Policy: Governance

Introduction

There is general agreement among investors that good governance is important for protecting long-term shareowner value. Conversely, companies with governance or compensation problems set off warning lights for investors.  Governance criteria, including shareholder rights, executive pay, transparency and anti-corruption concerns, and board issues, applied to $7.70 trillion in assets under management in 2016.

Priority Areas of Action

Shareholder Proposal Reform: The shareholder proposal rule is a vitally important, market-based mechanism for shareholders of all sizes to communicate with companies, directors and other shareholders. For decades now, the rule has facilitated dialogue between shareholders and companies and provided insights on issues of interest to shareholders and the marketplace.  This system is efficient and effective, and should not be changed.

Say on Pay: “Say on Pay” mandated by Section 951 of the Dodd-Frank Act has been a vital check and balance on executive pay packages and programs. Today US companies clearly are comfortable with an annual say-on-pay vote. According to a report issued by Compensation Advisory Partners, nearly all S&P 500 companies now have annual say-on-pay votes, with 93 percent of S&P 500 companies (as of May 15, 2017) seeking approval in 2017 of annual say-on-pay votes, up from 70 percent in 2011.

Sustainability and Political Contribution Disclosure: Investors are increasingly integrating environmental, social and corporate governance (ESG) information into the investment process, but are still hindered by a lack of comprehensive, comparable and reliable data. The voluntary nature of corporate sustainability reporting means that the information available to investors remains inconsistent and incomplete. There needs to be more robust and effective disclosure.

Proxy Access: We believe granting long-term shareholders the right to nominate directors, thereby ending the de facto monopoly the board and management have in picking director slates, is an important component of achieving the goals of effective oversight of US publicly traded companies’ boards and of broad financial reform.

Political contributions reporting: Investors should not be forced to go door-to-door with individual companies to find basic information on how corporate dollars are spent in the political arena. Corporate political spending is risky business, and opacity in corporate political spending only heightens these risks. Political spending disclosure is simply good risk management, as demonstrated by the Fortune 500 companies that now publish their political contributions.  Clear, consistent, and uniform reporting of political spending by public corporations should be required.
 
 
Letters and Statements

US SIF Letter Opposing Proxy Advisor Legislation (HR 4015) 12/2017
US SIF Letter on Section 844 of the Discussion Draft of the Financial CHOICE Act 04/2017
Joint Report - The Business Case for the Current SEC Shareholder Proposal Process 04/2017
Joint Report on SEC Disclosure 09/2016
US SIF Comment Letter on Regulation S-K Disclosure 07/2016
US SIF Letter to the SEC on Staff Review of Rule 14a-8(i)(9) 07/2015
US SIF Letter to SEC on Disclosure Effectiveness Review 09/2014
Investor Letter to the SEC in support of political spending disclosure rule  01/2014
US SIF Statement on Shareholder Resolutions and Corporate Responsibility 03/2013
US SIF Letter to the Editor regarding Washington Post piece, "More shareholders call on companies to disclose their political spending" 05/2012
Comment Letter to SEC on Corporate Political Spending 11/2011
US SIF Comments to the SEC on the U.S. Proxy System  10/2010
US SIF Letter to the SEC on Proxy Access  08/2010
US SIF Letter to SEC on Proxy Disclosure and Solicitation Enhancements 09/2009
US SIF Letter to SEC on Proxy Access 08/2009
US SIF Letter on SEC releases dealing with the shareholder resolution process and access to the proxy  09/2007