The percentage of U.S. retail investors who support increased Securities and Exchange Commission oversight of proxy advisors has grown even larger, according to a new study released Friday by wealth management research specialist Spectrem Group.
Seventy-five percent or more of the 5,000 retail investors polled online Nov. 13-21 supported many of the specific amendments proposed by the SEC, Spectrem said in its latest white paper, "Reclaiming Main Street: SEC hears retail investors' cries for proxy advisory oversight."
The study provided an update on the views of retail investors about proxy advisors and shareholder proposals from a previous April 2019 survey by the firm. The new survey results reflected "heightened awareness and apprehension among respondents," according to Spectrem.
In November, SEC commissioners approved several proposals affecting proxy voting practices included in Section 14A-8 of the Securities Exchange Act of 1934, raising the requirements for submissions and therefore limiting them. The proposals are out for a 60-day public comment period.
"Investors were asked both before and after the survey whether they support increased SEC oversight of proxy advisors," the new Spectrem report says. "At the onset, nearly two thirds of respondents indicated their support; by the end, that share increased by 12 points," it notes, adding: "This shows that the more investors learn about proxy advisors, the more they support reasonable regulations of the firms. Of the rules proposed by the SEC, investors are most supportive of requiring proxy advisors to disclose conflicts of interest, and of requiring them to post a hyperlink directing investors to a written statement addressing the proxy vote advice, to allow companies to respond to the proxy advisor reports."
At the start of the new survey, 69% of the retail investors supported increased SEC oversight of proxy advisors broadly, according to Spectrem. Following the survey, that support jumped to 81%, it said.
Among the other key findings of the new study was that 90% of retail investors supported disabling robo-voting when a hyperlink to additional information is included in proxy advisor reports. Meanwhile, retail investor support for the SEC's shareholder proposal amendments was 68% or higher, with investors at least twice as likely to indicate they expected to engage more with companies as a result of the changes, Spectrem found.
Other findings of the survey included: 79% of retail investors supported the SEC's new proposed rule requiring proxy advisory firms to give companies an opportunity to review and provide feedback on advice before issued; 78% supported the proposed rule to require proxy advisors to disclose conflicts of interest; 75% supported the proposed hyperlink rule; 77% supported the proposed rule requiring shareholder-proponents to provide their identity, role and interest when submitting proposals; 73% supported requiring shareholder-proponents to meet with companies to discuss proposals; 71% supported the proposal to limit proposals to one per shareholder; 68% favored increased thresholds for resubmission of previously failed proposals; and 72% supported modernizing criteria requiring shareholders to own higher amounts of shares for longer to be eligible to submit proposals, the firm said.