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SEC Must Not Coddle Executives Over Shareholder Activism


Oxfam America submitted a public comment with the Securities and Exchange Commission (SEC) today criticizing a proposed new rule that seeks to limit shareholder activism by making it substantially more challenging - if not impossible - for small shareholders to file resolutions requesting that companies adopt environmental, social, and governance policies that promote sustainable long-term financial growth.

The rule, which was proposed in November as a rollback to rule 14a-8 by President Trump’s appointees at the SEC, stymies shareholder resolution efforts by drastically raising the stock ownership requirements, raising re-filing thresholds and by implementing a slew of other measures designed to make it more expensive for small investors to file resolutions. These efforts enable executives to evade accountability for pursuing policies that prioritize short-term profits – and line their pockets in the process – at the expense of long-term sustainable growth that would benefit investors, workers, and society alike.

“The SEC was created to restore investor confidence in the wake of the 1929 stock market crash, but this rule flips the SEC’s mandate on its head to provide cover for corporate executives who want to be shielded from the growing expectations to consider their impact on workers, the environment and communities in their business operations,” said Irit Tamir, Director of Private Sector Department, Oxfam America. “This rule is yet another example of the administration’s efforts to sacrifice the average American at the corporate altar.”

Under the rule, shareholders would be required to own $25,000 in stock rather than $2,000 to file a proposal after one year of ownership and $2,000 of a company’s stock would need to be invested for three years before submitting a resolution instead of just 12 months as currently required. The rule would also raise the thresholds for resubmitting proposals that hadn’t previously received majority support. A shareholder would need at least 5% support on their first try in order to try again on the same topic within five years, 15% support on the second vote in order to call for a third, and 25% support the third time around in order to seek a fourth vote. This will significantly impair investors’ ability to submit proposals advocating for the adoption of strong environmental, social, and governance policies.

Oxfam’s comment criticizes the SEC’s failure to account for the enormous financial and societal benefits that the current shareholder resolution process accrues to investors, communities, and even the companies that are supporting these changes. Without integrating these quantifiable advantages into the cost-benefit analysis that the Commission is mandated to undertake, the SEC’s economic analysis is flawed.

“The rule could harm all investors, as well as workers, anyone with a retirement account, anyone who cares about long-term financial stability of our economy, communities who may be harmed by companies with irresponsible environmental or human rights policies,” continued Tamir. “Even the majority of companies themselves suffer if the SEC successfully muzzles shareholder advocacy. Only a small subset of executives, would benefit from this rule, executives who are willing to sacrifice long-term financial value to investors in exchange for short-term profits for themselves. This rule must not be adopted.”

In the recent past, Oxfam’s shareholder resolutions have generated positive commitments to uphold land rights, lower GHG emissions, and respect women laborers in agribusiness supply chains.

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Laura Rusu
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