One of the topics that we have not yet seen the Commission address through the rulemaking process is Rule 14a-8, the shareholder proposal rule. We have repeatedly heard from the Chairman and other SEC Commissioners that changes to Rule 14a-8 will be forthcoming, as the SEC seeks to address what it considers to be politicization of the annual meeting process. The first shot across the bow of Rule 14a-8 was the shift in the SEC Staff’s approach to exclusion requests this past proxy season, while Chairman Atkins laid out a path to considering whether precatory proposals could be excluded under Rule 14a-8(i)(1), which no companies followed during the course of the 2026 proxy season.

Liz recently noted on the Proxy Season Blog that a group of investors consisting of he US Sustainable Investment Forum (US/SIF), Interfaith Center on Corporate Responsibility, Freedom to Invest, the Shareholder Rights Group, and For the Long Term launched the website “Protect Shareholder Voice,” which hosts a petition urging the SEC to preserve the shareholder proposal rule. The petition states:

We write as retirees, pension beneficiaries, and individual and institutional investors whose savings depend on the integrity of America’s capital markets. We urge you to preserve the shareholder proposal rule as a cornerstone of property rights and free-market accountability.

Shareholder proposals are an expression of ownership. For eighty years, the ability of shareholders to raise questions before the companies they own has been one of the most effective free market-based checks on corporate mismanagement. The need for regulators to intervene is reduced when owners can speak directly. That is the genius of the system — and precisely what is at risk.

Shareholders have advanced sound governance of their companies through decades of governance reforms, adopted first through the shareholder proposal process and then as general market practice.

When investors ask a clothing retailer to account for supply chain vulnerabilities, they are protecting brand equity and long-term profitability. When they ask a pharmaceutical company to address legislative risk embedded in its earnings guidance, they are doing the analytical work that sound investing requires. When they flag water scarcity exposure for agricultural, beverage, semiconductor, or mining companies, they are surfacing risks that conventional financial filings routinely omit — risks that eventually become losses borne by ordinary shareholders.

Other investors have a right to inquire whether environmental or social commitments of a company are undercutting shorter term profitability. Regardless of the time horizons of investing, this is a critical right of investors to engage a fundamental American value — the marketplace of ideas.

If the shareholder proposal process is curtailed, the practical result is not quieter markets. It is a transfer of power: away from diverse owners, and toward a narrow class of the largest institutional players. Smaller investors — retirees, pension funds, individual savers — will lose one of the only shareholder protection tools scaled to their resources. Blind spots will accumulate. Risks that could have been surfaced early will compound, spreading across companies and sectors until they become systemic.

The boards and executives of public companies should answer to their owners. That principle is not progressive or conservative — it is foundational to capitalism.

We urge the Commission to honor its mandate to protect investors and maintain fair, efficient markets by keeping this rule intact.

Let America’s public companies be guided by their shareholders — not shielded from them.

Liz observes in her blog:

For companies, this is another reminder that any rollback of Rule 14a-8 is going to draw criticism and challenges. The petition floats talking points that – while somewhat ironically sounding like they were AI-generated – may resonate with some institutions and retail holders. Companies that believe the costs of putting shareholder proposals in the company’s proxy statement outweigh the benefits may want to gather data and anecdotes to help support that message and to help folks understand the nuances of Rule 14a-8 that may be problematic. Although the stated goal of SEC Chair Paul Atkins is to depoliticize annual shareholder meetings, it’s possible that things could get worse in that regard before they get better. . .

– Dave Lynn