Letter to SEC Chairman Atkins from Council of Institutional Investors

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Dear Chairman Atkins:

I am writing on behalf of the Council of Institutional Investors (CII). CII is a nonprofit, nonpartisan association of United States (U.S.) public, corporate and union employee benefit funds, other employee benefit plans, state, and local entities charged with investing public assets, and foundations and endowments with combined assets under management of approximately $5 trillion. Our member funds include major long-term shareowners with a duty to protect the retirement savings of millions of workers and their families, including public pension funds with more than 15 million participants – true and real “Main Street” investors through their pension funds. Our associate members include non-U.S. asset owners with more than $5 trillion in assets, and a range of asset managers with more than $74 trillion in assets under management.¹

We read with interest the Securities and Exchange Commission’s (SEC) “Statement Regarding the Division of Corporation Finance's Role in the Exchange Act Rule 14a-8 Process for the Current Proxy Season” (Statement). ² We recognize and appreciate the SEC’s “current resource and timing considerations following the lengthy government shutdown and the large volume of registration statements and other filings requiring prompt staff attention . . . .”³ We, however, are concerned that the Statement could diminish the use of an important shareholder right that for decades has led to improvements in corporate governance that benefit long-term shareholder value.⁴

The Preamble to CII’s membership-approved policies states:

CII believes effective corporate governance and disclosure serve the best long-term interests of companies, shareowners and other stakeholders. Effective corporate governance helps companies achieve strategic goals and manage risks by ensuring that shareowners can hold directors to account as their representatives, and in turn, directors can hold management to account, with each of these constituents contributing to balancing the interests of the company’s varied stakeholders. We consider effective disclosure to be accurate, prompt and useful information on company policies, practices and results. CII advocates for investor protection and robust capital markets, accomplished through a combination of private ordering and market-wide rules and regulations.

CII supports shareowners’ discretion to employ a variety of stewardship tools to improve corporate governance and disclosure at the companies they own. These tools include casting well-informed proxy votes; engaging in dialogue with portfolio companies (including with board members, as appropriate), external managers and policymakers; filing shareholder resolutions; nominating board candidates; litigating meritorious claims; and retaining or dismissing third parties charged with assisting in carrying out these activities.⁵

Consistent with that policy, CII believes that shareholder proposals, which are almost always nonbinding, are an essential and cost-effective tool for expressing the collective voice of a company’s shareowners on particular matters, and have made important contributions to corporate governance over the last 50 years. ⁶ Moreover, because “sound corporate governance is critical to long-term returns — and because poor governance can have a negative result on returns — CII members have a strong interest in seeing that shareholders can submit and vote on shareholder proposals that raise important corporate governance issues.” ⁷

In addition, CII has long publicly supported the view held by most market participants⁸ that the SEC’s Division of Corporation Finance (SEC Staff) is a fair arbiter for implementing the shareholder rule⁹ governing shareholder resolutions.¹⁰ And that “CII members take comfort in the fact that the SEC [S]taff is playing a role in terms of overseeing these proposals.”¹¹ What’s more, we believe corporations also benefit from the SEC Staff reviewing a corporation’s decision to include a shareholder proposal based on enumerated exclusions under Rule 14a-8 and providing an opinion on such exclusion through the no-action process.¹²

As you are aware, the Statement, without the benefit of public comment, ¹³ results in a fundamental change in how the SEC Staff approaches shareholder proposals under Rule 14a-8. ¹⁴As but one example, the Statement indicates that the SEC Staff will accept a company’s representation that it has a “reasonable basis” to exclude a proposal and won’t object to that conclusion. ¹⁵

We note that the Statement could potentially limit the ability of shareowners to file shareholder proposals that would otherwise meet the existing requirements of Rule 14a-8 and improve corporate governance and long-term shareholder value at the companies they own. We believe that good corporate governance practices could lead to special scrutiny of those corporate boards that may elect to respond to the Statement by omitting shareholder proposals from their proxy materials relying on the new process described in the Statement. We also believe that this special scrutiny could lead some institutional investors to holding some companies’ directors or boards accountable through (1) vote no-campaigns, ¹⁶or (2) litigation. ¹⁷ Thus, rather than alleviating pressure on corporate boards, the Statement could result in greater board-level instability through unnecessarily increasing issuers reputational¹⁸ or legal risks. ¹⁹

We also note that the Statement indicated that the new process “applies to the current proxy season (October 1, 2025 – September 30, 2026) as well as no-action requests received before October 1, 2025 to which the Division has not yet responded.”²⁰ We believe, for all the above reasons, the new process should be reconsidered and reversed as soon as practicable, but no later than the end of this proxy season.²¹

Thank you for your consideration of our views on this important matter. We would welcome the opportunity to meet with you and/or your staff to discuss our concerns in more detail and to answer any questions regarding this letter.

Sincerely, Jeffrey P. Mahoney General Counsel

References:

Council of Institutional Investors, Current CII Members, https://www.cii.org/current%20cii%20members.

