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Survey: Few U.S. Investors Back Potential Sec Curbs on Shareholder Resolutions, Role in Board Nominations

Published 09-25-07

Submitted by Hastings Group, The

WASHINGTON, D.C. - September 25, 2007 - Only about a third or less of U.S. investors support any of the five potential approaches outlined by the Securities and Exchange Commission (SEC) to curb the rights of shareholders to file shareholder resolutions and participate in the process of selecting members of corporate boards, according to a major new Opinion Research Corporation (ORC) survey conducted for nine leading investment companies and religious institutional organizations. The findings of the scientific survey of 1,133 U.S. investors is being released today with just one week to go before the October 2nd deadline for the comment period on the controversial proposals put forward by the SEC.

The survey of U.S. investors was made possible by nine organizations: Calvert Group Ltd., Pax World Management Corp., Trillium Asset Management Corporation, the Social Investment Forum, the Interfaith Center on Corporate Responsibility, Boston Common Asset Management, First Affirmative Financial Network, Marianists Province of the United States, and Green Century Capital Management.

Highlights of the ORC survey of U.S. investors include:

  • Fewer than four in 10 American investors (39 percent) support any SEC proposal that would "limit the ability of investors to file...shareholder resolutions" on such topics as "CEO compensation, climate change, governance problems, pollution and racial or gender discrimination."
  • Under a third of American investors (31 percent) would support the SEC "limiting the ability of investors to refile shareholder resolutions for additional votes in second and third years" on a range of social and traditional corporate governance topics.
  • Only about one in 10 American investors (13 percent) supports a potential SEC proposal barring shareholders from a meaningful role in helping to select corporate board members.
  • Just one third of American investors (34 percent) thinks a potential SEC proposal to allow companies to "'opt out' of the process of facing shareholder resolutions" would not result in "companies with poor or weak records when it comes to good corporate conduct and governance to drop out of the shareholder resolution process and isolate themselves further from investor feedback." Or, when stated in the reverse, the share of investors expecting more unresponsiveness from wayward companies that choose to drop out of the shareholder resolution process is more than three out of five (62 percent) among those with a view on this question.
  • Only one in 10 Americans investors back a potential SEC proposal to shift from shareholder resolutions to electronic "chat rooms" as the primary means for investors to express concerns about companies.
  • Lisa Woll, CEO, Social Investment Forum, said: "This is a resounding 'thumbs down' from U.S. investors to the possible approaches outlined by the SEC that would undercut shareholder advocacy and limit the involvement of investors in corporate boards. A clear majority of American investors understand that shareholder advocacy is vital to promoting wider corporate social responsibility, which, in turn, strengthens the bottom lines of companies and results in more long-term wealth for shareholders. What we are seeing here is common sense prevailing: Most U.S. investors agree that what the SEC should be further opening up corporate boardrooms, rather than shielding them from the scrutiny and feedback that is legitimately being offered by the American investors who are stakeholders in these publicly owned companies."

    Ivy Duke, associate general counsel, Calvert Group, Ltd., said: "Calvert supports the right of shareholders to file advisory/non-binding resolutions. The tenor of the SEC's recent questions about the shareholder proposal process indicates a threat to the continued ability of shareholders to file advisory resolutions. In response, Calvert strongly discourages the SEC from taking any action that would undermine the ability of shareholders to raise governance, environmental, and social issues through the shareholder resolution filing process."

    Cheryl Smith, executive vice president, Trillium Asset Management Corporation, said: "The survey results indicate that American shareholders value their ability as investors to interact with corporate management through the shareholder advocacy and proxy processes. Investors clearly support the current shareholder advocacy process and do not support the measures proposed by the Securities and Exchange Commission. This would limit proxy access to the relatively small number of investors holding a 5% stake in a company. Shareholders in this survey do not support changing a process that already works well to stimulate enhanced corporate governance. They are not willing to substitute a watered-down, behind-the-scenes, promise of an electronic chat-room for their current more substantial access."

