January 17, 2020
I am writing to oppose the proposed changes to Rule 14A-A and Proxy Advisers. The existing rules are important to my clients, who favor Sustainable. Responsible and Impact (SRI) investing.
The proposed changes would greatly restrict the ability of the average shareholder to advocate and vote on changes in corporate policy.
The founding purpose of the Securities and Exchange Commission is to protect investors, but you would not know that by the two proposals. One proposal severely limits the ability of individual and smaller institutional investors to file shareholder resolutions at the companies in which they invest. The second would muffle the voices of independent proxy advisory firms.
Shareholder proposals are an important, cost-effective and market-based mechanism for retail and institutional shareholders to communicate with management teams, directors and other shareholders. Today's proposal transfers power to CEOs and company management at the expense of their shareholders. Investors have not sought these changes corporate trade associations have. This is despite the fact that on average, only 13 percent of Russell 3000 companies received a shareholder proposal in any one year between 2004 and 2017. In other words, the average Russell 3000 company can expect to receive a proposal once every 7.7 years.
The new thresholds will make it significantly more difficult for investors to get critical issues on the meeting agendas of publicly traded companies. Time and again, individual investors, asset managers and institutional owners have raised an array of concerns at American companies to improve these companies and make them better investments over the longer term. They have encouraged companies to diversify their boards of directors, to align executive compensation incentives with the long-term good of the company, and to reduce their greenhouse gas emissions.
Additionally, proxy advisory firms help investors meet their fiduciary responsibilities by providing efficient and cost-effective research services to them to inform their proxy voting decisions. We do not support giving companies the automatic right to preview proxy advisory firm reports and to lobby the authors to change recommendations. These provisions will give corporate management substantial editorial influence over reports on their companies.
The SEC should protect the tools and resources available to shareholders to help hold publicly traded companies accountable