Because I already have written three times on this ongoing saga, I wanted to provide an update. Recall that in August 2019, the SEC voted 3-2 to publish interpretive guidance on proxy advisory firms such as ISS and Glass Lewis (SEC Votes to Provide Interpretive Guidance on Proxy Voting Responsibilities and Proxy Advisory Firms). Because the SEC styled this as an interpretation of existing rules, rather new rules, the interpreted rules became effective immediately. Then on Halloween, ISS sued the SEC in the federal district court in Washington, D.C., claiming that the SECs’ interpretative guidance was unlawful and should be set aside (SEC Rules on Proxy Advisory Firms Starting to Get Interesting!). In November 2019, the SEC held an open meeting and formally proposed new rules on proxy advisory firms, similar to the terms of the interpretive guidance (SEC Proposes Rules on Proxy Advisory Firms).
The update is that last month, the SEC and Chairman Clayton filed an unopposed motion to hold the ISS’s lawsuit in abeyance pending the conclusion of ongoing SEC rulemaking. “The parties agree that the case should be held in abeyance until the earlier of January 1, 2021 or the promulgation of final rules.”
In a sense, this is no news, it just means that the parties have agreed to let the rulemaking process take its course. But seldom does an executive compensation topic create such controversy and suspense. The comment period on the proposed rules closed last week, so stay tuned. I know that I am on the edge of my chair!
-Mike Melbinger, CompensationStandards.com February 6, 2020