On the final day of public comment on two related proposals by the Securities and Exchange Commission on proxy voting rules, a petition signed by more than 18,000 individuals opposing the policy change was submitted to the SEC, which was also the subject of a protest by some of the signatories.
Green America, a not-for-profit membership organization focused on the economic power of consumers, investors and businesses to create a environmentally sustainable economy, along with Americans for Financial Reform and As You Sow, delivered the petition.
Both SEC proposals, if finalized, would make it harder for investors to challenge corporate management on environmental, social and governance issues.
In one proposal, a shareholder would have to own at least $2,000 worth of stock for three years to sponsor a first-time proxy proposal, up from one year currently. A $25,000 stake would be required if they owned the stock for one year and $15,000 if they owned it for two years.
The rule also raises the minimum vote percentage required to resubmit a proxy proposal for the first time from 3% to 5%. For the second and third resubmissions, the requirement moves from 6% and 10%, respectively, to 15% and 25%, and it restricts the activities of proxy advisor firms.
In the related proposal, proxy advisory firms would be required to give a company a chance to comment on its recommendations and include a link to those companies in its distributions to clients and disclose any conflicts of interest. In recommending a vote against management, for example, a proxy advisory firm would need to include management’s opinion in their final report to shareholders.
SEC Jay Clayton has said that the amendments are long overdue and were “carefully crafted to more appropriately balance the benefits and burdens to all shareholders.”
The Green America petitioners don’t agree.
They are “deeply concerned about the need to build an economy that will be successful over the long term,” which requires “that social, environmental, and corporate governance issues facing corporations are effectively addressed, “according to the petition.