The U.S. proxy system is set to undergo a comprehensive review for the first time in nearly 30 years. Last week, the Securities and Exchange Commission (SEC) voted unanimously to issue a concept release “seeking public comment on the U.S. proxy system and asking whether rule revisions should be considered to promote greater efficiency and transparency.”1 This so-called “proxy plumbing” concept release marks the beginning of what will certainly be a years-long process with an emphasis on fact-finding to examine the effects of shifts in “shareholder demographics, the structure of share holdings, technology, and the potential economic significance of each proxy vote.”2
Major reform of the voting infrastructure is long overdue. Significant structural and procedural changes in shareholding and proxy voting over the last 30 years have fundamentally altered and expanded the proxy landscape.3 The SEC estimates that more than 600 billion shares are voted every year at more than 13,000 shareholder meetings.4 The concept release, which is necessarily wide-ranging, welcomes comments on all aspects of the proxy process and solicits comments on specific issues in three general areas: (1) the accuracy, transparency and efficiency of the voting process; (2) shareholder communications and shareholder participation in the proxy process; and (3) the alignment of voting power and economic interest.
Accuracy and Transparency
