The Financial Times reported this week on how how shareholder activists will respond to the SEC’s updated rules on shareholder proposals.
Luke Perlot, associate director at the conservative-leaning group National Legal and Policy Center, said his organisation would adjust to the new rules and that “well crafted proposals will still get through”.
“It might limit what types of issues we can address through shareholder proposals versus maybe having to use other tools like proxy filings or PR campaigns,” he said.
Blocking the vote may delay scrutiny, but it also broadcasts fear. If boards were confident their policies could withstand daylight, they would welcome shareholder debate.
Companies denied votes on a record number of resolutions during this proxy season after US regulators made it harder for shareholders to demand changes related to climate, diversity and labour rights.
The US Securities and Exchange Commission granted 195 “no-action” requests for companies to exclude a shareholder proposal from its proxy materials this year compared with 147 in 2024. That is a nearly 33 per cent increase and the highest number of omissions since ISS-Corporate started tracking the data in 2007.
The takeaway for investors is simple. Expect more procedural stonewalling in 2026. Fortunately, NLPC has many tools in its arsenal, including litigation, proxy memos, and corporate campaigns. Denying the vote only postpones the verdict. While other proponents are reducing their shareholder proposal efforts, we are finding ways to adapt and thrive in any environment.
The SEC in February rescinded guidance issued by the Biden administration that made it easier for shareholders to submit environmental and social proposals that raised issues with a “broad societal impact”. The new guidance lowered the bar for companies seeking to exclude such resolutions. It came after many proposals had already been submitted.
“The new letter is making it easier for companies to argue that a proposal is not material to the business or the business operations so that it should be left off the ballot,” said Ariane Marchis-Mouren, senior researcher at the Conference Board’s ESG centre. “We can expect an even larger increase next year.”
The rise in omissions contributed to a decline in shareholder proposals this year. Shareholders filed 574 proposals this year at S&P 500 companies, down from 746 the previous year, according to the Conference Board/ESGAUGE. The group also found that 57 per cent of the proposals that were omitted were related to environmental and social topics.
