Congress is considering a bill to roll back Dodd-Frank known as the Financial CHOICE Act 2.0, introduced by House Financial Services Chairman Jeb Hensarling (R-Texas). A provision in this draft Bill would virtually eliminate the shareholder proposal, which is a document that a shareholder formally submits to a publicly traded company advocating the company take a specific course of action. The proposed changes to shareholder proposal rule will make it more difficult for the Presbyterian Church U.S.A. (through its Committee on Mission Responsibility Through Investment) to advance the church’s social witness advocacy through the filing shareholder resolutions with publicly-traded corporations.
These changes include:
1. Requiring a 1% ownership (of total market capitalization) of a company over a three-year period in order to be eligible to submit a proposal.
2. Increase the threshold to refile a shareholder proposal in subsequent years to 6% of the vote in year 1 (from 3%); 15% in year 2 (from 6%); and 30% in year 3 (from 10%).
3. Prohibit the submission of proposals on behalf of a shareholder (what the bill refers to as “filing by proxy”).
The current shareholder proposal process effectively facilitates communication between shareholders and companies. It allows the PC(USA) and other entities, large and small, an opportunity to communicate directly with corporations and raise issues of concern and draw corporate management’s attention to what are often unmanaged risks. The process has successfully led to reforms in the interest of shareholders and provides a means to hold corporation management accountable to shareholders – the company’s owners. Changing the rules would make it impossible for PCUSA and the Committee on Mission Responsibility through Investment to engage with large companies and file shareholder resolutions, which do things like ask companies to report on their climate change planning efforts and provide staff training on how to recognize victims of human trafficking.
In 1971, the 183rd General Assembly affirmed that church investment is an instrument of mission and includes theological, social and ethical considerations. Church investors work in pursuit of peace, racial justice, economic and social justice, and in the establishment of environmental responsibility. MRTI is instructed to work toward these goals by seeking aligned investment opportunities; exercising stockholder obligations and raising questions in appropriate forums; and evaluating company policies with respect to these mission areas. This work becomes almost impossible without access to shareholder meetings and company leadership.
Reach out to members of Congress and encourage them to oppose the suggested changes to the shareholder proposal process currently included in Section 844 of the Financial CHOICE Act 2.0. Ask your elected officials to oppose any attacks on the shareholder proposal rule and to support shareholder rights.