Subject: File No. S7-23-19
From: Jessica Droste Yagan

January 31, 2020

I am hereby providing my comments on the Proposed Rule on Procedural Requirements and Resubmission Thresholds under Exchange Act Rule 14a-8, File Number S7-23-19. As an investor, I am committed to helping develop a more just and equitable society and having economic growth that is socially inclusive and environmentally sustainable. I want my capital market investment dollars to help businesses operate and grow while prioritizing ecological, social, and business ethics. I believe that by investing wisely, we have the means to generate good jobs, a strong economy, a healthy environment, and economic opportunity for all. In order to represent multiple stakeholders, we need to allow multiple stakeholders to participate in the process.
The shareholder proposal process plays an important role in ensuring that our capital markets remain transparent, dynamic, and efficient. Shareholder proposals can and often do lead to the adoption of best practices and help ensure accountability and responsible stewardship. Shareholder resolutions are the most direct and transparent communication mechanism between company management and shareholders. This rule change will limit the volume and increase the complexity of those communications. The end result is that it will be more difficult for investors to get critical issues on the meeting agenda of public companies.
Last month, Chairman Clayton said the SECs first goal is to protect the long-term interests of Main Street Investors. However, this rule raises the minimum ownership threshold to file shareholder resolutions from $2,000 to $25,000, a whopping 1,200%, eliminates Main Street Investors ability to aggregate shares to meet that new threshold, and the momentum rules intended consequence is to remove issues from the ballot more quickly. It is inarguable that this rule change will limit the ability of Main Street Investors to participate in the shareholder proposal process. This strikes me as firmly inconsistent with the SECs stated goal of protecting the Main Street Investor.
If, in your view, this rule change is indeed consistent with the SECs stated goal, the inescapable conclusion is that the SEC believes the best way to protect Main Street Investors is to diminish their participation in the shareholder resolution process. This view is inconsistent with a long history of shareholders (including many Main Street Investors who would now be prohibited from filing resolutions) raising critical, material issues environmental and social issues, like board diversity, greenhouse gas emissions, and nondiscrimination policies.
The Business Roundtable, an ardent supporter of this rule change, recently made headlines by releasing its Statement on the Purpose of a Corporation. That statement concluded by saying, Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country. I agree with that statement but struggle to understand how this proposal furthers that commitment when significant percentages of proposals on climate change reporting, executive stock sales, board diversity, and political spending would be excluded from consideration. These are the kinds of issues that when raised lead to best practices and help us move forward on pace with science and social awareness and development.
At a time when market participants are affirming the inextricable link between a broad array of stakeholder interests and the financial health of their businesses, this rule serves to choke off one of the most important avenues of that dialogue and dampen investors ability to hold corporate management accountable.
Thank you for your consideration of these comments.
Jessica Droste Yagan