Last week I attended the National Conference of the Society of Corporate Secretaries and Governance Professionals in Chicago. It was a great conference – wonderful, substantive programs and a chance to catch up with many friends and colleagues.

With some exceptions.

One exception was the opening speech by SEC Chair Mary Jo White. Now don’t get me wrong – I’m a fan (particularly when Senator Warren and others go after her – as in my last post). Among other things, I love the fact that she speaks clearly; unlike so many others in Washington, whose statements make me think I know what it must have been like to visit the Delphic Oracle, she’s perfectly straightforward about her views.   It was her views – or at least most of them – that I didn’t like.

Chair White addressed four topics, and on all but one of them she basically told the corporate community to give up. Her topics and views can be summarized as follows:

  • Interim Vote Tallies: This issue reared its ugly head a couple of years ago, when Broadridge decided it would no longer give interim vote tallies to a shareholder proponent engaged in an “exempt solicitation.” While there are two legitimate sides to this story, Chair White said companies should “consider leveling the field by agreeing or consenting to a mechanism that provides the interim vote tallies to shareholder proponents”. In other words, give up.
  • Universal Proxy Ballots: For reasons I do not understand, the investor community seems to believe that this is the most important reform ever. Or at least that seemed to be the case before proxy access became this year’s burning issue. Frankly, universal ballots don’t strike me as being all that important; among other things, they only become an issue in proxy fights, which do not impact many companies. However, here again Chair White said companies should “[g]ive meaningful consideration to using some form of a universal proxy ballot even though the proxy rules currently do not require it”. In other words, give up.
  • Zombie Directors: Chair White said that when the board decides that a “zombie director” should stay on, it owes its shareholders a decent explanation as to the reasons for its decision. So far, so good; I did some research on this topic a few years ago and was unhappy to learn that all but one company said the reason for retaining the zombie was that the board deemed it to be “in the best interests of the company and its shareholders”, which strikes me as blazingly lame disclosure. However, Chair White went beyond this and said “[s]hareholders are…likely quite willing to listen to reasonable explanations…. [T]hey could evaluate the additional information and express disagreement with the decision not to remove the board member, which would provide further information for you to consider about your shareholders’ views on removal”. Well, there I differ. Shareholders are right in thinking that the least a director can do is attend 75% of the meetings he/she is supposed to attend. But in my experience, there is no explanation that will satisfy most shareholders. Bottom line, I’m troubled by the Chair’s assumption or belief that investors are rational but companies, well, not so much.
  • Shareholder Proposals: Chair White discussed this year’s kerfuffle on proxy access and the SEC’s suspension of no-action relief under Rule 14a-8(i)(9). However, here again she put the onus on companies. “[C]ompanies…should consider other possible steps they could take in response to a proposal rather than just saying no. Sometimes, foregoing technical objections could be the right response. Letting shareholders state their views on matters may be a relatively low cost way of sounding out and preventing potential problems down the line”. Now I’m a firm believer in engagement, but it bothers me that companies are repeatedly told that they should not exercise their legal rights while shareholders should feel free to exercise theirs. In fairness, Chair White did suggest that shareholder proponents ought to behave like adults, but at least some of us felt that was an afterthought.

In case you think I’m exaggerating, you might be interested to know that, following the Conference, the Council of Institutional Investors sent a letter to Chair White that expressed gratitude “for highlighting four of [our] proxy related priorities in your remarks last week before the Society of Corporate Secretaries and Governance Professionals.”

Sounds like a thank you note to me. Need I say more?