November 2, 2026
Read the submitted comment letter here.
Imagine arriving at your local polling place to find the candidates still on the ballot—but every ballot question proposed by fellow citizens has vanished.
A clerk tells you that, unless you object, your vote will be cast on unnamed, undisclosed ballot questions as officials currently in power choose.
No American would accept that arrangement at City Hall.
Investors will not accept that arrangement for corporate annual meetings, either.
To the Commission:
The Shareholder Rights Group is an association of investors, asset managers, faith-based institutions, and individual shareholders. We oppose the proposed rescission of Rule 14a-8 and amendments to Rule 14a-4, and urge the Commission to withdraw those proposals.[1]
The principle at stake is fundamental: federal law guarantees that investors be armed with the tools necessary to exercise intelligent judgment and voting on matters to be presented at corporate annual meetings, whether those investors vote by proxy or attend in person. They should be able to be fully informed as to what is being considered, be able to direct how their shares are voted, and have a meaningful opportunity to put proposals before fellow shareholders.
The Rule 14a-8 shareholder proposal process lets public-company owners manage risks that companies might otherwise minimize or neglect[2] and often serve as a critical early warning system on emerging risks facing a company. The rule has helped advance governance reforms such as majority-voting standards for directors, given shareholders a voice on executive pay, and brought transparency to climate-related financial risks.[3] As an example of a topic of current concern, it has also allowed shareholders to elevate questions about AI-related risks.[4] Investors and companies have relied on this rule for more than 80 years.
1. The rulemaking proposal subverts the central safeguard of the Securities Exchange Act: the right of shareholders to access tools that enable intelligent judgment and voting on matters raised at an annual meeting.
The release asserts that Rule 14a-8 exceeds the Commission’s statutory authority. The Commission’s own decisions and releases over eight decades, together with the legislative history, weigh heavily against that conclusion. The Securities Exchange Act was enacted to provide a federal solution to the failure of state laws to guarantee dispersed shareholders the tools necessary to exercise informed judgement and hold management accountable. The Act secured that right through federally regulated proxy materials. The Commission explained in its Sixth Annual Report (fiscal year ended June 30, 1940):
Where the stockholders are uninformed concerning the matters upon which the proxies are to be voted and where the proxy machinery is available only to the existing management, it is impossible for the average stockholder to protect his investment through intelligent participation in the determination of corporate policies. Accordingly, the general purpose of the proxy rules is to insure that security holders who are requested to authorize or consent to proposed corporate action are furnished with sufficient information to enable them to exercise an intelligent judgment on the matters involved, as well as an opportunity to indicate their approval or disapproval of such matters.
The fundamental requirement of the proxy rules is that corporate managements and others who solicit proxies, consents, or authorizations from security holders shall furnish to the security holders a proxy statement containing prescribed information as to each matter on which the proxies are to be voted. Furthermore, with certain exceptions, the persons soliciting such proxies, consents, or authorizations must give stockholders an opportunity to specify whether their proxies shall be voted for or against each proposal submitted. The Commission believes that the information now required to be disclosed in the proxy statement with respect to such vital matters as the election of directors, voluntary reorganizations, and mergers is the minimum which must be furnished to stockholders to enable them to act intelligently with respect to their investments.
The rules also require that managements give to minority stockholders an opportunity to present new proposals to their fellow stockholders. For example, a stockholder who desires to secure corporate action on a suggestion of his own can be assured that in most cases his proposal will be submitted to the other stockholders of the corporation if he gives timely notice to the management of his intention to present the matter at the annual meeting. [5] [Emphasis added].
Rule 14a-8 does not alter any shareholder right under state corporate law, and it does not displace state law. [6] Whether a shareholder may bring a proposal before a meeting remains a matter of state law and the company’s governing documents. A shareholder may raise the same proposal from the floor whether or not Rule 14a-8 exists. The rule also does not dictate corporate outcomes: most proposals are precatory, and a vote on them binds no one.
What Rule 14a-8 does regulate is the content of the company’s proxy statement—a federally mandated disclosure document and voting vehicle. Section 14(a) authorizes the Commission to prescribe rules governing proxy solicitation “as necessary or appropriate in the public interest or for the protection of investors.”
Congress enacted Section 14(a) to protect dispersed, poorly informed shareholders from being manipulated into signing blank proxies that leave insiders to cast important votes without meaningful investor direction. This is a basic safeguard. Shareholders should have information about what is being decided and the opportunity to cast their own votes, rather than surrendering voting authority on an uninformed basis.
