Reform request on shareholder resolutions drawing a line in the sand for public companies, activists

As public company annual meeting season nears, renewed calls for the SEC to raise the resubmission threshold on shareholder proposals are being fought by proponents of the current system who say the changes would hurt investors and companies.

Since 1954, a shareholder proposal needed 3% support in its first year, 6% after the second attempt and 10% after the third attempt within five years to be eligible for resubmission. In 1997, the SEC led by then-Chairman Arthur Levitt, proposed a rule raising the resubmission thresholds to 6%, 15% and 30%. But the rule was never finalized due to proponents for the status quo. In 2017, the U.S. House passed the Financial CHOICE Act, which called for enacting the 1997 proposal's resubmission thresholds, but the provision never cleared the Senate.