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U.S. Securities and Exchange Commission

The following Letter Type A, or variations thereof, was submitted by individuals or entities.

Letter Type A:

Dear Chairman Clayton,

On Tuesday, November 5th, the Securities and Exchange Commission (SEC) proposed amendments to Rule 14a-8 that will severely limit the rights of shareholders to engage with corporations. As a constituent concerned about corporate accountability and investor protection, I strongly oppose these proposed rule changes. The rules would inhibit important progress from being made on critical matters such as climate risk that are crucial to the public interest.

The SEC is designed to protect investors, not shield corporate executives from accountability. For decades, the shareholder proposal process has served as a cost-effective way to build long-term value while reducing the potential for harm and mismanagement. The proposed increase in ownership and re-submission thresholds will make it harder for investors to voice important concerns and raise issues of risk to the companies they own, particularly smaller investors.

The current filing threshold of $2,000 and one-year of holding ensures a diversity of voices be heard. Smaller investors have made valuable contributions to the shareholder proposal process by raising numerous environmental, social, and governance (ESG) issues that have eventually received substantial votes and been taken up by companies. Substantially increasing the filing thresholds would inhibit the important back and forth on this issue between companies and shareholders.

The proposal to double the re-submission thresholds for proposals further threatens to hinder critical issues from being properly considered. There are many examples of issues that initially received little support, but went on to receive majority support as shareholders came to appreciate the serious risks they presented to companies. Important examples include management of climate risk and other environmental risks; management of supply chain risks; board diversity; the ability for shareowners to nominate candidates to serve on boards; annual election of directors; and other important reforms that have benefited companies; investors; and the public at large. The new rule changes could prevent topics like this from being put in front of shareholders and considered at all.

Furthermore, the proposed rule changes regarding proxy advisory firms will undermine the ability of investors to make informed decisions on proxy voting, and seem intended to produce more management-friendly votes. These provisions unfairly stack the deck against shareholders and towards corporate management.

As Commissioner Allison Herren Lee said in voting against these proposed rule changes: “The odds are stacked against shareholders.” I strongly oppose these changes and urge the SEC to reconsider.


Modified: 01/9/2020