SEC Increases Exclusion of Proposals - 2023-2025

In order to help companies decide whether a proposal passes these tests, the SEC has developed a process to allow companies to ask the SEC in advance whether a proposal must be included in the meeting materials. The “no action” process is an informal review process through which the SEC staff advises companies and their investors on whether the SEC staff would likely recommend enforcement action if a company fails to include a submitted shareholder proposal on its annual proxy statement. The staff grants the company’s request if it finds some basis to agree with the company’s arguments that the proposal is excludable under one of the elements of SEC Rule 14a-8. It denies the request if it is unable to concur with the company’s arguments.

SEC Rule 14a-8 is intended to exclude trivial, irrelevant, and inappropriate shareholder proposals, thus minimizing the burden on companies. The no action process is a structured, time-tested process that adds an additional layer of objective scrutiny to company decisions regarding whether to include or exclude proposals, which serves to protect investors’ interests. If an investor disagrees with the no action decision by the SEC, the investor can submit a letter in opposition, but it does not have legal recourse against the SEC. Without Rule 14a-8 and the no action process, an investor only has the option to sue the company under federal law if it disagrees with a company’s decision to not place a proposal on the proxy, which would add delays, and significant costs for both parties.

The SEC staff periodically recalibrates its interpretation of the rules of the no action process to reflect current issues of concern to investors and companies. For example, in 2021, the SEC staff issued an interpretive bulletin, Staff Legal Bulletin 14L, which clarified ordinary business and micromanagement rules in a manner that allowed some environmental and social proposals to reach the proxy that might not have qualified in a prior interpretation. However, following market response and criticisms, the staff tightened up its interpretations of micromanagement and excluded many proposals on social and environmental issues that had previously been allowed, even with the new bulletin remaining in place. From November 1, 2023 to May 1, 2024 the SEC staff supported company requests for exclusion of proposals roughly 68% of the time, similar to the average exclusion rate during the first Trump administration, from 2017-2020, which was 69%.

In the 2025 proxy season, the staff again tightened its interpretation of the micromanagement rule, excluding, for example, proposals on lobbying disclosure that had previously been permissible since at least 2011. On February 12, 2025, the SEC staff signified that it is taking a more restrictive posture on proposals that request specific forms of disclosure or actions by companies. SLB 14M issued on that day revoked SLB 14L and altered staff interpretations of the micromanagement, ordinary business and relevance exclusions. The new interpretations led to an increase in the exclusion of environmental and social proposals, and fewer such proposals appearing on proxy statements. Of particular note in SLB 14M is a shift in interpretation of micromanagement from SLB 14L’s focus on the interest and capacities of shareholders to understand and vote on an advisory proposal, and toward an evaluation as to whether the proposal seeks a specific method, strategy or outcome that the staff views as more appropriately determined by the board or management.

When Public Sentiment Drives Shareholder Strategy

How headlines, hashtags, and media cycles are reshaping proxy season

Do public opinion and media narratives really influence shareholder proposals? A new study says: yes, and in some cases, that influence is financially material.

Analyzing proposal volumes and public discourse, the authors find that:

• Increased public salience of corporate issues (like AI ethics, reproductive rights, or climate impacts) correlates with a rise in ESG-focused proposals;

• These proposals are more likely to receive broader investor support when they align with media attention and reputational risk;

• And when companies respond constructively, firm value tends to improve.

📉 Sentiment as an Early Warning Signal

For investors, public opinion is often a precursor to regulatory or reputational risk. Think of social movements that preceded litigation, consumer backlash, or regulatory intervention—public scrutiny often arrives before the balance sheet feels the impact.

This study confirms that investor engagement is increasingly attuned to reputational signals and that media awareness serves as a “soft metric” for materiality.

“In today’s democratized information environment, companies can no longer operate behind closed doors, shielded from public scrutiny. Shareholders, armed with public sentiment data, are increasingly willing to hold management accountable. This new reality underscores the importance of transparency and responsiveness in maintaining investor trust and long-term value creation. ”

These insights have significant implications for both corporate leaders and investors. For management, the warning is: ignoring public sentiment can lead to increased shareholder activism and leadership turnover. For investors, our findings highlight the effectiveness of acting with the public’s voice in leading to corporate change.

