State treasurers and investor advocates mobilize to defend Rule 14a-8, which has allowed them to file advisory shareholder proposals since 1942. Dismantling the shareholder-proposal process would silence an essential early-warning system, increase litigation, and shift power from shareholders to corporate management. Jump to How to Defend Rule 14a-8. Jump to Petition on SEC Rule 14a-8 Reform, Posted by Sanford Lewis, Shareholder Rights Group, to the Harvard Law School Forum on Corporate Governance.
On July 23, 2026, two state treasurers and leading shareholder-rights advocates held a virtual press briefing to defend SEC Rule 14a-8 and announce coordinated action against further erosion of investors’ ability to place proposals on corporate proxy ballots.
The event was organized by US SIF, the Interfaith Center on Corporate Responsibility, Freedom to Invest, the Shareholder Rights Group, and For the Long Term. It was moderated by Elizabeth “Liz” Levy, Managing Director of Clean Yield Asset Management and a board director of US SIF.
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Music for a Democratic Corporate Governance, a songbook waiting for the next Mahalia Jackson or Bob Dylan
Timing is urgent. In November 2025, the SEC’s Division of Corporation Finance suspended its traditional practice of evaluating most corporate requests to exclude shareholder proposals. SEC Chair Paul Atkins has since indicated that staff is unlikely to resume that function for the 2027 proxy season and has questioned the federal government’s broader role in administering the shareholder-proposal process.
The SEC’s regulatory agenda also anticipates proposed changes to the proxy rules by October 2026. (ESG Dive Coverage)
The speakers argued that this year’s experience demonstrates why the SEC’s neutral review function remains necessary—and why eliminating Rule 14a-8 would harm investors, companies, and market efficiency.
Liz Levy, Clean Yield Asset Management and US SIF, opened the briefing by framing shareholder proposals as a basic ownership right rather than a privilege granted by corporate management.
The SEC’s November withdrawal from substantive no-action review created uncertainty for shareholders and issuers alike. Companies were largely left to determine for themselves whether proposals could be omitted, while shareholders disputing an exclusion were pushed toward litigation.
At least six proponents filed lawsuits during the season seeking to prevent companies from excluding proposals—a dramatic departure from the customary reliance on SEC staff guidance.
Levy emphasized that investors are organizing because the threat extends beyond one unusual proxy season. Chair Atkins has stated that the SEC may not restore its traditional review process and may reconsider the federal role in shareholder proposals more broadly.
Michael Frerichs, Illinois State Treasurer, offered the clearest statement of first principles:
“Accountability to shareholders isn’t optional. It’s the foundation of public markets.”
Frerichs argued that communication between corporate boards and long-term shareholders promotes trust, more efficient capital allocation, and stronger companies. Weakening Rule 14a-8 would not eliminate sustainability, workforce, or governance risks. It would merely make those risks harder for investors to raise before they become more expensive corporate problems.
For state treasurers and other long-term fiduciaries, shareholder proposals establish expectations concerning:
Frerichs pointed to shareholder proposals filed at Meta Platforms in 2023 and 2024 calling for an assessment of child safety and harm-reduction measures.
Those proposals raised an issue that has since become a significant source of litigation, regulatory scrutiny, fines, and reputational risk for Meta. Shareholder proposals can alert boards to material risks before those risks become full-blown crises.
The Illinois Treasurer’s office also filed proposals at Southwest Airlines and American Airlines concerning employee and contractor health and safety, including heat stress among workers on airport tarmacs.
Both companies made commitments that allowed the proposals to be withdrawn. The engagements continued, leading to improved health-and-safety disclosures. One airline also committed to—and later obtained—an International Air Transport Association operational safety audit.
This is how the shareholder-proposal process frequently works in practice: not as a hostile referendum, but as leverage for constructive negotiations and measurable improvements.
Frerichs also described a proposal at HCA Healthcare, where low staffing levels had generated negative headlines and investigations concerning patient care.
The proposal asked HCA to amend the charter of its board’s Patient Safety and Quality of Care Committee so that the committee would explicitly review staffing levels and their effects on patient safety and care quality.
HCA amended the committee charter in response.
Frerichs called on the SEC to preserve Rule 14a-8 to protect retirees, pension beneficiaries, retail shareholders, and families investing for long-term goals such as college expenses.
Deb Goldberg, Massachusetts State Treasurer, explained that Massachusetts does not frequently file shareholder proposals. Nevertheless, its pension fund votes on every proposal presented and regards the process as a cost-efficient way to communicate with portfolio companies about material risks.
Massachusetts also uses a Stewardship and Sustainability Committee to inform investment practices. During the previous year, the Treasurer’s office engaged approximately 50 companies on improving human-capital transparency.
Goldberg argued that capital markets function best when companies and their owners can communicate easily. Corporate disclosure, direct engagement, proxy voting, and shareholder resolutions are all parts of that communication system.
Without Rule 14a-8, investors will not disappear. They may instead turn to less precise and more expensive instruments:
The sharp rise in shareholder litigation during the 2026 proxy season illustrates this danger. Removing an efficient administrative process does not eliminate disputes; it transfers them to the courts, where they become more costly for both shareholders and companies.
Goldberg described shareholder proposals as an early-warning system—a “canary in the coal mine” that alerts boards to risks and changing investor expectations.
Taking away the canary, she noted, does not make the coal mine safer.
Environmental and social matters such as climate change, workforce strategy, and water availability can materially affect corporate performance. The SEC should not prevent investors from addressing those matters or restrict their freedom to decide how best to pursue long-term value.
Sanford Lewis, Director and General Counsel of the Shareholder Rights Group, argued that the SEC’s retreat was not neutral.
