The U.S. Securities and Exchange Commission has proposed a new rule that could undermine key reforms the NAM secured in 2020—and empower activist shareholders.
The background: Shareholders in public companies generally have the right to submit proposals to corporate proxy ballots.
- These proposals, which voice shareholders’ views on business and governance topics relevant to the company, can then receive a vote by the full shareholder base.
- To qualify for inclusion on the ballot, shareholder proposals must meet certain criteria.
Submission thresholds: In 2020, the NAM supported—and the SEC finalized—new thresholds to make it more difficult for activist shareholders to place politically motivated proposals on the proxy ballot.
- These thresholds require higher degrees of ownership and shareholder support before a proposal can be submitted or resubmitted.
The new rule: The SEC’s proposal leaves the 2020 thresholds in place, but it creates other opportunities for activists and limits the tools companies can use to prevent them from hijacking the proxy ballot.
- Currently, companies can exclude shareholder proposals that have already been substantially implemented, are duplicative of other proposals on the proxy ballot or are resubmissions of previous failed proposals. Each of these abilities would be limited significantly under the proposed rule.
- For example, rather than being allowed to exclude all duplicative proposals, companies would only be permitted to exclude virtually identical proposals that address the same subject matter, seek the same objective and do so by the same means.
What we’re saying: “The NAM is concerned that the SEC’s proposed rule may prioritize the agendas of activists over the needs of long-term shareholders investing for the future,” said NAM Senior Director of Tax and Domestic Economic Policy Charles Crain.
- “We look forward to working with the SEC in the coming months to ensure that manufacturers’ shareholder engagement can continue to focus on issues critical to business growth and investor returns.”
Next steps: Comments on the proposed rule are due to the SEC by Sept. 12.
Washington, D.C. – Ahead of the midterm elections, the National Association of Manufacturers released its policy roadmap, “Competing to Win,” a comprehensive blueprint featuring immediate solutions for bolstering manufacturers’ competitiveness. It is also a roadmap for policymakers on the laws and regulations needed to strengthen the manufacturing industry in the months and years ahead.
With the country facing rising prices, snarled supply chains and geopolitical turmoil, manufacturers are outlining an actionable competitiveness agenda that Americans across the political spectrum can support. “Competing to Win” includes the policies manufacturers in America will need in place to continue driving the country forward.
“‘Competing to Win’ offers a path for bringing our country together around policies, shared values and a unified purpose,” said NAM President and CEO Jay Timmons. “The NAM is putting forward a plan filled with ideas that policymakers could pursue immediately, including solutions to urgent problems, such as energy security, immigration reform, supply chain disruptions, the ongoing workforce shortage and more. Manufacturers have shown incredible resilience through difficult times, employing more workers now than before the pandemic, but continued resilience is not guaranteed without the policies that are critical to the state of manufacturing in America.”
The NAM and its members will leverage “Competing to Win” to shape policy debates ahead of the midterm elections, in the remainder of the 117th Congress and at the start of the 118th Congress—including in direct engagement with lawmakers, for grassroots activity, across traditional and digital media and through events in key states and districts as we did following the initial rollout of the roadmap in 2016.
The document focuses on 12 areas of action, and all policies are rooted in the values that have made America exceptional and keep manufacturing strong: free enterprise, competitiveness, individual liberty and equal opportunity.
Learn more about how manufacturers are leading and about the industry’s competitiveness agenda at nam.org/competing-to-win.
The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.8 million men and women, contributes $2.77 trillion to the U.S. economy annually and accounts for 58% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org