Efforts to regulate proxy advisory firms have progressed further in Europe than in the United States. In 2014, the European Commission proposed that the European Parliament and EU Council revise existing corporate governance directives. The proposal would require proxy advisors to disclose, on an annual basis:

• The essential features of the methodologies and models they apply;

• The main information sources they use;

• Whether and, if so, how they take national market, legal, and regulatory conditions into account;

• Whether they have dialogues with the companies that are the object of their voting recommendations, and, if so, the extent and nature thereof;

• The total number of staff involved in the preparation of the voting recommendations;

• The total number of voting recommendations provided in the last year. 

Further, proxy advisors would be required to “identify and disclose without undue delay to their clients and the company concerned any actual or potential conflict of interest or business relationships that may influence the preparation of the voting recommendations and the actions they have undertaken to eliminate or mitigate the actual or potential conflict of interest.” Would you favor such a reform for the United States?