Lorraine Kelly, head of governance business at ISS, writes in Barron’s about the SEC’s proxy advisory rule. An excerpt:

Since last year, the Securities and Exchange Commission has been swept up in a well-funded corporate lobbying campaign pressing for enactment of onerous regulations that will make it more difficult for shareholders to voice disagreement with corporate management on issues such as payments to CEOs.

That campaign culminated last week with the SEC issuing final rule amendments regarding the provision of proxy voting advice, as well as supplemental guidance to investment advisors ­regarding their responsibilities with ­respect to proxy voting. While the final rules may appear less draconian than originally envisioned, they do serve as a blow to institutional investors seeking to judiciously ­monitor portfolio companies. Despite reducing the patently unconstitutional burdens the commission proposed to place on proxy advisors, the final rule amendments, coupled with the updated guidance for investment advisors, will hinder investors’ ability to vote in a timely, cost-effective, and ­objective manner.

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The rules take direct aim at the ­objective and impartial work of proxy advisory firms, which are retained at the discretion of sophisticated institutional investors to help analyze governance matters at their portfolio companies, as well as the shareholder meeting proposals on which those ­investors vote. One provision would require a proxy advisor to notify its clients not just when a corporation files a rebuttal, but also when it signals an intent to file a rebuttal to the proxy advisor’s report.

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The SEC’s decision to move forward with this rule-making is a major step backward and nothing short of tipping the scales in favor of corporate managers, in the process upending the existing balance between public companies and their investor-owners.

The SEC’s New Proxy Advisor Rules Wall Off Companies From Dissent