Letter Requests Meeting Following Public Remarks by SEC Chair That Alarmed Many Across the Investment Community
Washington, D.C. - A coalition of five leading investor organizations - including the AFL-CIO, Ceres, Interfaith Center on Corporate Responsibility (ICCR), Shareholder Rights Group, and US SIF - last week submitted a letter to SEC Chair Paul Atkins expressing serious concerns about his keynote speech at an October forum in Delaware . The speech triggered serious investor concerns regarding the Chairman's approach toward the SEC's shareholder proposal rule.
Chair Atkins’ recent public remarks endorsed a sweeping change in SEC practice under which all advisory (non-binding) shareholder proposals may be seen as improper under Delaware law, and therefore allowed to be excluded from corporate proxy statements . If implemented, this interpretation would dismantle more than 80 years of established investor rights and legal precedent, undermine the SEC’s longstanding no-action letter process and potentially create greater uncertainty and turmoil across the corporate governance landscape.
In their letter, the investor organizations explain how Chair Atkins’ recent remarks amount to a highly significant policy change—without public input or formal rulemaking—in violation of the Administrative Procedure Act. They emphasize that shareholder proposals have historically been a key part of a highly effective private ordering process that has advanced best practices in corporate governance without infringing on board discretion or broader economic dynamism and growth.
The specifics of this proposed change and why it matters were covered in greater detail in this recent article.
“This proposed shift would take power away from shareholders, depriving them of a vital and longstanding tool for corporate engagement and improving governance,” said Sanford Lewis, Director and General Counsel of the Shareholder Rights Group. “Precatory proposals have been a cornerstone of investor dialogue for nearly a century and have become an essential instrument for fostering necessary reforms and durable corporate accountability.”
“ICCR has been deeply concerned about the ways this proposed attack on shareholder rights could impact our members and the wider landscape of corporate governance and accountability,” said Josh Zinner, CEO of ICCR. “These changes being suggested by the administration would undermine a tool that generations of Americans have come to depend upon to safeguard the long-term value and viability of their investments. At a time of growing unease about the condition and direction of the U.S. economy, Chair Atkins should be seeking to strengthen rather than undermine investor protections.”
“Investors across capital markets value shareholder engagement and the shareholder proposal process even when they are not filing the proposals,” said Maria Lettini, CEO of US Sustainable Investment Forum. “Modifying the rules governing the shareholder proposal process, as is suggested in the speech, requires an open process with stakeholder input.”
“Shareholder proposals provide an important means for investors to express collective concerns to corporate managers via proxy voting. Without advisory proposals, investors would be left with inferior ways to protect their interests including lawsuits, proxy contests, votes against directors and compensation packages, and expensive 14a-4 proxy solicitation,” said Steven Rothstein, Chief Program Officer at Ceres, which operates networks of large investors and companies. “Everyone would be worse off without these non-binding shareholder proposals.”
The coalition of investor organizations is calling for basic accountability, transparency and dialogue. They are eager for the SEC chair to demonstrate his commitment to his agency’s foundational mission of protecting investors and ensuring fair markets. The letter requested Chair Atkins to meet and discuss the implications of his position.
About the Interfaith Center on Corporate Responsibility (ICCR)
The Interfaith Center on Corporate Responsibility (ICCR) is a broad coalition of more than 300 institutional investors collectively representing over $4 trillion in invested capital. ICCR members, a cross-section of faith-based investors, asset managers, pension funds, foundations, and other long-term institutional investors, have over 50 years of experience engaging with companies on environmental, social, and governance (“ESG”) issues that are critical to long-term value creation. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website www.iccr.org and follow us on LinkedIn and Bsky.
