Investor Letter to SEC: Rulemaking on Rule 14a-8 Not Needed

September 18, 2019

The Honorable Jay Clayton
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20001

The Honorable William Hinman
Director, Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20001

Dear Chair Clayton and Mr. Hinman:

The 129 undersigned investors and investor organizations, representing $525 billion in assets under management, are writing to share their concerns about potential changes to Rule 14a-8. The Securities and Exchange Commission has placed investors on alert with its May 2019 announcement that it is considering conducting a rulemaking to alter the thresholds for filing and/or resubmission of shareholder proposals.

Rule 14a-8 is a vitally important, cost-effective, market-based mechanism for shareholders of all sizes to communicate with management teams, directors and other shareholders on important corporate governance, risk and policy issues that affect companies and their investors. We oppose changes to Rule 14a-8 for the following reasons:

  • The current rule is not broken. While a handful of large trade associations are advocating for the SEC to make changes to reduce investors’ ability to engage constructively with companies, this process is one of the most reliable—and vital— ways in which investors can practice responsible ownership. Additionally, it allows shareholders to raise issues before they become crises that can erode shareholder value.

  • Investors in publicly traded companies have long held the right to participate in the shareholder proposal process. In exchange for capital, shareholders gain unique rights to bring concerns in front of corporate management. Changes to submission and resubmission thresholds will likely decrease shareholders’ ability to share concerns about and suggestions for better policies and procedures. Concerns may thus emerge in other ways including voting against directors, lawsuits, books and records requests and requests for additional regulations. The existing rule provides a well-established, well understood, and reasonably predictable vehicle for investor input.

  • The rule is designed to give voice to all investors, including small investors. The size of a shareholder’s investment in a company does not dictate the quality of the shareholder’s idea. The threshold to file a shareholder proposal was intentionally set at a level which allows small institutional and individual shareholders alike to engage corporate boards and senior management. It has been pegged at a modest level for over 70 years. This harnesses the power of the free market to the benefit of companies, investors and the economy. Efforts to revise ownership thresholds upwards would likely exclude retail investors.

  • The existing resubmission thresholds are effective at screening out proposals considered irrelevant or ill-advised by most shareholders. Advocates for weakening shareholder rights argue that submission criteria and resubmission thresholds should be revised upwards. It is our view that those advocates have not substantiated a clear and widespread problem requiring the SEC to propagate a lengthy and costly rulemaking to alter Rule 14a-8. This move seems particularly misguided when there are much more pressing matters before the SEC, such as proxy plumbing and universal proxy.

Over the years, shareholder proposals have helped companies address issues before they have become significant problems.  Proposals have contributed to significant and tangible benefits at companies. Issues addressed by shareholder proposals include:

  • The now standard practice that independent directors constitute at least a majority of the board. This is now mandated in US stock exchanges’ listing standards;

  • Advisory votes on executive compensation, or “say-on-pay” vote requirements – now mandated by the Dodd–Frank Wall Street Reform and Consumer Protection Act;

  • Wide-scale adoption of international human rights principles as part of corporate codes of conduct and supply chain policies which help protect companies from legal and reputational risk;

  • Expanded company initiatives to reduce greenhouse gas contributions to climate change and report about these efforts;

  • Widespread adoption of corporate sustainability reporting;

  • Adoption of comprehensive nondiscrimination policies that include sexual orientation and gender identity or expression which are now standard practice at the majority of large companies;

  • Increased board diversity.

The SEC’s job is to protect investors and maintain well-functioning markets. Thus, we urge the SEC to protect the market mechanism tools available for shareholders to ensure that companies are transparent and accountable. It does not benefit the economy, companies or the capital markets to diminish this fundamental right.   


Abacus Wealth Partners
Santa Monica, CA

Addenda Capital
Toronto, ON

Adrian Dominican Sisters Portfolio Advisory Board
Adrian, MI

American Federation of Labor and Congress of Industrial Organizations
Washington, DC

Arjuna Capital
Manchester-by-the-Sea, MA

As You Sow
Berkeley, CA

Azzad Asset Management
Falls Church, VA

Foster City, CA

Bon Secours Mercy Health
Cincinnati, OH

Boston Common Asset Management
Boston, MA

Boston Trust Walden
Boston , MA

Brethren Foundation Funds

Calvert Research and Management
Washington, DC

Catholic Health Initiatives
Englewood, CO

Change Finance, PBC
Longmont, CO

Church Investment Group
Atlanta, GA

Church of the Brethren Benefit Trust
Elgin, IL

Clean Yield Asset Management
Norwich, VT

CNote Group, Inc.
Oakland, CA

Communitas Financial Planning
San Francisco, CA

Conference for Corporate Responsibility Indiana and Michigan
Indiana and Michigan

Confluence Philanthropy
Oakland, CA

Congregation of Sisters of St. Agnes
Fond Du Lac, WI

Congregation of St. Joseph
Wheeling, WV

Cornerstone Capital Group
New York, NY

Corporate Governance (
Elk Grove, CA

Corporate Responsibility Office - The Province of Saint Joseph of the Capuchin Order
Detroit, MI

