Comments on the SEC’s Proposed Restrictions on Shareholder Proposals

Excerpts of Investor Comments Opposing SEC Proposals to Restrict Shareholder Rights, compiled by the Investor Rights Forum.

In November 2019, the Securities and Exchange Commission adopted proposed changes to Rule 14a-8 that would sharply restrict the rights of investors to file shareholder proposals and hold corporate managers accountable on important environmental, social, and governance concerns. By February 3, the deadline for public comments on the proposed changes, more than 14,000 public comments had been submitted to the agency. The overwhelming majority of commenters opposed the new rules. The quotes below are from a diverse sample of the range of comments the SEC received, as well as related public statements–from investment firms, financial advisors, pension fund managers, faith-based groups, unions, trade associations, civil society organizations, and individual investors.


“The provisions of the rulemaking proposals, separately and together, are a mix of the ill-advised and unlawful, involve impractical micromanagement of relationships between clients, advisors, shareholders and companies, and in undermining shareholder rights would have significant unintended consequences on investor protection, the public interest, efficiency and competition.”

–Sanford Lewis, Director, Shareholder Rights Group

“Our conclusion is that the SEC has not provided sufficient data or a compelling argument about how these changes would improve the proxy process. Nor has the SEC convinced us that such changes would help protect investors, one of the three goals of the SEC.”

–Lisa Woll, CEO, US SIF: The Forum for Sustainable and Responsible Investment

“The narrow self-interest of corporate CEOs who oppose the shareholder proposal process should not come before the value for investors that shareholder proposals create.”

–Brandon Rees, Deputy Director, Corporations and Capital Markets, AFL-CIO

“This Release represents a radical and dramatic departure from established, vetted, and well-functioning norms. It would impose capricious and arbitrary new rules that interfere with critical shareholder rights, hobble the existing Rule, and dim its high purpose and investor-focused intent. It would limit company share owners – especially smaller Main Street investors – from the free exercise of fundamental rights that should rightly attach to their share ownership.”

–Bruce Herbert, Chief Executive, Newground Social Investment

“We fail to see any business case for less frequent consideration of emerging risks and opportunities, especially as studies increasingly link ESG and financial performance.”

–Jeffery W. Perkins, Executive Director, Friends Fiduciary Corporation

“The SEC’s mandate is to protect investors, but these proposed rules, which have no evidentiary basis, are a giveaway to inward-facing CEOs that will undermine shareholder rights and, ultimately, threaten shareholder value.”

-Josh Zinner, CEO, Interfaith Center on Corporate Responsibility

“The only thing [the proposed rule] achieves is to strengthen the hand of corporate managers in their efforts to escape the discipline and rigor of the marketplace of shareholder oversight.”

–Jonas Kron, Senior Vice President, Trillium Asset Management

“The SEC’s failure to implement appropriate controls to ensure the staff and Commissioners are not exposed to false, misleading, or even fraudulent comments and other submissions fatally compromises its work on these proposed amendments to date.”

–Dieter Waizenegger, Executive Director, CtW Investment Group

“These proposed rules fly in the face of the SEC’s mission by harming investors rather than protecting them.”

–Jeff Davis, Executive Director, and Jason Malinowski, CIO,
Seattle City Employees’ Retirement System

“A shareowner proposal is meant to allow an owner to propose an idea to other owners for a vote. Shareowner proposals are about more than communicating with management or company representatives; they allow shareowners to communicate with each other.”

–Ash Williams, Executive Director & CIO, Florida State Board of Administration

“There is no democracy for shareholders in America unless they have a right to engage in meaningful shareholder advocacy and to be heard. The SEC is contemplating locking many shareholders out of the process. Many of the major advances of recent corporate history — going back to the rejection of racist apartheid South Africa and as recently as action on climate change — owe their success to shareholder advocacy. Today we are fighting for democracy and against a world that is run even more than it is today by corporations that can ignore the public.”

–Fran Teplitz, Executive Co-director, Green America

“The mission of the SEC is to protect investors, but investors did not seek these changes. The SEC should protect investors’ ability to help hold publicly traded companies accountable rather than undermining shareholder rights at the behest of corporate front groups.”

–Leslie Samuelrich, President, Green Century Capital Management

“We have seen an outpouring of investor opposition to these new restrictive rules coming from a significant cross section of investors. The SEC’s role is to be the Investors Advocate, protecting investor interests. The message from these comments is clear, the SEC should put aside these two proposals which reflect a disturbing anti-investor bias.”

–Timothy Smith, Director of ESG Shareowner Engagement,
Boston Trust Walden

“We agree with the Shareholder Rights Group and the Investor Advisory Committee’s recommendation that due process was not followed. Given this the Commission should reject the rulemaking proposals, conduct a baseline and balanced economic and policy analysis, and revise and re-notice the proposal?”

–Lauren Compere, Managing Director, Boston Common Asset Management

“This reaction was completely predictable. If the SEC didn’t see it coming, what does that say about their understanding of investors’ views? If they did see it coming, but forged ahead anyway, what does that say about their commitment to their investor protection mission”?