Squarely within that authority is the ability to require management, when it solicits proxies for a meeting at which a shareholder proposal will be presented, to disclose that proposal and give shareholders a means to vote on it. The opportunity to exercise intelligent judgment on such matters expected to be raised in the annual meeting is dependent on accessing the full text of a qualifying proposal—currently limited to 500 words—and to exercise a choice by casting a vote on that item. Under the rulemaking proposal, the 500 words would disappear from the proxy statement. Shareholders would instead receive on a one line company-written description, buried in the proxy statement and no check boxes to vote for or against each proposal on the proxy card. Thus the rulemaking proposal would dismantle the safeguards of informed judgment: it would eliminate Rule 14a-8’s requirement for inclusion of proposals and supporting statements in company proxy materials as well as limit shareholders’ ability to vote on them on the proxy card.
The Commission suggests that states can give proposals proxy access, even though the federal law was established precisely because states were already a poor protector of informed proxy voting by dispersed shareholders. State-by-state rules risk a race to the bottom and different shareholder proposal rules at every company. Texas has already enacted a law that purports to let certain companies exclude proposals unless proponents hold $1 million in company stock and solicit holders of at least 67% of the voting power.[7] That threshold would reserve access for the wealthiest shareholders, not necessarily those with the most valuable ideas. The Commission in its administration of Rule 14a-8 has long recognized that the merits of an idea presented in a proposal do not depend on the proponent’s wealth.[8]
The Commission suggests that proponents would still have the option of raising proposals from the floor of a meeting under state law. But most shareholders vote by proxy and do not attend annual meetings. With Rule 14a-8 eliminated, reaching a company’s dispersed shareholders independently would require the proposals to prepare and distribute their own proxy materials at far greater cost than under Rule 14a-8, and likely at much greater marginal cost to both proponents and the company compared with inclusion of the proposal in the company’s own proxy statement that is already being transmitted to all company shareholders.[9] Retirees, individual investors, and small funds would face high barriers that would thwart most of their proposals from appearing on the proxy, while large investors who could theoretically afford the independent solicitations seldom need them because they can often reach boards directly without even filing proposals. [10] Eliminating Rule 14a-8 would silence those who depend on it most to file, and would deprive all shareholders of the opportunity to receive and vote on their proposals.
2. Rule 14a-8 rescission combined with Rule 14a-4 amendments would transform the proxy ballot into a blank check
Today, the proxy card gives shareholders a choice. Directors, management items, and shareholder proposals appear on the card, each with options to vote For, Against, or Abstain. Shareholders can review the questions and record their own decisions.
Under the combined Rule 14a-8 and Rule 14a-4 amendments, there would be far fewer shareholder proposals filed and a company would not have to put proposals on the proxy card. Instead it would have to include only a single, technical-sounding checkbox for withholding consent from management on discretionary voting. If a shareholder leaves the box unchecked, management would be able to vote that shareholder’s shares against any shareholder proposals presented at the meeting. The card would provide no direct way to vote for or against each proposal anticipated at the meeting.
This restores the conditions the Securities Exchange Act was enacted to prevent: poorly informed shareholders being manipulated into signing blank proxies that leave insiders to cast important votes without meaningful investor direction. Silence would be counted as consent.
3. Rule 14a-8 has guardrails that can be recalibrated to address policy concerns.
Rule 14a-8 has meaningful guardrails. Proponents must meet ownership requirements; proposals must satisfy relevance standards and generally cannot address ordinary business. Proposals are limited to 500 words, and those receiving low support face resubmission restrictions. Most are nonbinding, signaling shareholder priorities and informing boards without compelling company action.
The SEC’s institutional knowledge, labor and capacity embedded in the Rule has served investors, companies, and markets for more than 80 years. Jettisoning the rule would entail a harmful and disruptive elimination of that institutional knowledge and capacity, including the guardrails that investors and companies rely upon.
Across the decades of administration of the rule, the Commission has periodically recalibrated to address evolving issues in application of the rule. It has adjusted those guardrails from time to time to limit access to the federally regulated proxy statement even where state law might afford more flexibility in presenting floor proposals. For example, state law might tolerate individuals raising personal grievances or raising irrelevant proposals on the floor of a meeting. The SEC rules provide for exclusion of such proposals from the proxy statement – to protect the interests of the issuers in what appropriately appears in the proxy.
In its rulemaking release, the Commission makes a series of policy arguments about the current usage of the proposal process that are of the type that has caused the Commission in prior years to recalibrate filing and resubmission thresholds, and adjust other levers and exclusions of the rule for targeted improvements. The Administrative Procedure Act requires consideration of less harmful alternatives, reducing the costs, disruptions, risks and lost benefits that rescission would impose on those who are reliant upon the rule. The need for assessment of such alternatives was reinforced in the rulemaking petition we and other stakeholders submitted earlier this year.[11] The release fails to undertake a realistic and rigourous assessment of strategies for readjustment of the procedural and exclusion guardrails as a less harmful alternative.
Instead, the Commission proposes bulldozing decades of institutional knowledge and capacity, rescinding Rule 14a-8 and making it harder for investors to vote on proposals outside of Rule 14a-8. The entire approach of the release would undermine, not advance, the Commission’s investor-protection mission.