Dana Investment Advisors
Waukesha, WI

Daughters of Charity, Province of St. Louise
St. Louis, MO

Dignity Health
Santa Cruz, CA

Domini Impact Investments LLC
New York, NY

Dominican Sisters ~ Grand Rapids
Grand Rapids, MI

Dominican Sisters of Peace
Columbus, OH

Dominican Sisters of Springfield IL
Springfield, IL


Everence and the Praxis Mutual Funds
Goshen, IN

Figure 8 Investment Strategies

First Affirmative Financial Network
Colorado Springs, CO

Franciscan Sisters of Mary
Bridgeton, MO

Franciscan Sisters of Perpetual Adoration
La Crosse, WI

Friends Fiduciary Corporation
Philadelphia, PA

Fund for Democratic Communities
Greensboro, NC

Green America
Washington, DC

Green Century Capital Management
Boston, MA

Hampshire College
Amherst, MA

Harrington Investments, Inc.
Napa, CA

IBEW Pension Benefit Fund
Washington, DC

Impact Investors
San Diego, CA

Impax Asset Management
Greenwich, CT; London, UK

Incourage Community Foundation, Inc.
Wisconsin Rapids, WI

Interfaith Center on Corporate Responsibility
New York, NY

Investor Environmental Health Network
Boston, MA

Investor Voice
Seattle, WA

James McRitchie
Elk Grove, CA

Jantz Management LLC
Boston, MA

Jessie Smith Noyes Foundation
New York, NY

Jesuit Committee on Investment Responsibility
Washington, DC

JLens Investor Network
New York, NY

John Chevedden
Redondo Beach, CA

KBI Global Investors
Dublin, Ireland

Kendall Sustainable Infrastructure
Cambridge, MA

Laura Isanuk
Denver, CO

Leadership Team of the Felician Sisters of North America
Beaver Falls, PA

Manaaki Foundation
Chicago, Illinois

Manhattan Country School
New York, NY

Mary Reynolds Babcock Foundation
Winston-Salem, NC

Maryknoll Sisters
Maryknoll, NY

Mennonite Education Agency
Goshen, IN

Mercy Investment Services, Inc.
St. Louis, MO

Miller/Howard Investments, Inc.
Woodstock, NY

Missionary Oblates/OIP Trust
Washington, DC

Natural Investments
San Francisco, CA

Newground Social Investment
Seattle, WA

NorthStar Asset Management, Inc.
Boston, MA

Northwest Coalition for Responsible Investment
Seattle, WA

Office of the Illinois State Treasurer Michael Frerichs
Chicago, IL

Office of the Vermont State Treasurer
Montpelier, Vermont

Oneida Nation - Trust Enrollment Department
Green Bay, WI

Oxfam America
Boston, MA

Parnassus Investments
San Francisco, CA

Pax World Funds
Portsmouth, NH

Portico Benefit Services
Minneapolis, MN

Providence St. Joseph Health
Renton, WA

Region VI Coalition for Responsible Investment
Cleveland, OH

Rhode Island Treasurer's Office
Providence, RI

Riverwater Partners
Milwaukee, WI

Robasciotti & Philipson
San Francisco, CA

Rose Foundation for Communities and the Environment
Oakland, CA

Sant Charitable Foundation, Inc.
Washington, DC

School Sisters of Notre Dame Cooperative Investment Fund
Wilton, CT

School Sisters of St. Francis
Milwaukee, WI

Seattle City Employees' Retirement System
Seattle, WA

Segal Marco Advisors
Chicago, IL

Seventh Generation Interfaith Inc
Milwaukee, WI

SharePower Responsible Investing
Westminster, MD

Shawn T. Wooden, Connecticut State Treasurer
Hartford, CT

Sierra Club Foundation
Oakland, CA

Sisters of Charity of Saint Elizabeth
Convent Station, NJ

Sisters of St. Dominic/Racine Dominicans
Racine, WI

Sisters of St. Francis Charitable Trust, Dubuque
Dubuque, IA

Sisters of St. Francis of Philadelphia
Aston, PA

Sisters of St. Joseph of Boston
Brighton, MA

Sisters of the Holy Family
Fremont, CA

Sisters of the Humility of Mary
Villa Marie, PA

Sisters of the Presentation of the BVMary of Aberdeen SD
Aberdeen, SD

Sonen Capital
San Francisco, CA

SRI Investing LLC
New York, NY

Sustainable Insight Capital Management
New York, NY

Swift Foundation
Santa Barbara, CA

Boise, ID

The Episcopal Church (DFMS)
New York, NY

The Russell Family Foundation
Gig Harbor, WA

The Summit Foundation
Washington, DC

The Sustainability Group of Loring, Wolcott & Coolidge
Boston, MA

Thomas P. DiNapoli, New York State Comptroller
Albany, NY

Tides Foundation
San Francisco, CA

Toniic Institute
San Francisco, CA

Tri-State Coalition for Responsible Investment
Montclair, NJ

Trinity Health
Livonia, NY

Unitarian Universalist Association
Boston, MA

US SIF: The Forum for Sustainable and Responsible Investment
Washington, DC

Utility Workers Union of America, AFL-CIO
Washington, DC

ValueEdge Advisors
Portland, ME

Veris Wealth Partners
San Francisco, CA

Vermont Pension Investment Committee
Montpelier, VT

Vert Asset Management
Sausalito, CA

Wallace Global Fund
Washington, DC

Wespath Benefits and Investments
Glenview, IL

Zevin Asset Management
Boston, MA


Cc:       Commissioner Roisman
            Commissioner Peirce
            Commissioner Jackson
            Commissioner Lee