Refer to the original article here.

Shareholder Voting and Corporate Governance

Why shareholder voting isn’t just symbolic—it’s structural

It’s easy to take shareholder voting rights for granted. But according to David Yermack (2010), voting is not just a procedural ritual—it’s a foundational component of corporate accountability.

Yermack’s comprehensive review of governance literature demonstrates that strong voting rights correlate with better corporate outcomes, including:

• Lower CEO entrenchment,

• Greater board independence,

• More responsive management,

• And ultimately, improved long-term firm performance.

These effects are especially visible in firms where shareholders have actively used proposals or majority voting to reshape governance policies. This article reviews recent research into corporate voting and elections. Regulatory reforms have given shareholders more voting power in the election of directors and in executive compensation issues. Shareholders use voting as a channel of communication with boards of directors, and protest voting can lead to significant changes in corporate governance and strategy. Some investors have embraced innovative empty voting strategies for decoupling voting rights from cash flow rights, enabling them to mount aggressive programs of shareholder activism.

🛠️ Voting Rights as Investor Tools

Proposals to declassify boards, require majority voting for directors, or separate the CEO and chair roles aren’t just governance “theater.” They are functional tools that:

• Enable greater transparency,

• Shift power away from entrenched insiders,

• And reinforce the board’s accountability to long-term owners.

⚠️ A Warning Against Restriction

Yermack cautions that undermining shareholder voting mechanisms—whether by limiting proposal access or weakening vote influence—reduces a key market check on managerial behavior.

As policymakers revisit the rules around 14a-8, Yermack’s work offers a timely reminder: Shareholder voting is governance. Curtailing it risks undercutting the integrity of the capital markets themselves.

📚 Further Reading- Shareholder Voting and Corporate Governance

Shareholder Proposals and the Freedom to Invest

Investors’ right to file shareholder proposals has contributed to the success of the US capital markets.

Large, publicly traded companies play a dominant role in the U.S. economy: pharmaceutical companies influence the medicines available in our pharmacies and their cost, health insurers influence which treatments will be affordable to patients, and tech companies influence the degree to which consumers are subject to surveillance or privacy in their use of email and social media.

The free market, and the relationship between investors and issuers, is grounded in investors’ rights as company owners to elect directors as well as file shareholder proposals. The job of boards is to oversee the executives who are day-to-day managing the company. The rights to vote upon directors, as well as to present focused issues through shareholder proposals, are part of the bundle of rights investors possess and value as company owners. The unfettered exercise of these rights reinforces the relationship of trust needed for capitalism to thrive.

Shareholder proposals address issues relevant to companies that are neither trivial nor “picayune.” Risks of potential lawsuits against the company, operational disruptions from droughts, floods and fires, and of ethical scandals that shake consumer or investor confidence— these are typical issues in shareholder proposals and raise material concerns for investors. This private ordering process can allow good ideas to proliferate in the market, advancing best practices and reducing the pressure for government regulation or for more confrontational or costly approaches by shareholders, such as voting against the board, or litigation.

Without the right to make proposals, corporate management can more easily ignore the voice of small shareholders, pension funds, and other investors.

The shareholder’s right to place proposals on the proxy, and the freedom to express a collective voice by voting on such proposals, are part of the social and legal compact between investors and companies that maintains the trust needed for capitalism to thrive. This trust has resulted in the US becoming the largest and most envied capital market in the world.

Shareholder proposals are largely non-binding. Non-binding proposals give companies the flexibility to address shareholder concerns without displacing the traditional role of the board of directors to oversee the operations of the company.