1 Division of Corporation Finance, Securities and Exchange Commission, Statement Regarding the Division of Corporation Finance’s Role in the Exchange Act Rule 14a-8 Process for the Current Proxy Season (Nov. 17, 2025), https://www.sec.gov/newsroom/speeches-statements/statement-regarding-division-corporation-finances-roleexchange-act-rule-14a-8-process-current-proxy-season.

2 Id.

3 Letter from Jen Sisson, Chief Executive Officer, International Corporate Governance Network, to Paul S. Atkins, Chairman, Securities and Exchange Commission, et al. (Dec. 10, 2025), https://www.icgn.org/sites/default/files/2025-12/30.%20ICGN%20letter%20to%20SEC%20on%20shareholder%20proposals.pdf.

4 Council of Institutional Investors, Policies on Corporate Governance – Preamble (last updated Mar. 11, 2025), https://www.cii.org/corp_gov_policies#intro.

5 Letter from Kenneth A. Bertsch, Executive Director, Council of Institutional Investors, et al. to Vanessa A. Countryman, Secretary, Securities and Exchange Commission (Jan. 30, 2020), https://www.cii.org/Files/issues_and_advocacy/correspondence/2020/20201030%2014a8%20comment%20letter%20FINAL.pdf.

6 Daniel M. Stone, SEC Suspicion of Shareholder Proposals Hurts Corporate Democracy, Bloomberg Government (Dec. 22, 2025).

7 Brief of the Council of Institutional Investors as Amicus Curiae in Support of Plaintiffs’ Motion for Summary Judgment, ICCR v. SEC, No. 1:21-cv-1620-RBW (D.D.C. Sept. 24, 2021), https://www.cii.org/files/issues_and_advocacy/legal_issues/17_Brief_final.pdf.

8 Amendments to Rule 14a-8 Under the Securities Exchange Act of 1934 Relating to Proposals by Security Holders, Exchange Act Release No. 20091, 48 Fed. Reg. 38218 (Aug. 23, 1983).

9 Shareholder Proposals, 17 C.F.R. § 240.14a-8 (Feb. 18, 2025), https://www.ecfr.gov/current/title-17/chapter-II/part-240/subpart-A/section-240.14a-8.

10 Council of Institutional Investors, Leading Investor Group Defends SEC as Fair Arbiter of Shareholder Proposals as ExxonMobil Goes to Court (Feb. 8, 2024), https://www.cii.org/feb82024-press-release-exxon.

11 Roundtable Discussions Regarding the Federal Proxy Rules and State Corporation Law, Statement of Ann Yerger, Council of Institutional Investors, before the Securities and Exchange Commission (May 7, 2007), https://www.sec.gov/spotlight/proxyprocess/proxy-transcript050707.pdf.

12 Andrew Ramonas & Drew Hutchinson, SEC Prepares Plan to Curb Company Reporting, Investor Proposals, Bloomberg Government (Dec. 29, 2025).

13 Gina Gambetta, Uncharted Territory: How Are Investors Preparing for the 2026 AGM Season?, Responsible Investor (Dec. 17, 2025), https://www.responsible-investor.com/uncharted-territory-how-are-investors-preparing-for-the-2026-agm-season/.

14 ICCR, Statement on Recent Policy Change at the SEC (Nov. 20, 2025), https://www.iccr.org/iccr-statement-on-recent-policy-change-at-the-sec/.

15 SEC to Companies: You’re on Your Own (Sort Of) Under Rule 14a-8, Winston & Strawn Blog (Nov. 24, 2025), https://www.winston.com/en/blogs-and-podcasts/capital-markets-and-securities-law-watch/sec-to-companies-youre-on-your-own-sort-of-under-rule-14a-8.

16 Public Companies in Uncharted Territory Following SEC Announcement It Will Step Back from Responses on Most Shareholder Proposal No-Action Requests, White & Case Alert (Nov. 24, 2025), https://www.whitecase.com/insight-alert/public-companies-uncharted-territory-following-sec-announcement-it-will-step-back.

17 Proposal Free-for-All Sets In as Early Filers Contend with SEC Withdrawal, Agenda, Gallagher (Dec. 15, 2025).

18 Kevin M. LaCroix, Guest Post: Is the SEC Signaling the End of ESG Shareholder Proposals?, D&O Diary (Dec. 16, 2025), https://www.dandodiary.com/2025/12/articles/securities-regulation/guest-post-is-the-sec-signaling-the-end-of-esg-shareholder-proposals/.

19 Leland S. Benton et al., SEC Division of Corporation Finance Announces Major Changes to Rule 14a-8 Shareholder Proposal Process, Morgan Lewis LawFlash (Nov. 19, 2025), https://www.morganlewis.com/pubs/2025/11/sec-division-of-corporation-finance-announces-major-changes-to-rule-14a-8-shareholder-proposal-process.

20 Letter from Elizabeth A. Steiner, Oregon State Treasurer, et al. to Paul S. Atkins, Chairman, Securities and Exchange Commission (Dec. 3, 2025).

21 Letter from Jen Sisson, Chief Executive Officer, International Corporate Governance Network, to Paul S. Atkins, Chairman, Securities and Exchange Commission, et al. (requesting reconsideration of the Statement).