Currently, any individual owning $2,000 of shares in a company for one year can submit a shareholder proposal to that company. Additionally, shareholder proposals can be resubmitted annually to a vote upon hitting extremely low voting thresholds of 3% in year one, 6% in year two, and 10% in year three and beyond.
The announced changes include:
- Update to Shareholder Proposal Eligibility Requirements: Under the proposal, an individual must own at least $2,000 in stock for three years—up from one year—to submit shareholder proposals at a company at that ownership level. For individuals owning company shares for one year, the dollar threshold for submitting a proposal is $25,000, and for those owning shares for two years, it is $15,000.
Years owning stock Required ownership stake to submit proposal 1 $25,000 2 $15,000 3 $2,000
- Update to the shareholder proposal resubmission thresholds: Existing shareholder proposal rules allow proposals to be resubmitted to a company in multiple years so long as the proposals meet certain levels of voting support during a moving five-year window, per the chart below:
Number of proposal submissions in last 5 years Current rules: prior year support level needed Proposal: prior year support level needed Second Submission 3% 5% Third Submission 6% 15% Fourth or More 10% 25%
- Tightens the “one proposal” rule: The SEC’s proposal updates the “one proposal” rule to clarify that a single person may not submit multiple proposals at the same shareholder’s meeting, whether the person submits a proposal as a shareholder or as a representative of a shareholder. Previously, a shareholder could submit multiple proposals at a company by doing so on behalf of other individuals.
A 60-day comment period now begins, where the SEC will solicit public input on the workability of the proposals in preparation for finalizing a rule. The Association’s Center On Executive Compensation will file comments with the Commission supportive of the changes.
