Spectrum Group's new report on its recent survey of more than 5,100 qualified retail investors about the role and impact of proxy advisory firms on the proxy voting process reveals these and other key findings:
- To establish a baseline, at the start of the survey, 64% of respondents said they supported increased SEC oversight and regulation of the proxy advisory industry; nearly all of the balance (32%) recorded "don't know" responses.
- Levels of support for oversight increased as respondents learned more information during the survey such that, upon completion of the survey, 85% of respondents supported SEC oversight of proxy advisors to some degree; 1% did not; and 14% were unsure.
- Of the respondents self-characterized as informed about proxy advisors at the outset, support of increased SEC oversight and regulation increased with the respondent's level of familiarity.
- 91% of respondents indicated a preference for wealth maximization over political or social objectives.
- 74% of respondents said they were concerned that recommendations from Glass Lewis will be influenced by the ESG policies of their owners; just 6% said they were not concerned at all; and 19% were unsure.
- Most respondents supported SEC action to address conflicts of interest, robo-voting, proxy advisor process transparency, proxy report errors, and opportunities for issuers to respond to adverse proxy recommendations - topics that were raised in the course of the SEC's Proxy Process Roundtable.
- 58% of respondents said that companies should have more than one week to evaluate a proxy advisory firm notice of an adverse recommendation and interact with the firm to correct those potential issues; 18% said 3 days to one week; and 19% were unsure.
- Respondents identified the following as likely to increase their participating in the proxy voting process: additional investor education about the current proxy process (42%), better communication & coordination among proxy participants (40%), changes to SEC rules to promote retail participation (21%), and increased use of technology (e.g., blockchain) (19%).
Notably, approximately 80% of respondents voted shares in the past or are interested in voting in the future, 12% don't know if they're interested, and only 8% have not voted and are not interested in voting in the future.
Respondents had at least $10,000 of assets in any combination of stocks, bonds, mutual funds and exchange-traded funds (ETFs) held in various account types, e.g., defined contribution plans (such as 401ks) (67%), advisory or managed accounts (23%), IRAs (61%), and other similar investment accounts.
See also the data file and Spectrem's release; SEC Investor Advocate Rick Fleming's contrary views articulated at the SEC Speaks conference earlier this week (which don't consider the views of retail investors); this letter to SEC Commissioner Roisman on proxy advisory firm oversight recommendations from the Shareholder Communications Coalition (the Society and NIRI); this CNN Business op-ed: "These firms have an outsize influence on Corporate America. The SEC needs to regulate them"; and additional information & resources on our Proxy Advisors and Proxy Plumbing pages. This post first appeared in the weekly Society Alert!