff will host a roundtable this fall to hear from investors, issuers, and other market participants about whether the SEC’s proxy rules should be refined.

The SEC’s rules governing the proxy process are at the center of investor participation in, and influence over, corporate governance at U.S. public companies. For example, our proxy rules specify the requirements for information companies must provide to shareholders and how votes may be solicited. Since the 2010 concept release, we have seen a dramatic increase in the number of U.S. companies reporting shareholder engagement, with 72% of S&P 500 companies reporting engagement with shareholders in 2017, compared to just 6% in 2010.[2] The scope of topics subject to shareholder engagement also has increased. Consistent with the Commission’s mission, we must regularly review whether our existing rules are achieving their objectives effectively in light of changes in our marketplace. The SEC staff roundtable is intended to facilitate that type of assessment with respect to the proxy process and shareholder engagement.

SEC staff will announce the roundtable agenda items shortly. As they develop that agenda, I have asked that staff consider the topics outlined below.

Potential Topics for Consideration

Voting Process

Accuracy, transparency, and efficiency in the proxy system can inspire confidence in the proxy voting process for both companies and investors. Areas that may warrant particular attention include:

Retail Shareholder Participation

In the 2017 proxy season, retail shareholders voted approximately 29% of their shares, while institutional investors voted approximately 91% of their shares.[3] In this regard, it may be useful to better understand:

Shareholder Proposals

The shareholder proposal process is a channel for shareholders to engage with the U.S. public companies in which they invest on specific topics. All shareholders, as the ultimate owners of the company, bear the costs associated with management’s consideration of a proposal and its inclusion in the proxy statement. And, those same shareholders may benefit from the engagement and potential for enhanced performance brought about by consideration of a shareholder proposal. Many market participants believe this dynamic has enhanced company performance. Many market participants also believe that the costs of this process could be significantly reduced without limiting (and potentially increasing) the benefits of shareholder engagement. In this vein, it often is noted that a small group of shareholders submits a significant percentage of the total number of shareholder proposals each year.[4]

Areas of the shareholder engagement process that may warrant particular attention include:

Proxy Advisory Firms

Proxy advisory firms provide a number of services related to proxy voting, which include aggregating and standardizing information, providing platforms for managing votes, and providing voting recommendations. Areas that may warrant particular attention include:

Technology and Innovation

The use of technology is implicated in all areas of the proxy process. As such, it may be appropriate to consider the following:

Other Commission Action

In 2016, the Commission proposed amendments to the proxy rules to require the use of universal proxy cards that would include the names of all nominees in contested board of directors’ elections.[8] Under existing rules, nominees must consent to including their names on a proxy card. This means that in an election contest, a dissident may not include the other party’s nominees unless it receives consent, which in my experience has rarely been provided. A consequence of this current rule is that, if a shareholder wants to vote for a combination of directors (e.g., some from the management slate and some from the dissident slate), he would have to attend the shareholder meeting in person.

Roundtable Details

The roundtable date, agenda items, panelists, moderators, and logistical information will be made public as they are finalized.

Members of the public who wish to provide their views on the proxy process, either in advance of or after the roundtable, may submit comments electronically or on paper.[9] Please submit comments using one method only. Information that is submitted will become part of the public record of the roundtable and posted on the SEC’s website. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make publicly available.

Electronic Comments:

Use the SEC’s Internet submission form or send an email to .

Paper Comments:

Send paper comments to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, D.C. 20549-1090.

All submissions should refer to File Number 4-725, and the file number should be included on the subject line if email is used.


[1] Concept Release on the U.S. Proxy System, Release No. 34-62495 (July 14, 2010) [75 FR 42982 (July 22, 2010)]. The comment letters received in response to the 2010 concept release are available at

[4] See Gibson Dunn, Shareholder Proposal Developments During the 2018 Proxy Season (July 12, 2018), available at (one proponent, and shareholders associated with him, submitted or co-filed 24% of all proposals in the 2018 proxy season).

[5] Shareholders must own either $2,000 or 1% of a company’s stock for one year. 17 CFR 240.14a-8(b).

[6] 17 CFR 240.14a-8(i)(12).

[7] See SEC Staff Legal Bulletin No. 20, Proxy Voting: Proxy Voting Responsibilities of Investment Advisers and Availability of Exemptions from the Proxy Rules for Proxy Advisory Firms (June 30, 2014); Institutional Shareholder Services, Inc. SEC Staff Letter (Sept. 15, 2004); Egan-Jones Proxy Services, SEC Staff Letter (May 27, 2004). The guidance states that investment advisers should ascertain whether a proxy advisory firm has the capacity and competency to adequately analyze proxy issues, including the robustness of its policies and procedures identifying and addressing any conflicts of interest. In addition, the guidance addressed the availability and requirements of two exemptions from the federal proxy rules that are often relied upon by proxy advisory firms. SEC Staff Legal Bulletin No. 20 (June 30, 2014).

[8] Universal Proxy, Release No. 34-79164 (October 16, 2016) [81 FR 79122 (November 10, 2016)]. The comment letters received in response to the 2016 proposing release are available at

[9] Comments on the use of universal proxy cards should be submitted to the rulemaking file for the 2016 Universal Proxy release using the Commission’s Internet comment form ( or via email to (please include File Number S7-24-16 on the subject line).

This statement was issued on July 30, 2018, by Jay Clayton, chairman of the U.S. Securities and Exchange Commission.

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