House of Reps Eyes SEC and Glass Lewis and ISS Approach to New SEC Policy

House Financial Services Committee Talks SEC

The House of Financial Services Committee is holding a hearing this Wednesday entitled, A New Day at the SEC: Restoring Accountability, Due Process, and Public Confidence.

Review of bills: The agenda for the hearing includes a list of bills for the committee to review, all pertaining to increasing the review and oversight of SEC policy and rulemakings; including extending all SEC rulemaking periods to at least 60 days and requiring the Comptroller General of the US to review the economic analysis of past SEC major rules.

Partial shutdown: The government entered a partial shutdown on Saturday, which has yet to impact the hearings.

Glass Lewis’ and ISS’ Approach to Shareholder Proposal Omissions

Glass Lewis and ISS have reported their procedures for when companies leave off shareholder proposals from their ballots this proxy season.

Case-by-case: Glass Lewis reported to Responsible Investor that they do not have a company-wide policy for “evaluating the merits of each omission,” rather they will “review these types of proposals on a case-by-case basis.” Glass Lewis will report each omitted proposal, an explanation of the proposal, the basis for omission, and note if proponents or investors have raised concerns over the omissions.

Fundamental right of share ownership: ISS reported that they are requesting companies who use the “ordinary business” grounds to exclude a proposal to send in their justification. If SEC or court precedent exists, ISS asks companies to explain how this case differs. ISS stated if a company fails to give “a clear and compelling argument” ISS would consider this a governance failure as it violates “a fundamental right of share ownership.” ISS will highlight this in their report and may recommend votes against agenda items, individual directors, committee members, or the entire board.

What We are Watching This Week

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