regulation

An Annual Report on Corporate Governance and Shareholder Activism

One way shareholders exert influence over corporations is by introducing proposals that appear on corporate proxy ballots.1 To an unprecedented degree, a small subset of shareholders has been turning to this shareholder-proposal process to pursue social and political changes outside normal legislative and administrative channels. In 2016, a record percentage of shareholder proposals concerned social or policy issues, with, at most, an attenuated relationship to share value.

This report adds to the debate and shows that were the SEC to raise its resubmission threshold to 10%, almost one-fourth of resubmitted shareholder proposals could be excluded from companies’ ballots. Were the SEC to implement a 33% resubmission threshold, more than 35% of resubmitted shareholder proposals could be excluded. We hope that the SEC will consider such evidence in light of its pending rulemaking petition on this issue.

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