The SEC’s latest effort to reduce its role in overseeing shareholder proposals is creating new governance questions for public company boards. The agency’s plans to potentially shift oversight of shareholder proposals from the federal level to the states could leave boards navigating varying state requirements and increase uncertainty around shareholder engagement and proxy season strategy.
Bracewell’s Troy Harder told Agenda that SEC Chair Paul Atkins “has made it clear that he is not a fan of Rule 14a-8,” and while a shift to the states on shareholder proposals may be seen as a welcome change to some public companies, it could draw the ire of shareholders.
If shareholders are “locked out of the proposal process, they may voice their dissatisfaction by organizing campaigns to vote against incumbent directors,” he said.