The Role of Shareholder Proposals in Corporate Governance

Luc Renneboog, Peter G. Szilagyi, July 27, 2010

This paper offers evidence on the corporate governance role of shareholder proposals by simultaneously investigating the selection of target firms and the proposal outcomes in terms of voting success, implementation, and stock price effects. Using 2,436 proposals submitted between 1996 and 2005, a sample of 1,961 target and nontarget firms, as well as extensive controls for governance quality, we make several contributions to the literature. First, we find that shareholder proposals tend to be targeted at firms that both underperform and have generally poor governance structures. The results show that regardless of the proposal objectives, submissions are more likely to be made against firms that (i) use antitakeover provisions to entrench management, (ii) have ineffective boards, and (iii) have ill-incentivized CEOs. More detailed analysis reveals that target selection is largely driven by governance concerns irrespective of the sponsor type. Overall, these findings provide very limited basis to the claim that activists such as union pension funds pursue self-serving agendas. . . .

[T]he paper provides clear evidence that the market views shareholder proposals as a relevant device of external control. The stock price effects are most fundamentally driven by the target firm’s prior performance and governance quality. At the same time, they are strongest for proposals that win a majority vote as well as pass, which indicates that the market anticipates voting success reasonably well. Nonetheless, while voting outcomes and implementation rates have improved dramatically over time, the market returns are strongest during stock market peaks when there is a high premium for good governance.

Read full paper

Child Online Safety

Social media companies have been linked to numerous child safety problems, including a mental health crisis for young people, age verification failures, cyberbullying, self-harm and child sexual exploitation, and grooming and trafficking. Since 2016, a group of now more than 60 investors from multiple countries has engaged with tech companies concerning child online safety, collaborating with online safety experts, law enforcement, and policy makers such as the Senate Judiciary Committee to prompt tech companies to remove harmful content and implement stronger protections. Shareholder proposals during 2022 and 2023 at Apple, Alphabet, and Meta Platforms (Facebook) played a significant role in this investor engagement to improve child safety online.

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For information on the resolution, please click here

What is a Shareholder Proposal?

Shareholders—as owners of a company—have a legal right to offer proposals to appear on the corporate proxy statement to be voted upon at a company’s annual shareholders meeting. Corporations are required to hold these annual meetings in order for shareholders to vote
on matters related to the corporation such as auditor ratification, election of directors, and executive compensation. The Securities and Exchange Commission (SEC) requires public companies to file an announcement ahead of the annual meeting including its items of business called the proxy statement.4 SEC Rule 14a-8 allows shareholders to submit statements of up to 500 words (“shareholder proposals”) to be included in the company’s proxy statement.

The proxy statement is therefore the vehicle by which investors are informed of proposals by other investors. SEC Rule 14a-8 defines a shareholder proposal as a specific request from the shareholder - a “recommendation or requirement that the company and/or its board of directors take action, which you intend to present at a meeting of the company’s shareholders.” The SEC states that the proposal “should state as clearly as possible the course of action” that the shareholder believes the company should follow.

“Shareholder proposals are a crucial tool for investors to engage with their companies. Engagement covers a host of strategies investors use to obtain additional information and influence the policies and practices of their portfolio companies on governance and sustainable value creation.”

Some shareholder proposals seek changes in governance infrastructure, for example, requesting that the CEO and the board chair be separate people to increase the independence of the board and its ability to oversee the company on behalf of shareholders. Or they might request a change in voting standards to allow proposals to be passed by a vote of a simple majority rather than a larger voting threshold of supermajority, thus creating a better balance of power between the company and its investors. Other proposals may address environmental or social challenges facing the company—issues that may also be the subject of a wider social or political debate, but which nonetheless have a potential financial impact on the company or the larger economy on which returns depend.

For example, a proposal may request the disclosure of the company’s assessment of its operations, policies and practices designed to mitigate environmental, regulatory or liability risks associated with its mining operations. In another instance, a proposal may request
that a company report as to its timeline and plan for how it expects to transition to meet its stated objective of net zero greenhouse gas emissions. Some of these proposals might be described as “social or political proposals,” but they must nonetheless be relevant to the company’s business according to SEC rules and comply with more than a dozen strict SEC rules for acceptable proposals and filings.