–Barbara Roper, Director of Investor Protection, Consumer Federation of America

“We are concerned that the proposed rule seeks to solve problems that simply do not exist and, if implemented, risks further diminishing the rights of shareholders and their ability to hold corporations accountable.”

–Aeisha Mastagni, Portfolio Manager, Sustainably Investment & Stewardship Strategies,
California State Teachers’ Retirement System

“In brief, we believe these proposals advance the interests of corporations rather than investors… We also believe some of the specific metrics in the rules are cynically crafted to benefit a few corporate interest groups, notably the U.S. Chamber of Commerce, where shareholder activism has threatened to shed light on its corporate funders.”

–Bartlett Naylor, Financial Policy Advocate, Public Citizen

“We strongly believe minority shareholders deserve a voice, and that it is not only appropriate but advisable that companies balance perspectives from across their shareholder base. In our view, all shareholders are capable of bringing forward good ideas for all shareholders benefit. That is especially important when considering that small investors may collectively own more shares than institutional investors, and nearly always own more shares than management.”

–Joseph V. Amato, President & CIO-Equities, Neuberger Berman

“The proposed steep increase in minimum shareholding thresholds for filing of proposals seems to be aimed squarely at shutting out smaller investors such as our foundation, preventing us from engaging directly with the companies which we own, and tilting heavily in favor of larger investors.”

–Jonathan A. Scott, President & Treasurer, Singing Field Foundation

“If finalized, the SEC’s proposed rules on shareholder proposals and proxy advisers would introduce major impediments to environmental, social and governance (ESG) integration, which has traditionally depended on dedicated investors engaging with management and access to independent and efficient proxy voting advice.”

–Fiona Reynolds, Chief Executive Officer, Principles for Responsible Investment

“It is also possible to get an impression of what shareholders think from the news media, and perhaps as well as from social media. But none of these methods allows a company to accurately learn the views of its shareholders as a whole. Shareholder proposals provide a useful solution and a relief valve far short of a proxy fight.”

–Kenneth A. Bertsch, Executive Director, and Jeffrey P. Mahoney, General Counsel,
Council of Institutional Investors

“Rule 14a-8 best represents the fundamental bargain struck between corporations and shareholders — in exchange for capital, shareholders have the right to bring important issues to the attention of management and all other shareholders. This trade off is critical to efficient functioning of the equity market itself.”

–W. Andrew Mims, Trustee and Partner, Loring, Wolcott & Coolidge

“Despite our small shareholdings, our Climate Change Plan Resolution was able to garner over 30% of votes cast in favor of our resolution that asked Amazon to report publicly on how it plans to reduce its reliance on fossil fuels and manage the risks posed by climate change, given the increasing material, regulatory, and reputational risks associated with it. This is similar to what Larry Fink, CEO of Blackrock, has asked all companies to do, stating, “Where we feel companies and boards are not producing effective sustainability disclosures or implementing frameworks for managing these issues, we will hold board members accountable.” As small employee-investors who lack Blackrock’s clout, we depended on the shareholder proposal process to have our voices heard by our fellow investors.”

–Amazon Employees for Climate Justice

“In addition to voting, stock ownership also comes with the right to submit shareholder proposals, which allow shareholders, even very small investors, the ability to communicate concerns to public companies and ask for a collective vote from the broad shareholder base. CalSTRS believes that shareholder proposals have made a significant and positive impact on corporate policies and practices on a wide range of issues.”

— Aeisha Mastagni, Portfolio Manager, Sustainable Investment and Stewardship Strategies, California State Teachers Retirement System

“The push for reforms [related to proxy advisors] is not from investors who are obtaining the advice (like CalPERS), but instead is from the companies that are subjects of the advice sought. The Release is facially not an effort to protect shareholders but is instead a clear effort to protect company executives from shareholders.”

— Marcie Frost, CEO of CalPERS

“The Commission should base its rulemaking on clear evidence of the existence or likelihood of a market failure, and not solely on the concerns expressed by some market participants. The Commission should also carefully consider that it is not the investor clients of proxy advisory firms calling for reform, but the corporate issuers who are held accountable to shareholders through the proxy voting process.”

— William J. Stromberg, President & CEO of T. Rowe Price

“Shareholder proposals have been a cost-effective way for investors to provide feedback to boards of directors that has been critical in both senses of the word. They have made companies better and increased confidence in the era of separation of ownership and control.”

— Nell Minow, noted corporate governance expert and Vice Chair of ValueEdge Advisors

“Shareholder proposals provide an orderly means to mediate differences between a company’s management, board of directors and shareowners. The proposals allow shareowners to signal issues of concern in the interest of enhancing long-term company value and provide a framework for the company to respond with information about its strategy, governance and risk management approaches to the issues raised.”

— signed by 17 state treasurers through the Democratic Treasurers Association

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