Our request
We ask the Commission to:
Withdraw the proposed rescission of Rule 14a-8 and amendments to Rule 14a-4;
Retain the requirement to include the full text of qualifying shareholder proposals in the proxy statement;
Retain the requirement to provide For, Against, and Abstain options for each duly submitted shareholder proposal on the proxy card.
Respectfully submitted,
Sanford Lewis
Director and General Counsel
The Shareholder Rights Group
REFERENCES
[1] We are submitting this letter as an initial top-level comment on the rulemaking. We intend to submit additional detailed comments before the November 20 deadline.
[2] As financial economist Michael C. Jensen observed, corporate reporting and market communications are often shaped by incentives to meet or beat market expectations rather than to present a full account of risk. Michael C. Jensen & Kevin J. Murphy, The Earnings Management Game: It’s Time to Stop It, Harvard Bus. Sch. NOM Unit, Working Paper No. 12-004 (Apr. 12, 2012), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1894304. Former SEC Chairman Arthur Levitt similarly warned in 1998 that the drive to satisfy earnings expectations could displace faithful representation with “a game of nods and winks.” Arthur Levitt, Chairman, U.S. Sec. & Exch. Comm’n, The “Numbers Game,” Remarks at the N.Y.U. Center for Law and Business (Sept. 28, 1998). https://www.sec.gov/newsroom/speeches-statements/spch220-numbers-game.
[3] Shareholder Rts. Grp., Interfaith Ctr. on Corp. Resp. & US SIF, Shareholder Proposals: An Essential Investor Right (Feb. 24, 2025), https://www.iccr.org/wp-content/uploads/2025/02/Shareholder-Rights-Group-Report-V20.1_Final.pdf. See also Sehr Khaliq & Timothy Smith, Shareholder Proposals as an Early Warning System for Corporate Risk, and the Cost of Ignoring Them, Harv. L. Sch. Forum on Corp. Governance (Oct. 8, 2026), https://corpgov.law.harvard.edu/2026/10/08/shareholder-proposals-as-an-early-warning-system-for-corporate-risk-and-the-cost-of-ignoring-them/.
[4] Subodh Mishra, Governing AI: Corporate Oversight and Shareholder Engagement, Harv. L. Sch. Forum on Corp. Governance (Oct. 6, 2026), https://corpgov.law.harvard.edu/2026/10/06/governing-ai-corporate-oversight-and-shareholder-engagement/.
[5] SEC, Sixth Annual Report of the Securities and Exchange Commission for the Fiscal Year Ended June 30, 1940, at 113-114 (1941), https://www.sec.gov/files/1940.pdf.
[6] See Shadow SEC, Shadow SEC Statement No. 16: Retain Rule 14a-8, CLS Blue Sky Blog (Oct. 13, 2026), https://clsbluesky.law.columbia.edu/2026/10/13/shadow-sec-statement-no-16-retain-rule-14a-8/.
[7] Tex. Bus. Orgs. Code Ann. § 21.373 (West 2025), https://law.justia.com/codes/texas/business-organizations-code/title-2/chapter-21/subchapter-h/section-21-373/. The law also gives the option of owning 3% of a corporation’s voting shares in lieu of $1 million.
[8] In fact, some of the most widely supported corporate governance reforms originated with small, individual shareholders such as John Chevedden and James McRitchie who have, for decades, consistently submitted proposals that receive high levels of approval, often winning majority support from shareholders. Timothy Smith, Individual Investors Filing Shareholder Resolutions Have Had A Significant and Impactful Role in Encouraging Good Corporate Governance, Harv. L. Sch. Forum on Corp. Governance (Sept. 10, 2026), https://corpgov.law.harvard.edu/2026/09/10/individual-investors-filing-shareholder-resolutions-have-had-a-significant-and-impactful-role-in-encouraging-good-corporate-governance/; Alyce Lomax, People Power in Corporate America, https://www.fool.com/investing/general/2010/07/21/people-power-in-corporate-america.aspx (last updated Apr. 6, 2017).
[9] SOC Investment Group, The SEC says shareholders will still have a voice through independent solicitations, LinkedIn (Oct. 29, 2026), https://www.linkedin.com/feed/update/urn:li:activity:7521208021126004736/.
[10] Joseph McCahery, Corporate Governance Preferences of Institutional Investors, Harv. L. Sch. Forum on Corp. Governance (Sept. 10, 2015), https://corpgov.law.harvard.edu/2015/09/10/corporate-governance-preferences-of-institutional-investors/. The authors surveyed 143 mostly very large, long-term institutional investors in 2015. The respondents reported that, over the prior five years, 63% had engaged in direct discussions with management, and 45% had held private discussions with a company’s board outside management’s presence.
[11] Ceres et al., Petition Regarding Amendments to Rule 14a-8 Under the Securities Exchange Act of 1934, SEC File No. 4-917 (July 23, 2026), https://www.sec.gov/files/rules/petitions/2026/petn4-917.pdf.