Most shareholder proposals are non-binding. Non-binding proposals give companies the flexibility to address shareholder concerns without displacing the traditional role of the board of directors to oversee the operations of the company.

Artificial Intelligence

Labor strikes in the entertainment industry in 2023 demonstrated that intellectual property infringement by artificial intelligence (AI) can have a material financial impact on a company’s operations. The growing public distrust in the indiscriminate use of AI and increased government regulation were also deemed to pose material financial and reputational risks
to tech and media companies. Shareholder proposals during the 2024 proxy season filed at Netflix and Apple requesting greater clarity on the use of AI and its board oversight, and the ethical principles guiding AI use, received 43% and 37.5% of shareowner votes, respectively, thus indicating widespread investor concern on the issue.

Investors have also focused on the financial and legal risks of ineffective content moderation at large social media platforms as a serious threat to society. With Meta and Alphabet now deploying Generative Artificial Intelligence (gAI) tools, investors were concerned that critical human rights and democratic processes could be further compromised. Proposals filed on managing gAI-related risks received 16.7% of votes from all shares at Meta (53.6% of non-insider votes) and 17.6% support at Alphabet (82.4% of independent investor votes).

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To understand dual-class voting structures at technology companies in more detail, refer to the Harvard Corporate Governance article.

COVID Vaccines

How shareholder proposals promote corporate accountability

During the COVID pandemic, pharmaceutical companies received tens of billions of US and global public funding to accelerate medical breakthroughs to respond to the pandemic. Amid press reports of “pandemic profiteering”, shareholders called for financial prudence and a commitment to the public good.

Investor members of ICCR were part of a group of 59 investors representing US$2.5 trillion in assets under management who sent letters to 17 pharmaceutical companies strongly urging financial prudence and a commitment to strategies to ensure widespread access to treatments and vaccines for COVID-19, including affordable pricing and the sharing of technology to scale- up manufacturing. The letters urged the companies to show restraint in terms of pricing, tax avoidance, stock option awards, etc., and to demonstrate a willingness to share their intellectual property to ensure the necessary scale-up, manufacturing and mass distribution at prices low enough to ensure equitable access.

“Excessive drug company executive pay packages are a major contributing factor to prescription drug costs. Since the 1990s, shareholders have used shareholder proposals to urge companies such as Warner-Lambert, Eli Lilly, Bristol-Myers Squibb and Celgene Corporation selling high-priced pharmaceuticals to reduce executive compensation and take other actions to bring prices down to benefit consumers and prevent price gouging.”

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This Columbia Business Law Review article delves into the issue further.

Subprime Lending

Prior to the banking crisis of 2007-2008, shareholders of banks had attempted to draw attention to the risks of predatory lending through shareholder proposals. Predatory lending in the subprime market was of growing concern to some investors as it became clear that borrowers were unable to repay these loans and were losing their homes. In 2004, shareholders submitted a proposal at American International Group (AIG) requesting that the Board conduct a review to study ways of linking executive compensation to successfully addressing predatory lending practices. Although the proposal only received 2.8% voting support, it is a remarkable example of the prescience of shareholders as to material risks to their companies. In 2007, AIG was the world’s largest insurance company with some $850 billion in assets and 76 million customers worldwide (30 million in the US alone). By September 2008, it was on the brink of collapse. Over the course of the financial crisis, AIG received a total of $182 billion in government bailout funds.

The AIG example underscores the foresight and function of ESG-related shareholder proposals as early warning systems—tools that can identify risks long before they materialize into financial catastrophe. While proposals like the one on predatory lending may receive limited support at the time of filing, they often signal systemic vulnerabilities that, if left unaddressed, can have sweeping consequences for companies, investors, and the broader economy. This case study, among others, demonstrates why shareholder engagement should not be dismissed as mere activism. It is a necessary component of sound corporate governance and long-term risk management. In a financial system where the public’s retirement savings are often tied to the health of the national and global economy, shareholder proposals offer a critical mechanism to protect long-term value and promote corporate accountability.

