Investor Advisory Committee Meeting Agenda

Panel Discussion: Engaging with Beneficial Owners: Exploring Pass-Through Voting and Other Means of Reaching the Ultimate Beneficial Owner

The right to vote at a shareholder meeting belongs to the registered shareowner under state law. In the case of shares of an issuer held by a fund, the voting rights are typically directed by the fund or the fund’s manager, not by the fund’s investors who benefit from the stock’s performance. Recent innovations have opened pathways for fund asset managers to engage with fund investors—those who beneficially own the fund’s investments—in order to gain insight into those investors’ voting preferences.

Pass-through voting (or voting choice) refers to different types of mechanisms that an asset manager may use to engage with fund investors/beneficial owners of the fund’s equity investments in order to discern voting preferences or to delegate voting decisions. To date, a number of asset managers, particularly those who engage in passive management strategies, have undertaken a variety of programs to engage with beneficial owners on proxy voting decisions.

The panel is comprised of experts with varying perspectives on the proxy voting process as it applies to funds and beneficial owners and will discuss trends in pass-through voting, potential impacts of pass-through voting, and the challenges and opportunities in more directly engaging beneficial owners in decisions about how asset managers vote proxies. This panel will also address challenges and opportunities of engaging beneficial owners of equity securities, including non-objecting beneficial owners, and whether anything can be learned about engaging beneficial owners from shareholder participation and engagement in directly held investments

Moderated by:

• Jennifer J. Schulp, Director of Financial Regulation Studies, Cato Institute’s Center for Monetary and Financial Alternatives, Vice-Chair of U.S. Securities and Exchange Commission’s Investor as Owner Subcommittee of the Investor Advisory Committee

Panelists:

• Jill E. Fisch, Saul A. Fox Distinguished Professor of Business Law, University of Pennsylvania Carey Law School
• John Galloway, Global Head of Investment Stewardship, Vanguard
• Will Goodwin, Co-founder and Head of U.S. Sales, Tumelo
• Katie Sevcik, Consultant and former Chief Operating Officer, EQ Shareowner Services
• Paul Washington, President and CEO of the Society of Corporate Governance 

Panel Discussion: Beyond the GAAP: Market Perspectives on Non-GAAP Financial Disclosures

 

In the United States, financial accounting standards are developed by the Financial Accounting Standards Board (FASB), an independent body that ensures consistency and comparability in financial reporting. The Securities and Exchange Commission (SEC) requires companies to submit financial statements in accordance with U.S. Generally Accepted Accounting Principles (GAAP) as established by FASB. The GAAP standards are robust and provide specific guidance on the presentation of certain financial information. However, the regulatory system allows companies to supplement GAAP-based reporting with non-GAAP financial measures, which provide additional insight into operational performance. These measures are commonly included in Management’s Discussion and Analysis (MD&A), earnings releases, and investor presentations to help frame financial results from management’s perspective. These non-GAAP financial disclosures are valued and relied on by investors. Despite their usefulness, there is the risk that non-GAAP metrics may be presented in a way that emphasizes a more favorable outlook than GAAP reporting alone might suggest. This potential tension makes non-GAAP disclosures an area that is litigated in the courts and a topic raised by the SEC when reviewing issuer disclosures. 

The panel is comprised of practitioners with experience in dealing with issues surrounding non-GAAP from differing perspectives. The panel will discuss the following issues: What areas of current regulations on non-GAAP measures, if any, could be strengthened or clarified? Would greater standardization of certain non-GAAP measures benefit investors? What challenges or benefits exist in implementing industry-specific non-GAAP reporting guidelines? How will AI impact the quality and transparency of non-GAAP reporting and could AI be used to detect potentially misleading non-GAAP disclosures?

Moderated by:

• James Andrus, Chair of U.S. Securities and Exchange Commission’s Purchaser Subcommittee of the Investor Advisory Committee

Panelists:

•  Timothy Brown, Partner, KPMG
•  Steven Grey, Managing Principal, Grey Value Management
•  Jeff Mahoney, General Counsel, Council of Institutional Investors (CII)
•  Vanessa Teitelbaum, Senior Director, Professional Practice, Center for Audit Quality (CAQ) 
•  Jose R. Rodriguez, Chairman of the Board and Audit Committee Chair, CareMax and Audit Committee Chair, Popular

• 4:00 p.m. –  4:30 p.m.

• Discussion of a Recommendation Regarding the Use of Mandatory   Arbitration Clauses by Registered Investment Advisers

• 4:30 p.m. –  4:45 p.m.

• Subcommittee Reports

• 4:45 p.m.

• Closing Remarks and Adjourn