Shareholder Rights

What Investors and Financial Officers Can Do  

Mainstream institutional investors, investor organizations, state financial officers, and other free market voices are speaking out in an urgent effort to protect the U.S. shareholder proposal process. They make the case that it is necessary for effective fiduciary oversight and corporate governance. The structured process gives them the chance to address issues themselves, thereby reducing the need for government regulation or costly shareholder litigation. 

How Shareholder Proposals Have Strengthened Companies 

Proposals have led to the adoption of accountability and governance practices essential for long-term growth and value creation. Among the examples:  

• Requiring Majority Voting for Directors 

• Declassification of Corporate Boards 

• Say-on-Pay and Executive Compensation Reform 

• Risk Oversight Committees in Financial Institutions  

• Enhanced Disclosure of Material Risks 

• Protecting Children Online 

• Political Spending Transparency 

Help protect shareholders’ freedom to engage with the companies they own through the longstanding proposal process.   

What’s Happening in the States  

Fourteen states introduced legislation, known as the Proxy Advisory Transparency Act, to punish entities that provide research and analysis on shareholder proposals. Efforts to silence proxy advisors’ recommendations to company management violate the First Amendment. In Texas, House lawmakers passed a bill (HB 1057) that allows companies to amend their bylaws to raise the submission threshold for shareholder proposals to an aggregate of shares worth at least $1 million. This change would significantly change how shareholders communicate with companies and could increase the need for government regulation. Separately, Texas lawmakers enacted SB 2337, which redefines who provides a proxy advisor service. Currently, the implementation of this legislation is being litigated, as several groups and companies have sued Texas over these changes 

What Conservatives Are Saying 

Two op-eds this year, each co-written with Ceres’ Steven Rothstein, make the same case: one from a Republican former member of Congress and one from the Chairman of the National Legal and Policy Center, a conservative group. 

From Carlos Curbelo and Steven Rothstein in the Washington Examiner

A government that decides which investor voices are legitimate and then removes the mechanism for the others to be heard is not reducing regulation. It is substituting political judgment for market discipline.

From Peter Flaherty and Steven Rothstein in the Wall Street Journal

We head nonprofit organizations concerned with corporate governance and policy and are often on opposite sides of important issues. But we agree on this: When shareholders’ voices are silenced, our capital markets lose accountability. The system becomes more political, not less.