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Learn more about the New York Fed’s actions related to AIG during the financial crisis here.

Drug Pricing

Polling has found that nearly 30% of Americans say they haven’t taken their medication as prescribed due to high drug prices and research estimates that more than 1.1 million Medicare patients alone could die over the next decade because they cannot afford to pay for their prescribed medications.

For decades, members of the Interfaith Center on Corporate Responsibility (ICCR) have pressed drug companies for greater disclosures on pricing structures as a way to promote greater access to medicines, including asking companies to disclose the rates of year-to-year price increases of their top-selling branded prescription drugs and to disclose the rationale and criteria used for these price increases.Excessive drug company executive pay packages are a major contributing factor to prescription drug costs. Since the 1990s, shareholders have used shareholder proposals to urge companies such as Warner-Lambert, Eli Lilly, Bristol-Myers Squibb and Celgene Corporation selling high-priced pharmaceuticals to reduce executive compensation and take other actions to bring prices down to benefit consumers and prevent excessively high prices. Investors have also expressed concern about pharmaceutical companies’ governance structures and their boards’ ability to proactively mitigate risk related to high drug prices, such as the risks from unsustainable business models that rely on price increases for growth, or strategies to extend patents without any meaningful new science.

Patent practices of pharmaceutical companies are also a corporate tool to artificially maintain high drug prices at the expense of consumers. In 2022, a shareholder proposal filed at Gilead Sciences asked for an evaluation of how the company’s patenting policies that extend exclusive rights and prevent generic competitors impact patient access and cause higher consumer drug prices. The proposal earned 39.6% voting support from investors. Similar proposals were also filed at nine other pharmaceutical companies, including proposals at Bristol Myers Squibb and Amgen that were withdrawn due to productive dialogue, and proposals that were voted on and received significant investor support at Pfizer (30.2% vote FOR) and at AbbVie (29.5% vote FOR).

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To learn more, refer to ICCR and Mercy Investment Services for detailed coverage of investor engagement with healthcare and pharmaceutical companies.

Introduction to the Ordinary Business Rule

Ordinary business

A basic principle of SEC Rule 14a-8 is that a proposal should not supplant or attempt to control the day-to-day decision-making of the corporation, referred to as “ordinary business.” The company’s officers are hired to manage the company under the oversight of the board of directors. The board is accountable as an elected representative of the shareholders. As such, the management and board have important day to day discretion in running the company—who to hire, how much to pay them, what kind of products or services the corporation should offer and many other ordinary business matters that it takes to run a business.

While a focus on ordinary business is not appropriate for a shareholder proposal, the courts and the SEC have made a notable exception when shareholder proposals address important policy issues for a company on which it is appropriate for shareholders to weigh in, often referred to as the “social policy” exception. Such proposals are described as transcending ordinary business.

For instance, while the day-to-day lending practices of a bank are ordinary business, when there is evidence that the bank is engaging in predatory policies and practices, shareholders are able to file a proposal asking the company to disclose more about this issue and its current policies. Similarly, policies regarding the amount of compensation paid to employees are generally ordinary business, but proposals coming from shareholders that challenge excessive compensation of the CEO or of directors are appropriate. A pharmaceutical company’s prices for its products are ordinary business, but company policies exploiting a pandemic to exploit vulnerable consumers may be seen to transcend ordinary business. Day to day legal compliance on environmental regulations is ordinary business, but significant pollution incidents or catastrophes that a company may be liable for may be an appropriate topic for a shareholder proposal because it transcends ordinary business.

An important related limitation is for proposals not to micromanage. Even if the topic transcends ordinary business, proponents must not be so granular in their request to the company that they attempt to micromanage the business. The discretion of the board and management is protected in this process. That is why many proposals often ask the board or management to disclose more about their policies and practices, and proposals seeking action are typically advisory rather than a mandatory order.

