Keep showing up (on Capitol Hill to protect shareholder rights)

group of people in suits in front of a plaque indoors

It’s graduation season. A perennial graduation speech adage is about the importance of persistence and perseverance in pursuing goals – the old get-back-on-the-horse lesson. It’s about showing up, and it’s a lesson that we take to heart. While the Washington machine continues its efforts to dismantle shareholder rights, we keep showing up to protect them.
Last week, we showed up (again) on Capitol Hill. This time with over 65 of our friends from our industry trade association, US SIF. We were there to make sure that Hill staffers were up to speed on the importance of shareholder rights and to ask them to continue to fight against efforts to undermine them. Together, our team met with staffers from 38 offices on Capitol Hill.
This trip to the Hill was important because the attacks on shareholder rights, which we have written about in the past here and here, continue. In May, Representative Sean Duffy (R-WI) filed a new bill (HR 5756) which aims to raise shareholder proposal resubmission thresholds. Resubmission thresholds are the amount of support shareholder proposals must get in order to be refiled the subsequent year. Currently, a shareholder proposal must get at least 3%, 6%, and 10% of shareholder support in order to be filed in subsequent years. Rep. Duffy’s bill proposes to raise these hurdles to 6%, 10%, and 30%. The argument for raising these thresholds is that shareholder proposals, some think, are burdensome to companies, aren’t in the interest of a wide range of shareholders, and are destructive to shareholder value.
We take issue with these claims. On the contrary, we think the current proposal resubmission thresholds that have been in place for years are working well. They weed out the real non-starter proposals while still giving enough runway for new proposals, which can often take a few years to get good traction. We also think that plenty of good can come from proposals that don’t garner overwhelming support. There are a number of companies, particularly in tech and media, that are largely owned by insiders. Because so much of the vote is controlled by management, it is exceedingly difficult to get a high vote count, but companies often take note of important proposals with lower vote counts. Raising the resubmission thresholds could render shareholder proposals pretty ineffective at these companies.
While Rep. Duffy has yet to find a Democratic co-sponsor to give this bill legs, industry chatter suggests that there are a few Democrats that may cross the aisle to support it. We went to the Hill to urge our representatives to stay away from this one and to work to stop it.
We don’t know where this bill will go, but we are paying attention to this and other threats to shareholder rights. We will continue to be in touch with our representatives about the need to protect shareholder rights. And we will continue to work with others in our industry to use our united voice to counter these attacks.
In a less regulated environment, shareholder and consumer advocates must step up and hold companies accountable on environmental and social issues. It is more important than ever to make sure that we, as shareholders, continue to have the right tools for the job. To that end, we will keep showing up and fighting for shareholder rights.