Large investors benefit from smaller investors' right to file proposals

Heidi W. Hardin, General Counsel & Executive Vice President, MFS

Our investment process relies on a long-term orientation, deep fundamental research, and institutional risk controls. Our clients appoint us to help them achieve their investment objectives over the long term. Generally, our clients' objective is to maximize the financial return of their portfolio within appropriate risk parameters.   MFS seeks to understand any factor that could impact our clients' investment returns over the long-term, including financially material environmental, social, and governance ("ESG") factors. 

MFS has historically supported a wide variety of shareholder proposals on ESG topics….  because we believed that the proposals encouraged improved governance or provided shareholders with insight into the company's management of environmental, social, reputational or regulatory risks… Over the years, we have seen smaller shareholders use the shareholder proposal process to initiate and encourage improved governance (e.g., declassification of boards and the introduction of proxy access) and better management of financially material environmental and social risks (e.g., disclosure of risks from climate-related regulatory changes). 

 As a large institutional investor, we generally have access to management teams and directors that smaller shareholders may not have. The current shareholder proposal process offers smaller shareholders the opportunity to have management teams and boards consider the unique, and potentially financially material, risks they have identified.

As an active investor, we believe that it is to our client's benefit to understand the views of other shareholders, as this information can augment our understanding of the risks and opportunities inherent in the companies we own.  As such, we would view any action to limit some shareholders' rights to file proposals as an action to limit all shareholders' ability to fully consider all risks and opportunities of their investment.

Note: MFS is a global asset management firm with $485 billion in assets under management (as of August 31, 2018). 

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