The Value of Environmental and Social Proposals

Evidence of sustainable value raised in environmental and social proposals

Shareholder proposals frequently address risks due to environmental issues that can be highly costly to companies and their investors when they ultimately materialize in the near- or long- term. Consider that the shareholder value of BP plummeted by 55% after the explosion of the Deepwater Horizon oil rig, from $59.48 per share on April 19, 2010 to $27 per share on June 25, 2010. Climate change-induced changes in severe weather such as drought and flooding, as well as regulatory responses and constraints in various markets worldwide, has been documented to threaten substantial financial risks to the banking, mining, industrials, transportation, agriculture and real estate sectors. Bringing greater transparency to the management of such risks has been the subject of shareholder proposals in these sectors.

Corporations also face risk related to social issues such as disruption of the business or supply chains due to human rights abuses workforce health and safety scandals or failures to protect the online safety of children. The growth in environmental and social shareholder proposals over the last several years also reflects concern that certain issues threaten the economy as a whole and large swathes of investment portfolios.

“Informed investors are often early movers on addressing risks that ultimately prove to be quite material, and even existential, to their investments. As an example, proposals filed by members of the Interfaith Center on Corporate Responsibility ICCR) against predatory lending in the early 2000s at AIG and other companies.43 At the time, these proposals might have been characterized as merely addressing social risks yet they foreshadowed the banking crisis driven by such predatory practices that proved to be very expensive for AIG and the other companies, and for society in the housing crisis and bank bailouts that followed.”

Shareholder proposals also mirror public sentiment. A recent study of companies in the Russell 3000 Index found that negative public sentiment about a firm on both financial and broad sustainable investing aspects are significantly related to the number of shareholder-sponsored proposals, with the impact of news sources being slightly stronger than social media in affecting the number of shareholder proposals. The study also found a strong association between the number of shareholder proposals on the ballot and director turnover and forced turnover of CEOs at the firm, finding one additional shareholder proposal is associated with a 10.9% increase in director turnover and a 24.8% increase in forced CEO turnover, both to the mean. The study not only found association between these factors; it also was able to demonstrate causal evidence that negative sentiment around corporate practices that are not sustainable leads to increased shareholder dissent.

Toxic Products and Chemicals

Johnson & Johnson knew its baby powder contained asbestos, an undisputed carcinogen, at least as early as the 1970s, yet allegedly misled consumers into believing its talc products, which it sold for more than a century before stopping, were safe. The misconduct led to a class action lawsuit, tens of thousands of individual lawsuits and an investigation by 42 US states and Washington, D.C. into its marketing of baby powder and other talc-based products. Some of the lawsuits included accusations that Johnson & Johnson marketed baby powder to Black and overweight women despite knowing about possible asbestos contamination for decades. While the company stopped the sale of baby powder products in the United States and Canada in 2020, the product was still on the market for many consumers worldwide by 2022, when investors filed a shareholder proposal asking the company to report on the public health risks from continued worldwide sales of its talc products.

As of mid‑2023, Johnson & Johnson had fully transitioned worldwide to its cornstarch-based baby powder, ending talc-based sales in all markets.

Toxic Chemicals in Water

Poly and perfluoroalkyl substances (PFOA and PFAS) are a class of chemicals that has been under scrutiny and has been linked to hormone disruptions, liver and kidney disease, and cancer in addition to other human health harms. In 2023, Mount Sinai researchers concluded that higher blood concentrations of certain PFAS were associated with a significant reduction in the likelihood of pregnancy and live births. Other studies have shown that certain PFAS can disrupt reproductive hormones and delay puberty and have been linked with increased risks for polycystic ovary syndrome and endometriosis.

In 2023, Sisters of St. Francis of Philadelphia filed a proposal at Essential Utilities, requesting that the company report on PFAS levels at all Essential water sources, along with the potential public health and/or environmental impacts of toxic materials in the water it provides to the public. The proponents withdrew the proposal after the company agreed to make public test results for its wells and water systems and to report the results to its one million customers.

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For more information, refer to the Sustainable Investment Institute’s Investor Briefing on PFAS and other toxic chemicals.

