Supplemental Comment Letter to SEC on Shareholder Proposals

A group of investors has filed a supplemental comment with the SEC asking for withdrawal of the proposed rule restricting shareholder proposals. The full comment is below. An excerpt:

This evidence demonstrates that the economic harm that the amendments could cause if they were finalized far outweighs the de minimis purported benefits cited in the Release accompanying the proposed amendments, further supporting investors’ widespread requests that the SEC set the proposed amendments aside. The evidence shows that shareholder proposals related to environmental and social matters, in particular, would be sharply curtailed, at a time when significant threats to shareholder value stemming from such issues have emerged, including risks related to the Covid-19 pandemic, diversity and inclusion, human capital management and climate change. These are material issues to many investors. They relate directly to protecting minority shareholder interests through corporate governance – a hallmark of our system of securities regulation that has led to widespread economic growth, but which is under more threat than ever as some companies adopt dual-class share systems that give managers outsized voting power in comparison to their financial interest in the company. Moreover, these matters are not yet captured in existing financial reporting frameworks, making disclosures that may be critical to investment decision-making, monitoring and stewardship dependent on private ordering through shareholder proposals. Shareholder proposals also play a critical role in focusing corporate boards’ attention on the need to develop new expertise, new oversight models and new strategies to protect and drive shareholder value, as demonstrated in the 2020 proxy season.

07-29-20 Joint Letter to SEC-Evidence from 2020 Proxy Season

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