Oped neglects importance of shareholder rights in guiding corporations to long-term value

      Sanford Lewis, Director
     Shareholder Rights Group

 A letter to the editor of the Wall Street Journal:l 


On September 29, Vivek Ramaswamy of Strive Asset Management  published an opinion piece in the Wall Street Journal alleging that Chevron and Apple, among other companies,  had engaged in social activism under the guise of creating long-term value to shareholders.


The article portrayed corporate policy changes as simply an outcome of pressure politics by outside groups who cared about non-pecuniary concerns over investment outcomes.   Glaringly  absent from Mr. Ramaswamy’s article is any acknowledgement that the boards’ “sudden changes of heart” in support of ESG-focused issues occurred after a majority of the companies’ shareholders voted  for a change.  At Apple, 54% of votes  favored a shareholder proposal requesting a civil rights audit. At Chevron, 61% of voting shares supported a shareholder proposal  asking the company to track and cut emissions generated by the use of the company’s products.


The genius of shareholder democracy is that it invites perspective-taking by the shareholders that have a vested interest in the success of the company as well as in the economy writ large. Indeed, recent polling shows that investors are heeding environmental and social concerns now more than ever, with nearly 80% saying that ESG is an important factor in their investment decision-making. Investors are at least as savvy about these issues as board and management.


Mr. Ramaswamy has certainly made it clear that he does not believe in the long-term value proposition of ESG. There is no controlling authority as to what will produce long term value for a company, only diverse views, and what we believe is a well-founded resulting surge of interest in ESG investing strategies. Neither the management, board, nor the investors have a monopoly of insight.


The shifting position of corporate boards is not a failure of oversight or an unfounded change of heart, but rather reflects a healthy openness to heed the perspectives of investors on the long-term value proposition and a show of what real leadership looks like.


Mr. Ramaswamy concludes his article stating that “Corporate boards are obligated to act with the sole purpose of advancing the best interests of stockholders. . . owners should assert their rights.” Thankfully, we believe that shareholders are asserting their rights through the shareholder proposal process. And companies are listening and acting accordingly - in the best interest of stockholders.



News Release: Shareholder Rights Group praises SEC proposed fixes to shareholder proposal rule

Immediate Release 

July 13, 2022

Further Information
Sanford Lewis
413 549-7333

Today the Securities and Exchange Commission proposed amendments to the shareholder proposal rule, Rule 14a-8,  modifying and clarifying elements of the rule relating to when a proposal can be excluded as substantially implemented, and limiting the circumstances under which a proposal that has different objectives or methods may block another proposal submitted for the current or subsequent year.  

The Shareholder Rights Group (SRG) supports these overdue changes to the shareholder proposal rule. According to SRG Director Sanford Lewis, "The changes should reduce the cost and uncertainties associated with filing and defending shareholder proposals. We appreciate the leadership of Chairman Gary Gensler, the Commissioners and SEC Staff in supporting the rights of investors to file proposals while making the process more efficient, objective and predictable." 

The rulemaking proposal on substantial implementation states that a proposal will be considered substantially implemented by a company if “the company has already implemented the essential elements of the proposal.”   This effectively streamlines the substantial implementation rule by eliminating arguments that are sometimes made by issuers, claiming that the company's actions implemented the "essential purpose" without implementing the  guidelines of the proposal.  The new language makes it much clearer as to the circumstances under which substantial implementation can be found.

The rulemaking proposal says that proposals previously submitted will only block another proposal on the current proxy if it “addresses the same subject matter and seeks the same objective by the same means.”  Similarly, to the extent that a proposal did not receive sufficient votes for resubmission,  a subsequently  submitted proposal would only  be blocked by the prior vote if the subsequently submitted proposal " “addresses the same subject matter and seeks the same objective by the same means.” These technical fixes are supportive of the interest of investors in having clarity about the functioning of the rules, and should ease concerns about whether a conflicting proposal with very different objectives may nevertheless block another proposal from being submitted at a current or subsequent meeting.

The Shareholder Rights Group is a group of leading proponents of shareholder proposals. http://www.shareholderrightsgroup.com/