Nareit Comments on Two SEC Proposals to Reform Proxy Rules

On Feb. 3, 2020, Nareit submitted to Comments to the SEC responding to proposals that would reform aspects of the annual proxy process for REITs and other U.S. Company’s. Nareit’s Comment on Amendments to the Shareholder Proposal Rules, set forth our strong support for the SEC’s proposal to modernize the shareholder proposal process, by increasing the ownership requirement for submitting a shareholder proposal and the voting margins required for resubmitting a failed proposal in a subsequent year. Nareit’s Comment noted that “Nareit members believe that roughly 20-30% of the proposals that they receive are resubmitted, or are substantially similar, to previously submitted proposals. They report that these “repeat” proposals are time consuming for their boards and management. They also worry that these proposals are confusing for shareholders.” Nareit has long urged the SEC to raise these two thresholds. These shareholder ownership thresholds have not been updated since 1998 and resubmission thresholds have not been updated since 1954.

Nareit also submitted a Comment supporting the SEC’s proposed Amendments to Exemptions from the Proxy Rules for Proxy Voting Advice, which would require proxy advisory firms to disclose material conflicts of interest and provide registrants with a 5-day period to review draft voting reports before they are finalized. The Proposal would also require proxy advisory firms to offer companies that dispute a voting recommendation the opportunity to have a statement of its disagreement hyperlinked to the proxy advisory firm’s report. Nareit was pleased that the Proposed Amendments address many of the concerns that Nareit cited in previous comments to the SEC regarding proxy advisory firm operations and incorporated many of our recommendations, including our requests that conflicts of interest be disclosed and that registrants be provided with a meaningful opportunity to review proxy advisory firm recommendations and correct inaccuracies prior to finalizing any reports or voting recommendations.

(Contact Victoria Rostow at vrostow@nareit.com)

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