Comptroller Stringer: Proposed SEC Rule Change a Transparent Threat by Corporate Executives to Shareholder Rights

New York City Comptroller Scott M. Stringer submitted a comment letter to the U.S. Securities and Exchange Commission (SEC) detailing his strong opposition to the proposed amendments to how shareholders, such as the New York City Retirement Systems (NYCRS), express concerns and hold companies accountable to long-term sustainable growth. Comptroller Stringer further called on the SEC to extend the comment period for the proposed amendments – “Amendments to Exemptions from the Proxy Voting Rules for Proxy Voting Advise” and “Procedural Requirements and Resubmission Thresholds under Exchange Act Rule 14a-8” – from 60 days to 120 days to allow investors to properly respond to the changes which include a total of 320 pages and hundreds of individual questions.

The proposed changes impact the Comptroller’s office’s capacity to vote on shareholder proposals and other ballot items at the companies that the NYCRS invest in – a crucial responsibility that enables investors to advocate for sound corporate governance and responsible business practices at portfolio companies – by compromising the independence of research by proxy advisory firms, reducing the amount of time available to review ballot items, and imposing additional burdens.

In the letter, Comptroller Stringer called into question the motivations behind the proposals, writing, that “to state the obvious, it is not the institutional investors who pay for and rely upon proxy advisor research who are calling for onerous regulation of proxy advisory firms. Instead, the impetus is coming from those who are the subject of their analysis, namely board members, corporate executives (and their lobbying organizations), who don’t like their performance or pay criticized.”

Comptroller Stringer further said, “the Proposal, individually and in combination with the proposed Shareholder Proposal Rule, seeks to remedy problems that do not exist and will radically tilt an already uneven playing field further in favor of corporate management and away from investors, such as the NYCRS, who actively and responsibly exercise our longstanding rights to cast informed proxy votes and to submit shareowner proposals to hold companies accountable for runaway CEO pay, excessive risk taking and irresponsible and harmful business practices.”

“The two proposals are, in effect, a two-pronged attack on rights – proxy voting and shareowner proposals – that form the heart of the NYCRS Corporate Governance Program and that the NYCRS have long relied upon to advocate for sound corporate governance and responsible and accountable business practices at our portfolio companies. We believe the NYCRS Corporate Governance Program creates and protect long-term shareholder value on behalf of our participants and beneficiaries, and to the benefit of all investors,” he added.