    John Wilson, board member, Interfaith Center on Corporate Responsibility, and director of socially responsible investing, Christian Brothers Investment Services, Inc., said: "We find it deeply troubling that the Commission may be considering weakening this important right, particularly in light of the Chairman's expressed objective of improving the dialogue between shareholders and management. If these test concepts are developed into proposed rules, the result could be a significant defeat for shareholder rights and corporate governance."

    On August 29, 2007, SIF and ICCR launched the Web site, which has facilitated the submission of 4,000 investor emails (as of 5 p.m. EDT on September 24, 2007) to the Securities and Exchange Commission and Congress in opposition to the shareholder curbs now under discussion at the SEC. Socially responsible and religious investors first indicated on July 24, 2007 that they would oppose any SEC rollback of shareholder rights - one day before the Commission put out for comment two proposals that would open the door to a substantial weakening of shareholder rights in the proxy process and in the selection of board members. The current campaign by socially responsible and religious investors aims to surpass by a significant margin the outcry that ensued in 1997-1998 when more than 300 socially responsible investing, religious, labor and other groups coalesced to oppose an earlier SEC staff plan to gut the shareholder resolution process. The groups prevailed in that fight in which the SEC was forced to withdraw its widely criticized proposal.


  • Shareholder resolutions. Support for limits on shareholder resolutions is weakest among the highest household income category for investors: $75,000 and above (37 percent). Among all U.S. investors who had a view about this question, nearly six out of 10 (57 percent) opposed limits on shareholder resolutions.
  • Refiling of shareholder resolutions. Among investors who had a view about this question, nearly two out of three (64 percent) opposed limits on the refiling of shareholder resolutions. By age, support for such limits was weakest among investors aged 35-44 (27 percent). Limits on shareholder resolution refiling was supported by a bit over half of those with less than a high school education (53 percent) but fewer than three in 10 college graduates (29 percent).
  • "Chat room" provision. More than four out of five investors (82 percent) said that they would prefer to see the preservation of the current process of publicly voting on shareholder resolutions over a "chat room only" approach. (Note: This question did not rule out some role for chat rooms if offered at other than the expense of the current shareholder proxy process.)
  • Board nomination process. More than four out of five American investors (84 percent) agree that "investors who own shares in America's companies should be able to help nominate corporate board members." Half of investors said that they "strongly agree" with this role for investors, including 55 percent of men and 45 percent of women. Those who failed to complete high school are somewhat more likely than those with college degrees (22 percent v. 11 percent) to think that shareholders do not have a role to play in nominating corporate board members.
  • Wayne Russum, vice president, Opinion Research Corporation, said: "It might be expected in a case like this where five different possible proposals are being weighed that a majority of investors would come down in favor of at least one of them. However, that was not the case here, with supporting ranging from a low of 10 percent to a high of 39 percent. That across-the-board rejection of the potential SEC proposals is really quite remarkable. And it should be assumed that these are 'high water marks' in terms of potential support for what the SEC is contemplating. If any degree of argument had been provided in the survey against the SEC proposals, it is likely that the support level would have dropped to even more anemic levels."


    The results of this Opinion Research Corporation survey are based on telephone interviews conducted among a sample of 2,051 adults of whom 1,133 are investors who live in private households, in the Continental United States. Interviewing was completed during the period of September 6-10, 2007. Completed interviews of the investors were weighted by four variables: age, sex, geographic region, and race, to ensure reliable and accurate representation of the total adult population. The margin of error at a 95 percent confidence level is plus or minus 3 percentage points for the sample of investors. Smaller sub-groups will have larger error margins.

    Over half of all respondents (52 percent) among the 2,051 Americans initially surveyed identified themselves as "investors" who "own stocks, bonds, or mutual funds either directly or through retirement plans such as 401(k)s, IRAs, Roth IRAs or similar plans." It was the group of 1,133 self-identified investors who were asked the body of questions in this survey.

    EDITOR'S NOTE: A streaming audio recording of the news event will be available on the Web as of 6 p.m. EDT on September 25, 2007 at

    Hastings Group, The

    Hastings Group, The

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