It disproportionately harmed:
Lewis warned that the shareholder-engagement infrastructure built by pension funds, investment managers, faith-based investors, and individual shareholders is now at risk.
He announced three coordinated actions.
New York State Comptroller Thomas DiNapoli, together with Ceres, US SIF, the Interfaith Center on Corporate Responsibility, For the Long Term, and the Shareholder Rights Group, filed a formal petition asking the SEC to restore substantive no-action review.
The petition does not demand that the process remain unchanged. Instead, it proposes ways to reduce the SEC staff’s workload while retaining neutral review.
Suggested reforms include:
Lewis estimated that such measures could reduce the staff’s traditional workload by half or more.
The petition also asks the SEC, if it considers radical changes or rescission, to evaluate less harmful alternatives. The Administrative Procedure Act requires agencies to address significant alternatives and explain departures from longstanding rules and practices.
The coalition is not opposing every possible adjustment. It is opposing the destruction of a market institution that investors and companies have relied upon for decades.
The Shareholder Rights Group and Democracy Forward filed a Freedom of Information Act request seeking information about meetings in which SEC leadership may have previewed its Rule 14a-8 plans to outside organizations.
The request seeks correspondence and calendar records that may reveal who received advance access to the SEC’s thinking and what positions were presented.
Transparency is particularly important if selected corporate or industry representatives were given opportunities to shape policy before a formal public rulemaking process.
The coalition also delivered petitions containing nearly 32,000 signatures from investment firms, beneficiaries, individual investors, and other supporters urging the SEC to preserve Rule 14a-8.
The signatures reinforce a central point: shareholder proposals do not belong only to large institutions or specialized activists. They are part of the rights associated with owning stock in a public corporation.
Beth-Ann Roth, General Counsel of the Interfaith Center on Corporate Responsibility, challenged Chair Atkins’ suggestion that existing precedent provides enough guidance for companies and shareholders to resolve exclusion disputes without contemporaneous SEC review.
The 2026 proxy season, she argued, proved otherwise.
Among challenged proposals:
Some proposals were withdrawn after companies negotiated in good faith. But Roth argued that the disappearance of SEC review weakened a major incentive for engagement.
Under the former process, a company risked having the staff reject its exclusion argument. That possibility encouraged companies to negotiate. This season, companies providing an “unqualified representation” that an exclusion applied could generally obtain a staff letter stating that the Division would not object—without meaningful analysis and without a fair opportunity for the proponent to respond.
Roth said the resulting vacuum produced three categories of difficulty:
Some companies excluded proposals in areas where prior SEC staff positions appeared favorable to proponents, including political-spending disclosure.
Other disputes involved the highly subjective question of whether a proposal improperly micromanaged the company. These are precisely the cases in which neutral interpretation is most valuable.
Proposals addressing new risks, including artificial intelligence, often lack a developed body of staff precedent. Without SEC review, both proponents and responsible companies lack reliable guidance.
Roth also warned that some companies appeared to base their decisions on whether a shareholder could afford to sue. That approach systematically disadvantages smaller investors—the very shareholders most dependent on SEC protection.
The result, she concluded, was neither beneficial nor consistent with the SEC’s mission to protect investors and maintain fair, orderly, and efficient markets.
During the question-and-answer session, Lewis addressed an important misconception: SEC review is not valuable only to shareholder proponents.
Companies also benefit from neutral guidance. It reduces uncertainty and allows boards and corporate counsel to assess exclusion risks without immediately preparing for litigation.
Lewis cited market discussions indicating that many companies, as well as investors, believe repealing the process would create disruption and chaos. Some companies elected to include proposals this season despite believing that an exclusion argument might exist because the absence of SEC guidance increased their legal exposure.
A functioning no-action process therefore serves as a low-cost dispute-resolution mechanism for both sides.
Asked whether the coalition opposes all changes to Rule 14a-8, Lewis said no.
The SEC has periodically recalibrated the rules, most recently in 2020. Thoughtful adjustments are a normal part of securities regulation.
The coalition’s objection is to changes so extreme that they would effectively diminish shareholder-proposal rights to a matter of corporate discretion or a fragmented collection of state-law regimes.
Outright rescission would upset a longstanding balance between investors and the companies they own. (ESG Dive)
Beth-Ann Roth added that an SEC chair’s personal skepticism about the SEC’s authority for the program does not erase decades of Commission interpretations, court arguments, factual findings, and congressional direction.
A decision to abandon a half-century of federal practice would face a significant legal and evidentiary hurdle under the Administrative Procedure Act.
Now that it is posted by the SEC, the coalition’s rulemaking petition is open for public comment. Investors, companies, academics, fiduciaries, and other interested parties can submit evidence and recommendations for inclusion in the administrative record.
The SEC must eventually respond to the petition, although no fixed response deadline applies.
That makes the administrative record especially important.
The July 23 briefing made a compelling case that Rule 14a-8 is more than a procedural accommodation for investors with grievances.
It is market infrastructure.
Shareholder proposals enable dispersed owners to communicate with boards and with one another. They identify emerging risks, encourage negotiated reforms, and offer investors a more precise alternative to litigation or indiscriminate votes against directors.
The 2026 proxy season did not demonstrate that neutral SEC review is unnecessary. It demonstrated the consequences of removing it: more exclusions, less predictable guidance, increased burdens on small shareholders, and a sudden turn toward costly and time-consuming litigation.
As Treasurer Goldberg observed, investors are not going away.
The real policy choice is whether disagreements between companies and their owners will be addressed through an orderly, comparatively inexpensive federal process—or through corporate unilateralism, courtroom battles, and escalating costly shareholder opposition, rather than relatively free advice.
The July 23 briefing was organized by US SIF, the Interfaith Center on Corporate Responsibility, Freedom to Invest, the Shareholder Rights Group, and For the Long Term.
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