From Social Investment Forum
I am deeply concerned that the Securities and Exchange Commission (SEC) may soon act to cripple the rights of Americans to present resolutions for votes by the shareholder owners of publicly traded companies. I urge you to join me in opposing the SEC initiatives that would (1) severely curb the rights of shareholders to sponsor proxy resolutions and/or (2) limit or flat-out prohibit the ability of shareholders to nominate members of corporate boards.
- The severe curbs on shareholder rights put forward by the SEC are “solutions in search of a problem.” There is no documented problem or problems that would justify such extreme restrictions on shareholder rights. It would be better for the SEC to take no action on their shareholder resolution initiatives than it would be to irreparably harm the rights of shareholders.
- The potential SEC restrictions are so harsh that they would kill more than nine out of 10 resolutions filed by shareholders. Over 95 percent of the shareholder resolutions filed in the last 35 years have been “advisory” and these would vanish under one or more of the approaches outlined by the SEC. Well under 20 percent of publicly traded companies face shareholder resolutions in a typical proxy season. And the reality is that many of these companies have documented problems with runaway CEO compensation, unresponsive boards, a history of polluting/inaction on climate change, costly racial/gender discrimination lawsuits and a wide range of other very serious problems. These are not companies that the SEC should be protecting from shareholders who are understandably concerned about what are often major and unmitigated risks to their investments. These are not companies that should be permitted by the SEC to “opt out” of facing the understandable concerns of shareholders.
- The shareholder resolution process helps U.S. companies, it does not hinder them. Shareholder resolutions have had a profound and beneficial impact on corporations, making them stronger and more competitive. The resolutions help to promote positive dialogue that results in improved corporate governance, greater accountability and more meaningful disclosure. These resolutions address a range of topics of concern to the investors who own these companies and have resulted in positive changes in company policies and practices, including in the area of executive compensation, environmental pollution, climate-related improvements, and minority/gender hiring practices, among others. That is one of the reasons why the instances where shareholder resolutions win majority support of 50 percent or more of the shares actually voted has risen dramatically from 16 percent in 2000 to 23 percent in 2006.
- The real owners of America’s companies should be able to influence the selection of board members. The two approaches that the SEC has put out for public comment represent completely contradictory positions on the right of investors to nominate candidates for corporate boards of directors by putting candidates on the annual proxy statement and allowing them to be voted on along with the slate prepared by the company. Recently, resolutions at Hewlett Packard and United Health asking for the right to nominate directors came close to achieving 50 percent support. It is apparent that investors strongly want this right that the SEC is refusing to provide. Investors should be able to nominate directors; the bar for doing so should not be set so impossibly high that it could be exercised only by mega-investors who own 5 percent or more of the company.