November 15, 2019
The Securities and Exchange Commission voted to update the shareholder proposal process by increasing the eligibility criteria for submitting and resubmitting shareholder proposals.
Currently, any individual owning $2,000 of shares in a company for one year can submit a shareholder proposal to that company. Additionally, shareholder proposals can be resubmitted annually to a vote upon hitting extremely low voting thresholds of 3% in year one, 6% in year two, and 10% in year three and beyond.
The announced changes include:
Years owning stock Required ownership stake to submit proposal 1 $25,000 2 $15,000 3 $2,000
Number of proposal submissions in last 5 years Current rules: prior year support level needed Proposal: prior year support level needed Second Submission 3% 5% Third Submission 6% 15% Fourth or More 10% 25%
A 60-day comment period now begins, where the SEC will solicit public input on the workability of the proposals in preparation for finalizing a rule. The Association’s Center On Executive Compensation will file comments with the Commission supportive of the changes.