Press Release Contact: Kyle W. Kempf, Green Century Capital Management, email@example.com, (617) 482-0800
Boston, November 12, 2019 – Green Century strongly opposes the shareholder rule changes recently proposed by the U.S. Securities and Exchange Commission (SEC).
“The proposed rules are an egregious dereliction of the SEC’s mission,” said Green Century President Leslie Samuelrich. “Instead of protecting shareholders, the SEC is trying to muzzle them and undermine corporate accountability. The shareholder proposal process was not broken and did not need fixing. There is no evidence to support the need for this assault on shareholder rights.”
As SEC Commissioner Robert Jackson noted in his opposition statement, research demonstrates that “on average… inclusion of shareholder proposals by an American public company tends to increase long-term value.”
The most troubling provisions in the proposed rules are its revisions to the resubmission and submission thresholds for shareholder resolutions.
The proposed rule would make it more difficult for shareholders to resubmit resolutions.
The current regulations allow companies to exclude resubmissions from their annual proxy materials if the initial proposal did not garner at least 3% of shareholder support in its first year, 6% in its second year, and 10% in its third year.
The proposal rule would needlessly raise those thresholds from 3% to 5% in the first year, 6% to 15% in the second year, and 10% to 25% in the third year. Even proposals receiving 25% support could be excluded, if the support was 10% less than the previous year.
Currently, investors must own at least $2,000 worth of stock for one year to file a shareholder resolution with a company.The proposed rule would dramatically alter this ownership threshold. Under the proposed rule, shareholders with $2,000 in stock would be forced to wait three years to file a resolution. To file a shareholder proposal after one year, shareholders would be required to own $25,000 in stock. Shareholders who own $15,000 in stock could file a resolution after two years. The proposed rule also would prevent shareholders from aggregating their shares to file a joint proposal.
While this rule clearly is intended to stifle shareholder participation in corporate management, the need for it is much more opaque. Last year, the number of shareholder resolutions filed fell 8.9% for public companies in the Russell 3000 and 11.6% for firms in the S&P 500, according to a joint-study by The Conference Board and the Rutgers Center for Corporate Law and Governance.
Ongoing corporate effort to undermine shareholder rights
The proposed rules are the latest salvo in an ongoing corporate effort to undermine shareholder rights. The effort is being led by front groups, such as the “Main Street Investors Coalition,” a puppet of the National Association of Manufacturers, and Protect Our Pensions, a discredited astroturf organization formed to “oppose efforts to push endowments, foundations and pension funds to divest their holdings in fossil-fuel companies.”
Shareholder resolutions are an integral component of Green Century’s work to highlight the material risks posed by corporations’ failure to address critical environmental and public health issues. Green Century opposes this assault on the proxy process and shareholder rights and will continue to work to quell it.
About Green Century Capital Management
Green Century is the first family of fossil fuel free, responsible, and diversified mutual funds in the United States. Green Century invests in sustainable companies, hosts an award-winning and in-house shareholder advocacy program, and is the only mutual fund company in the U.S. wholly owned by environmental and public health nonprofit organizations.
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This information has been prepared from sources believed reliable. The views expressed are as the date of this writing and are those of the Advisor to the Funds.
The Green Century Funds are distributed by UMB Distribution Services, LLC. 235 W Galena Street, Milwaukee, WI 53212. 11/19