In Focus

Financial CHOICE Act Would Decimate Shareholder Proposals

House Financial Services Committee Chairman Jeb Hensarling’s discussion draft of a bill to roll back financial regulation that would drastically increase the ownership requirement for filing shareholder proposals. The Financial CHOICE Act would require any shareholder wishing to put a proposal on a public company ballot to own at least 1 percent of the company's stock for a minimum of three years. Current rules set a minimum $2,000 ownership requirement. The change could put out of reach virtually all shareholder proposals, which have been a feature at public company annual meetings since the early 1940s. At Apple, for example, a shareholder would have to own more than $7 billion worth of stock to file a proposal. The new threshold "would shut down the shareholder proposal process completely," said Anne Sheehan, director of corporate governance at CalSTRS.
 
The CHOICE Act includes other provisions that could weaken shareholder rights and corporate governance, including barring the SEC from requiring universal proxy cards in contested elections for board seats and dropping a mandate that companies hold regular advisory shareowner votes on executive compensation. CII's position on many of the proposed changes, and other potential market reforms are outlined in numerous comment letters posted to our Correspondence page and in talking points here.

CII Podcast: Investors Push Back on Virtual-Only Annual Meetings

In a podcast, CII Director of Research Glenn Davis explains how shareholder meetings conducted entirely online short-change investors—and what CII is doing to persuade companies to use technology to enhance, rather than restrict, shareholder participation.

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CII Priorities

Fair Financial RulesSensible, effective rules safeguard investors and strengthen markets.

Dual-Class StockEach share of a public company's common stock should have one vote.

Majority Voting for DirectorsIn uncontested elections, directors should be elected by majority vote.

Universal ProxyIn contests, investors should be free to vote for the nominees they prefer.

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