Analysis-New Trump order reining in proxy advisers could weaken shareholder rights

By Ross Kerber

Dec 16 (Reuters) - A caller White House bid aiming to rein successful proxy advisory firms marks a large measurement successful a broader Republican effort to weaken the relation of investors and enactment much powerfulness successful the hands of CEOs, firm governance analysts and attorneys said.

U.S. President Donald Trump told the U.S. Securities and ​Exchange Commission and different agencies past week to summation oversight of proxy advisers Institutional Shareholder Services and Glass, Lewis & Co, which assistance communal money companies and different large organization investors ‌decide however to ballot astatine firm elections.

Their clients clasp important positions successful immoderate of the biggest Fortune 500 companies successful the world, making their proposal influential.

Trump's bid said the proxy firms often usage their powerfulness "to beforehand and prioritize extremist politically-motivated agendas," ‌including supporting biology and societal issues astatine the disbursal of shareholder returns. The directive goes to the bosom of a statement that has divided U.S. and European shareholders: however overmuch should issues similar clime alteration oregon workforce diverseness origin into concern decisions.

"This is astir a batch much than fiduciary responsibility. This is geopolitical warfare done fiscal markets," said Sarah Wilson, CEO of British proxy advisor Minerva Analytics. She said Minerva's clients, mostly based successful the European Union and United Kingdom, privation to support their Russell 3000 holdings but interest Trump's bid and akin actions by Republican-led states could interfere with their concern process.

"Our clients ⁠aren't rabid socialists astatine the gates, they privation bully returns implicit ‌time that are good risk-adjusted," Wilson said.

Trump's order, among different things, directs the SEC to see "revising oregon rescinding each rules" related to shareholder proposals, worrying capitalist activists 1 of their cardinal tools to unit companies could beryllium taken away.

Shareholders often workout their opinions by backing proxy measures calling for things similar limits connected ‍CEO wage oregon connected voting for committee directors, seen arsenic expanding accountability. If the agencies travel done with Trump's order, it could service to trim shareholder powerfulness by making it harder for investors to unit companies done proxy campaigns.

Sanford Lewis, an lawyer who represents shareholder activists, said the bid is based connected the premise that issues similar diverseness oregon the situation don't subordinate to fiscal performance, adjacent though galore investors and proxy advisers bash ​think beardown ESG policies amended a company's semipermanent value.