Eumedion not in favour of European regulation for proxy advisors
22-06-2012
Eumedion is not convinced that there is sufficient supportive evidence for regulatory interference in the small and vulnerable proxy advisory market. Clearly, introducing prescriptive regulatory measures on the voting advisors would be too severe. If it is decided to take EU policy action, Eumedion has a strong preference for non-binding guidelines (code of conduct) or recommendations to promote the quality and integrity of proxy advisory firms. This is the key message of Eumedion's comments on ESMA's Discussion Paper ' An Overview of the Proxy Advisory Industry; Consideration on Possible Policy Options'. The comments were submitted today.
Eumedion believes that the influence of proxy advisors on the voting outcomes of AGMs should not be exaggerated. A large number of institutional investors who subscribe to voting advices receive so-called customised advices: tailor-made advice, based on the voting policy of the institutional investor. Moreover, as Eumedion's evaluation report of the 2012 proxy seasons shows: in a large number of cases institutional investors do not follow the proxy advices in case a controversial item is on the AGM agenda. These controversial items are non-routine management proposals and are important for the long-term success of the company. However, Eumedion would encourage the proxy firms to draft a code of conduct in which at least the following issues are addressed: possible conflicts of interest and transparency on the consultation process with the issuer regarding the draft advice.