FFC Acts To Safeguard Shareholder Resolution Process

August 24, 2015

Friends Fiduciary joined a group of investors and investor associations, representing $2.2 trillion in assets under management, in expressing concerns over the interpretation review by the Securities and Exchange Commission (SEC) of its Rule 14a-8, (“the rule”) and specifically the section which allows a company to exclude a shareholder proposal that “directly conflicts” with a management proposal. The SEC issues the guidelines and rules for corporate proxies and shareholder resolutions. The investors, including FFC, believe the SEC should interpret the rule much more narrowly in order to preserve its original intent and support the value of shareholder proposals. A letter was submitted to the SEC’s Division of Corporation Finance to express our concerns and provide recommendations. Investors are concerned that companies will fabricate “conflicting” resolutions they know are unworkable simply to exclude a shareholder proposal from the proxy statement. There is good reason for this concern. Last year, 25 companies filed no-action requests under the rule and stated they would include a management proposal in their proxy statement. However, as noted in a letter submitted to the SEC, June 17, 2015, on behalf of the New York City pension system, “Despite those public promises to the SEC and to investors that each company would be presenting a proxy access proposal, 13 of the 25 companies failed to present any company-sponsored proposal on proxy access. Indeed, in their opposition statements to shareowner proxy access resolutions, 11 of those 13 companies opposed and argued against the entire concept of proxy access in any form.” As a socially responsible investor dedicated to reflecting Quaker values in our investment management, we believe submitting shareholder proposals is a vital step in communicating our values, concerns and interests to corporate management and other shareholders. If the SEC continues to interpret the rule too broadly it could diminish the effect and impact of shareholder proposals, potentially removing an effective channel of communication to management and an important means for FFC to witness our Quaker values. Click here for the Letter