Climate Shareholder Proposals Show Real Market Value

Climate-focused proposals boost shareholder wealth

For years, critics dismissed climate-focused shareholder proposals as distractions—“political,” “non-financial,” or simply too speculative. But a major 2024 study by Berkman, Jona, Lodge, and Shemesh turns that argument on its head. Published in the Journal of Corporate Finance, the study rigorously analyzed thousands of environmental shareholder proposals (ESPs) filed between 2006 and 2021 across Russell 3000 companies—and found a clear signal: markets reward climate proposals.

📈 Filing Climate Proposals? Markets Notice.

The researchers measured stock price reactions around proxy filing dates and found that climate-related proposals generated significantly positive abnormal returns—stronger than proposals tied to other environmental issues. These returns weren’t just random noise: the researchers used regression discontinuity methods around voting thresholds to isolate causal effects. Their results indicate that:

• Climate proposals were more likely to elicit supportive action from management when markets reacted positively.

• This suggests that boards recognize the economic substance behind these proposals, not just the optics.

🌎 Why This Should Reshape the ESG Debate

The paper undercuts the idea that ESG is separate from financial materiality. Climate risk—in the form of emissions exposure, stranded asset concerns, supply chain volatility, and regulatory pressure—has real and quantifiable value implications. Shareholder proposals targeting these concerns are not niche or ideological; they are market signals of unmanaged risk.

For institutional investors, this research strengthens the argument that voting in favor of well-constructed climate proposals isn’t just a values move—it’s a fiduciary imperative.

📘 Read the study: Berkman et al. (2024), The Value Impact of Environmental Shareholder Proposals

How Retail Investors Shaped Corporate Governance

Many corporate governance policies that today are viewed widely as best practice were initially driven by the shareholder proposals of small individual “Main Street” investors—not large institutions—and then expanded to common adoption by markets.

Going back to the 1940’s, a small, dedicated group of individual investors have played a leading role in the filing of governance-related shareholder proposals that received high levels of investor support and drove many reforms covering a range of governance topics. These reforms have enhanced capital markets by strengthening the ability of boards to oversee shareholder interests and by addressing power imbalances between investors and company boards and management, proof that many constructive ideas have come from smaller individual investors.

It has driven many reforms covering a range of governance topics, including eliminating staggered director terms, reducing supermajority voting thresholds, requiring an independent board chair, eliminating dual class voting, requiring shareholder approval of bylaw amendments, requiring majority voting in uncontested director elections, and proxy access for shareholder director candidates. The governance-related proposals of individual investors attracted, on average, 47.8% shareholder support between 2005 and 2018, and accounted for a large portion of the passed proposals, an indication that these proposals were receiving widespread support from larger investors. Many of these issues were also adopted by major investors in their proxy voting guidelines and corporate engagements, by market exchanges, and by companies— compelling evidence that constructive ideas have come from these smaller individual investors.

Some examples of corporate governance policies that today are viewed widely as best practice and that were initially driven by shareholder proposals and then expanded to common adoption by companies and markets, include:

• ƒ  Independent Directors and Board Recruitment: Shareholder proposals have encouraged norms such as independent directors constituting a majority of the board, independent board leadership, transparency of board recruitment and qualifications, and annual elections for all directors. For example, in 2013, shareholders submitted approximately 70 proposals requesting the adoption of a policy requiring that the company’s board chair be an independent director.

• ƒ  Electing Directors by Majority Vote: Shareholder proposals have encouraged electing directors by majority vote, rather than by plurality—a radical idea a decade ago when shareholders pressed for it in proposals, and now the norm at 90% of large-cap U.S. companies.29 In 2011, Apple was one of 58 companies the California Public Employees Retirement System urged to adopt majority rather than plurality voting, which more evenly balances power between the company and its investors.30 The proposal had majority support from shareholders at Apple and many other companies.

