Top U.S. business groups launched a six-figure ad campaign blasting proxy-adviser firms on Wednesday as the Securities and Exchange Commission preps for a roundtable on shareholder voting at publicly traded companies.
The ramp-up in advocacy from the U.S. Chamber of Commerce and the National Association of Manufacturers comes amid a push by lawmakers to require advisory firms such as Glass Lewis and Institutional Shareholder Services to register with the SEC and disclose potential conflicts of interest.
The companies, which provide recommendations on how investors should vote on matters like executive pay, have pushed back strongly against the criticism. ISS previously said it has “robust policies and procedures to mitigate any potential conflicts of interest,” while Glass Lewis told Sen. Dean Heller, R-Nev., earlier this year it already discloses any possible conflicts.
Recommendations from the firms are routinely followed by large institutional investors such as pension funds.
In the ads, NAM and the Chamber nonetheless warn that the two are a “silent threat” to worker retirement plans.
Glass Lewis did not respond to requests for comment. ISS said the campaign is part of “a desire to see no shareholder dissent on CEO pay” and other issues.
“Americans invested in public companies that are members of the Chamber and NAM deserve to know that their hard-earned money is being wasted on a Washington lobbying campaign and advertising to silence their voice on important voting matters,” Lorraine Kelly, head of governance business at the firm, wrote in an emailed statement. “It is entirely acceptable and, in fact, expected for investors entrusted with shareholders’ money to challenge the management of corporations.”
Lawmakers should not “heed the misleading calls from special interests,” she added.
The new ad campaign, which totals close to $1 million, comes after the manufacturer’s association last week urged the SEC to increase oversight of the two advisers, calling the current model “far from a neutral, fact-based process.”
The SEC is slated to hold its roundtable on Nov. 15.
