Jan. 01, 2019
Hon. Jay Clayton Chairman U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Dear Chairman Clayton, I am writing to urge you to revise the shareholder proxy voting process under SEC Rule 14a-8. This rule process has had a strong and positive effect by highlighting ineffective corporate governance, enhancing transparency, and promoting corporate actions on a range of environmental, social and governance issues that promote economic growth and job creation over the long term while increasing long term shareholder value. It needs to be stronger. We, as shareholders, ought to have much more voice in protecting our social fabric and environmental integrity. Since single bottom line capitalism has failed and is failing to protect the favbric of life on this planet and we are thereby all threatened with immanent extinction, shareholders have the position of beng a voice of sanity amid the destructive force of capitalism, we should be able to be the voice in the system that protects us all from the ideology of cancer, growth for the sake of growth, that is capitalism, our collective death unless we stand firm in tempering it with care for the people. The current shareholder proposal process has some success in being effective, efficient and beneficial to both shareholders and the long-term well-being of the companies they hold – there is no need to revise the rules governing the proxy process. But we need even more strength to protect our environment and social fabric or we will all die soon. For decades, the shareholder proposal process has served as a cost effective way to build long-term value while reducing the potential for harm and mismanagement. Shareholder resolutions have enhanced shareholder value by promoting such positive gains as: • Board diversity • Auditor independence • Annual election of all directors • The ability for shareowners to nominate candidates to serve on boards • The need to manage supply chain risks • The need to manage climate risk, as well as other environmental risks • Workplace diversity and non-discrimination The current ownership threshold of at least $2,000 worth of a company’s and the requirement of ownership for at least one year prior to filing a proposal already ensures that investors cannot simply buy shares before the filing deadline and sponsor a resolution. Raising the ownership threshold threatens to exclude smaller investors, which will categorically diminish the equality of the system. Shareholders both big and small can make, and have made, valuable contributions to the companies that they own – and this should remain as is. The argument has been made that shareholder resolutions are a burden on the markets. I say that not having oversite is an even bigger burden, the nature of capitalism is like a child with no empathy, wisdom, or sanity, it is actually the ideology of cancer. In the long run, this will kill us all, and much bigger burden indeed! Sadly, the vast majority of companies never even receive a shareholder resolution. Rather, most resolutions prompt productive dialogue and improved understanding between shareholders and management, leading to significant policy changes that can transform businesses. Resolutions with oil and gas majors have pushed companies to act in their own long-term best interests. Resolutions highlighting human rights risks in corporate operations and global supply chains have brought human trafficking and forced labor to the forefront. As a result of shareholder pressure, Fortune 500 companies like Coca Cola, HP, Ford and Gap now have human rights policies and supplier codes of conduct that help them uncover and eradicate these violations from their supply chains – along with the legal, reputational and financial risks they represent. If the SEC submits to the proposed changes in Rule 14a-8, proposals like these could be excluded, inhibiting important contributions to corporate governance that have proven beneficial to the long-term health and performance of companies, and the well-being of people and the environment. So I suggest doing the opposite, making corporations MORE responsive to social integrity issues and environmental disruption issues. Critics of the shareholder resolution process have a clear political agenda – to limit the ability of shareholders to engage with the companies that they own, and to cripple the proxy process that has been in place for over fifty years. I urge you to uphold the rights of shareholders and do not make the proposed changes to Rule 14a-8. We can do better than this, indeed, we must, for the sake of life on earth itself. Thank you.