The Carpenters, 1970
Part One of a Two-Part Post
This morning, the SEC held an open meeting to issue what’s called a “concept release”, the Commission’s mechanism for considering rule revisions by floating a first draft of policy open to public comment for 90 days. In this case, the SEC voted unanimously to endorse the release, which focused on the proxy voting process. It proposed measures for greater efficiency and transparency in the US proxy system, and accuracy and integrity of the shareholder vote. In keeping with the spirit of transparency, accountability, and engagement championed by the Obama Administration, the SEC Webcast the meeting. In both substance and style, it was important for several reasons, and reminded me of that 1970s hit Carpenters song, “We’ve Only Just Begun” (which was originally a song for a bank commercial, ironically enough).
In terms of substance, the concept release document (which now is available on the SEC’s “Concept Releases” page) will affect corporate governance through the following three broad areas: proxy voting improvements; shareholder communication and participation; and linking voting power to economic interest (including the role of proxy advisory firms). Today’s New York Times’ DealBook provided a brief overview. Yesterday, James McRitchie of Corpgov.net provided a glimpse, sharing portions of a more detailed post by Jeff Morgan of the National Investor Relations Institute about its scope. (Tune in tomorrow for Part Two of this post reviewing the substantive elements of the proposed measures.)
In terms of style, the concept release process displays two elements that fulfill the SEC’s commitment to greater participation, representation, and accountability:
- Webcasting: Using the web to broadcast meetings represents a first step toward more real-time engagement, though its unidirectional nature (“from one to many”) lacks the more robust interactivity of Web 2.0 tools that enable two-way or multidirectional communication;
- Public Comment: This allows investors and other stakeholders to voice their ideas and opinions in developing new policy, a dynamic enhanced by the Investor Advisory Committee, established last year and contained in Dodd-Frank as a permanent feature.
Yet, as the song says, “we’ve only just begun…” There are new horizons ahead for the SEC and the rest of us, as digital tools make possible all kinds of creative engagement, ranging from open Wikis that define inscrutable terms in plain English, to interactive forums that inform broader groups of citizens and stakeholders, to systematic outreach on the part of government officials to civilians who often are shut out of the process. At a time when 4 out of 5 Americans express grave doubts that Washington can do much to avert a later crisis, the SEC is on a promising path — but it will need wider support. Perhaps it’s time for thinking about how web-based social networks and software could be deployed in service to public engagement. Consider this an open invitation to all of you, to join in this new venture.
