Votermedia Finance Blog

February 19, 2010

Proxy Voting Transparency Proposal

Filed under: Uncategorized — Tags: — Mark Latham @ 8:58 pm

I’ll be presenting this proposal in the SEC Investor Advisory Committee meeting this Monday February 22 between 9:30 and 10 a.m. local time (in DC). [See next post for agenda, schedule & webcast links.]

Investor Advisory Committee
Investor as Owner Subcommittee

Proposed Resolution on Tag Data for Proxy and Vote Filings
February 22, 2010

The Investor Advisory Committee recommends that the SEC staff, as part of its review of the
US proxy voting system, study the costs and benefits of mandating a standardized tag-data
format1 for the following three filings:

1. Proxy filings (DEF 14A). Especially useful for investors would be the information
disclosed regarding directors (such as other board service, executive roles, affilations /
transactions with the company, committee memberships, etc.), governance attributes
of the firm, compensation data, peer groups, audit information, key accounting issues
and the details of each item to be voted on. This would facilitate a variety of investor
search purposes, including better information on which to make voting decisions,
enhanced ability of shareholders to assess the role of directors across the public
markets, improved opportunity for investors to compare and contrast important
governance attributes across firms and track changes in governance trends and
automated matching of voting items in a proxy filing to votes in N-PX filings.

2. N-PX filings of mutual fund votes. The Commission does not now specify technical
formats for release of N-PX filings. As a result, fund companies produce text files in
multiple layouts. Standardization using a tag data format would permit investors and
third party market bodies to make voting data available to the public in convenient and
intelligible ways at reduced costs. Format inefficiencies have frustrated the
fundamental goal of this disclosure requirement.

3. Corporate filing of voting results. These are now in 8-K filings in untagged text format.

The Committee intends that costs of developing common taxonomies for tag formatting be
borne by the industry or a private sector body rather than the SEC itself.

Tag formatting can reduce error rates inherent in processing various text formats that may
change from time to time. It would also facilitate research on mutual fund voting, such as
these two articles by University of Chicago Professor Gregor Matvos and Stanford University
Professor Michael Ostrovsky: “Cross-Ownership, Returns, and Voting in Mergers”, Journal of
Financial Economics
, v.89(3), September 2008, pp. 391-403 and “Heterogeneity and Peer
Effects in Mutual Fund Proxy Voting”, Journal of Financial Economics, forthcoming. These
authors concur that a standardized, computer-readable format for voting data would make
further research much easier in future.


1 For example, XBRL. Note that the Open Compliance & Ethics Group ( has already drafted a proposed XBRL
taxonomy for N-PX filings, and Broadridge has drafted a proposed XBRL taxonomy for proxy filings (DEF 14A). The XBRL US
organization plans to have a production-ready taxonomy for DEF 14A by November 2010.



  1. Great proposal — good luck! In case you haven’t seen it, there’s lots of info about XBRL here, , and here, There’s also a post on your post at , and information about the challenges of implementing XBRL in the XBRL Matters group on LinkedIn. The benefits of structured information have been proven time and again, with the structure of disclosure under U.S. GAAP dating back to the SEC’s founding being exhibit 1. Now that technology supports faster, better, and cheaper disclosure of non-financial information, the interests of investors can be served in new and improved ways.

    Comment by Paul Wilkinson — February 20, 2010 @ 3:22 pm

  2. I’m glad that your proposal is for the SEC to study the costs and benefits of mandating a standardized tag-data for proxy filings and not just mandate it without first doing a cost-benefit analysis. As we’ve seen from the initial phase of XBRL, the costs and burdens on registrants are not insignificant. At the same time, registrants are being asked to produce increasing amounts of disclosures in decreasing amounts of time. We need to be mindful of the importance of the quality of disclosures being produced in the face of demands for higher volumes of disclosures in more subject areas (like climate change, use of raw materials, and risk management), and in “real time.” To the extent investors want more meaningful disclosures and better analysis by registrants, instead of just a mass data dump, in-house time and resources are at a premium, especially in an economic environment where companies are hard-pressed to spend more in these non-operational functions. Also, we all need to be honest with ourselves regarding how widely standardized tag-data is being used and will be used. Is this really an “If you build it, they will come” situation? If it’s only benefitting a small sliver of the investor community who have other ways of getting substantially equivalent information at not much additional cost, we have to make wise decisions on who should be bearing the cost burdens. While clearly we want to do what’s practical to level the playing field for smaller investors who cannot afford the same tools as large institutional investors, there does have to be some degree of “user pays” in all of this, given that registrants’ resources to produce the information are limited. If the decision is that registrants must bear more of the cost burdens, then investors and regulators will have to rethink some of the time requirements to produce the information. Even in a world of unlimited resources, there is no substitute for time when it comes to producing information that is accurate and meaningful to investors.

    Comment by Doug Chia — February 21, 2010 @ 1:01 pm

  3. Thanks for your efforts on this important issue. I’m delighted the Advisory Committee took your recommendation and was happy to see your close work with Abe Friedman and others on the initiative.

    Comment by James McRitchie — February 22, 2010 @ 3:45 pm

  4. […] at time 13:50 of “II. Investor As Owner Subcommittee Recommendations”, I presented the Proxy Voting Transparency proposal, which passed unanimously. I’m excited about how this will empower individual investors […]

    Pingback by SECIAC Feb 22 Meeting Video « VoterMedia Finance Blog — March 3, 2010 @ 2:31 pm

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