The comment period for commenting on the proxy system is approaching
Corporate secretaries and board members, this is your call to action. The SEC is in the process of forming its policy on a revamp of the proxy system. Whether you call it proxy plumbing, proxy mechanics or something else this could be one of the most important things the Commission has done in the past decade, or for the coming decade for that matter. It is going to have serious consequences for how companies interact with shareholders and secure ever more important proxy votes.
Given the importance of the proposal, and the intense attention it has received, I am shocked at the tiny number of companies that have submitted comments on proxy reform. Left to its own devices the SEC is not going to get this right. It’s not its fault, the staff just don’t have the full picture. If you don’t tell them then who will? Silence, while often golden, in this case will guarantee we end up with a far from optimal result.
The lack of willingness to act reminds me of the line often – but incorrectly - accredited to Irish philosopher and politician Edmund Burke: ‘All that is necessary for the triumph of evil is that good men do nothing.’ While I would not go so far as to call the existing proxy system evil, it is definitely dysfunctional and benefits no one except a few embedded service providers. Good men (and women), you need to do something.
If you don't make an effort to do anything about it then you cannot complain about it afterwards. You have exactly 21 days to comment. So get to it.
But don't just take my word for it. Last week, at the Corporate Secretary Think Tank in Chicago, a several speakers and attendees urged companies to provide comments to the SEC.
Sensing the importance of the issue, and concerned by the lack of companies offering their perspective, a coalition of service providers and industry experts launched a new website to help you – the corporate secretary – write and submit a comment letter. Reformtheproxysystem has a list of all letters currently filed with the SEC – an embarrassingly low 44 since June and only 12 since the official passage of Dodd-Frank – so you can see what others are doing. If this isn’t enough, there is even a fully animated cartoon highlighting some of the issues. It is unlikely to become a Disney-backed smash hit but it is somewhat entertaining.
Sadly there is not a lot of help. Only four companies, well individuals from public companies, have submitted comments. I know some of you are concerned about going on the record with opinions ‘for’ or ‘against’ any elements of the current system. That is why you all need to comment. There is some safety in numbers.
Simply seconding a letter already submitted by your industry body or someone else is not really going to help. I know you all have opinions – trust me I hear them all the time – so get out there and write it down. What harm can it really do? I know there are some powerful forces that don't want the system to change because they make a lot of money from the status quo. But there are other influential players that are pushing for change - mostly because they too stand to make a lot of money if the system of access to shareholders is opened up. The point is, there are a lot of 'experts' claiming to have your best interests at heart. Do they really? I think you know the problems better than anyone so don't let these people speak for you.
There are other sources out there to help as well. The NACD, Society of Corporate Secretaries and others can provide information on comment letters, and help you submit, or include your comments in their own letters.
You can submit online or in writing to: Elizabeth Murphy Secretary, Securities and Exchange Commission 100 F Street NE Washington, DC, 20549.
So as soon as you finish ready this, start thinking about what you really want to do for your company and your shareholders and help change the system for the better. Please send me your thoughts and comments on these or any other topics.
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