• ƒ  “Say-on-pay”vote requirements: Now mandated by the Dodd-Frank Act—say on pay vote requirements originally resulted from shareholder proposals. The Say-on-Pay vote asks investors to vote on the compensation of the top executives of the company—the CEO, the Chief Financial Officer, and at least three other most highly compensated executives (“named executive officers”).

Shareholder Proposals: Bridging Governance and Regulation

How policy-aligned proposals shape ESG credibility and investor confidence

In a rapidly evolving ESG policy landscape, shareholder proposals are no longer just investor opinions—they are tools that anticipate and influence regulatory alignment. A 2025 study by Luca and Clement dives into this shift, analyzing how proposals that reflect emerging regulatory frameworks (like the SEC’s climate disclosure rules or Europe’s CSRD) can enhance a firm’s ESG profile and attract institutional capital.

The researchers reviewed dozens of U.S. and European proposals filed between 2017–2024 and linked them to outcomes such as ESG ratings trajectory, portfolio inclusion by ESG-screened funds, and net changes in institutional shareholding.

📌 The Key Finding: Regulatory Synergy Works

Proposals that mirror emerging policy trends (like requests for Scope 3 emissions disclosure or alignment of lobbying practices with stated climate goals) were:

• More likely to be implemented, especially in companies facing global investor pressure;

• Associated with improvements in third-party ESG credibility scores;

• Positively correlated with increases in long-horizon institutional investment, especially from European funds that screen for regulatory preparedness.

🧠 Why This Strategy Is Working

Boards that engage with these proposals are hedging regulatory risk and building investor trust. Instead of waiting for mandatory compliance, these companies use shareholder proposals as a way to “pre-comply” with known regulatory shifts, creating more agile, resilient governance frameworks.

The research supports what sophisticated investors already practice: well-crafted ESG proposals are strategic, not burdensome. They build credibility with regulators, appeal to allocators, and reduce uncertainty.

For more, access the full publication here.

Workplace Health and Safety

Amazon has been in the news concerning its unsafe working conditions, including rates of safety incidents far above those of its competitors, such as Walmart and Costco. State labor regulators have alleged that working at Amazon exposes employees to increased risk of ergonomic injury and musculoskeletal disorders as they awkwardly bend and twist to move goods through the warehouse. According to a December 2024 report of the Senate Committee on Health, Education, Labor, and Pensions, at least two internal Amazon studies found a link between how quickly its warehouse workers perform tasks and workplace injuries, but the company rejected many safety recommendations out of concern that the proposed changes might reduce productivity. Shareholder resolutions at Amazon in 2022, 2023, and 2024 focused on this potentially harmful conduct, asking the company to report on worker health and safety and the treatment of its warehouse workers.

Consistent support above 30% over three years shows significant investor concern. Amazon has responded by reinforcing its existing safety narrative, highlighting improvements, opposing external audits, and publicly disputing federal findings. The outcome underscores both the influence and ongoing limitations of shareholder-driven engagement at the company.

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For NPR’s coverage of the issue, please check here.

Rail Safety

Shareholder engagement on railroad safety has been an important force in pushing rail transport corporations to prioritize long-term risk management and community well-being. Following the financial and human costs of disasters like the East Palestine derailment to the local community and surrounding states, the rail industry was resistant to safety measures, blocking regulations such as two-person crew requirements. In response, in 2024, investors filed shareholder proposals at major rail companies such as CSX and Union Pacific aimed at creating safety-focused board oversight of reforms to prevent derailments, protect workers, and safeguard communities. This underscores the importance of shareholder advocacy to hold companies accountable for ethical behavior, address material financial and reputational risks, and preserve shareholder value.

Investor action has already begun to influence corporate behavior. In 2024, CSX agreed to publish a report on safety practices following shareholder pressure, and Union Pacific faced heightened scrutiny over its board’s oversight of derailment risks. These examples highlight how shareholder proposals can push companies to adopt stronger safety standards, demonstrating the material relevance of investor engagement in protecting both communities and long-term shareholder value.

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The Washington Post covers the rail industry’s response to the issue of rail safety.