Proxy Access in the United States: Revisiting the Proposed SEC Rule

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Proxy access refers to the ability of shareowners to place their nominees for director on a company’s proxy ballot. This right is available in many markets, though not in the United States. Supporters of proxy access argue that it increases the accountability of corporate boards by allowing shareowners to nominate a limited number of board directors. Afraid that special-interest groups could hijack the process, opponents of proxy access are also concerned about its cost and are not convinced that proxy access would improve either company or board performance.

The US Securities and Exchange Commission (SEC) most recently attempted to give shareowners proxy access in 2010, when it passed a proxy access rule (Rule 14a-11). A lawsuit challenging the rule succeeded when the US Court of Appeals for the District of Columbia Circuit vacated the SEC’s proposed rule, holding that the SEC had failed to adequately assess the economic effects of the proposed rule. The SEC did not appeal the court’s decision.

This report attempts to address the questions raised by the DC Circuit Court by analyzing event studies on the costs and benefits of proxy access. Taken together, these studies examine whether proxy access, on the particular event date, would have been beneficial or harmful to market performance, stock performance, and board performance and whether the potential use of proxy access by special-interest groups would have reduced shareowner wealth.


About the Author(s)

Chiara Trabucchi
Ellen Fitzgerald
Matt Orsagh
Matthew Orsagh CFA, CIPM

Matthew Orsagh, CFA, CIPM, is a senior policy analyst for the CFA Centre for Financial Market Integrity, where he serves as spokesperson for the CFA Centre, identifies and develops new corporate disclosure project ideas, and promulgates Capital Markets Policy Group corporate disclosure positions, policies, and standards. Previously, Mr. Orsagh served as a research analyst at Governance Metrics International. He has appeared on CNN's In the Money and National Public Radio's All Things Considered. Mr. Orsagh holds a BA in communications and English from the University of Notre Dame and an MBA in finance from Georgia State University.

Bob Dannhauser
Bob Dannhauser FRM, CAIA, CFA

Mr. Dannhauser directs the global private wealth management practice of CFA Institute. Based in New York City, he is responsible for content and programs that address the most relevant issues confronting private wealth practitioners and advocating for best practices that uphold fairness and integrity.

Before assuming this role in 2016, he was Head of Global Capital Markets Policy, leading a team that addresses policy issues relevant to the integrity of the world’s capital markets, and oversaw regulatory outreach efforts in Washington DC and Brussels. His team developed thought leader research and analysis on a variety of current issues including corporate governance, systemic risk, investor protection, market structure, and the regulation of the investment management profession. Previously, he was responsible for the organization’s highly respected standards of practice which provide guidance to individuals and firms grappling with ethical problems in the investment industry. Mr. Dannhauser is a member of the investment committee overseeing the CFA Institute operating reserve and previously chaired the organization’s defined contribution investment committee.

Before joining the CFA Institute staff in 2007, he held a variety of client portfolio management, sales and marketing positions in the institutional investment arena.
Mr. Dannhauser earned a MBA in finance from the Johnson Graduate School of Management at Cornell University, and a MPH in health systems and policy from the University of Medicine and Dentistry of New Jersey. He earned a BA in political science from George Washington University. In addition to holding the Chartered Financial Analyst designation, he earned the Financial Risk Manager certification from the Global Association of Risk Managers as well as the Chartered Alternative Investment Analyst designation from the CAIA Association.

He is a member of CFA Society New York (formerly NYSSA) and chaired the predecessor committee of NYSSA’s Sustainable Investment Committee from 2003-2005.

James Allen CFA

Additional Information

Published by CFA Institute

141 pages

ISSN: 978-0-938367-97-0

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