March 20 Proxy advisors should share drafts of
their work with public companies, and fund managers should be
aware of proxy advisors' potential conflicts of interest,
according to proposals offered by the U.S. Chamber of Commerce
The ideas are contained in a "best practices" document the
influential trade group issued in its latest effort to limit the
influence of firms whose proxy voting recommendations are often
critical of its corporate members.
Tom Quaadman, vice president of the Chamber's Center for
Capital Markets Competitiveness, said the ideas were meant to be
voluntary, in lieu of formal rules from an agency like the U.S.
Securities and Exchange Commission.
"We don't think that regulation is the answer here,"
Quaadman said in an interview. "We think this can be done by a
collaborative effort by all the parties."
The group, which represents 3 million businesses, suggested
in the document that proxy advisors like closely held Glass,
Lewis & Co and the Institutional Shareholder Services unit of
MSCI Inc should provide public companies with drafts of
their research reports, giving them time to identify "any
factual inaccuracies or other concerns."
Advisors' research reports and recommendations that
institutional shareholders vote "against" individual directors
or prominent proxy resolutions can prove quite controversial.
Both Glass, Lewis and ISS had recommended shareholders of
Hewlett-Packard Co oust directors at a meeting being
held on Wednesday, for instance.
The proxy advisors have defended their work and drawn some
support from big clients like mutual fund companies, which can
wield much influence in corporate elections.
For mutual fund companies and other asset managers like
hedge funds and pension funds, the Chamber offered other
guidelines that could also diminish the advisors' influence.
For instance, the Chamber suggested that in deciding whether
to hire or retain a proxy advisor, asset managers should
consider whether it discloses potential conflicts of interest.