WASHINGTON, D.C.—Benjamin Schiffrin, Director of Securities Policy, issued the following statement in connection with Better Markets’ new Fact Sheet, “Proxy Advisory Firms Allow Shareholders to Effectively Oversee the Companies They Own”:

“Tomorrow, Congress will hold a hearing that appears designed to attack proxy advisory firms. But the fact is that these firms are essential to shareholders exercising effective oversight of the corporations they own. That’s because these firms provide shareholders with independent advice and unbiased recommendations about how to vote on matters affecting the company. Without these firms, investors would receive only management’s perspective on the key issues a company faces, and all too often management’s perspective favors management over the long-term interests of the company and its shareholders.

“A good example is executive compensation. Proxy advisory firms often recommend that shareholders vote against bonuses for company executives in the tens of millions of dollars. They say that these bonuses are excessive. It’s not surprising that company executives therefore view proxy advisory firms as a thorn in their side and seek ways to reduce their influence. But this is precisely why proxy advisory firms are so important. These firms give shareholders the perspective they otherwise would not receive from corporate leaders.

“The proxy advisory industry, which is dominated by two firms, may well benefit from more firms and greater competition. But as a general matter proxy advisory firms are essential to shareholder engagement. Congress and the SEC should tread carefully before taking any steps to reduce the ability of shareholders to receive independent advice and analysis that is untainted and is not skewed by the inherently biased management of a company.”

The Fact Sheet is available here.

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.