U.S. investor, CEO groups set for lobbying battle over proxy challenges


By Sarah N. LynchWASHINGTON, March 20 (Reuters) - Shareholder activists are
pushing back against a major business trade group's request that
the White House use its influence on the U.S. securities
regulator to make it harder to get governance, political or
environmental issues onto corporate ballots, according to a
letter seen by Reuters on Monday.
    Company boards and CEOs have increasingly faced requests by
investors to include various shareholder proposals on corporate
ballots involving issues from CEO pay to climate change.
    Existing U.S. Securities and Exchange Commission rules have
"given shareholders an important voice," and should not be
changed, the five investor groups said in a March 15 letter to
the White House'sNational Economic Council Director Gary Cohn.
    The letter, to be made public on Tuesday, was signed by
groups including the Council of Institutional Investors and the
Investor Network on Climate Risk.
    In February, the Business Roundtable, a group of corporate
CEOs, gave Cohn a rundown of major regulations that it believes
hurt U.S. economic growth. It said the SEC's current rules
wrongfully encourage activists "with insignificant stakes in
public companies" to pursue "social or political agendas."
    In recent years, dozens of companies have adopted "proxy
access" proposals making it easier for investors to nominate
directors to corporate boards. The measures were backed by big
asset managers.
    More shareholders have also tried to get proposals on
ballots requiring company disclosures on environmental, social
or political issues, such as climate change. Far fewer of those
have won enough investor support.
    Under current SEC rules, shareholders are generally eligible
to submit proposals to corporate ballots if they own $2,000 or 1
percent of a company's outstanding stock for a year.
    If a company objects, the SEC can step in to decide if the
proposal meets certain legal standards and should be on the
    The Business Roundtable has previously urged the SEC to
raise the stock ownership threshold, and has also advocated for
rules limiting how often shareholders can re-submit proposals
that fail repeatedly.
    The SEC is an independent agency, so Cohn or other White
House official cannot directly influence how it writes or
enforces the rules. The White House could, however, lean on
Congress to enact legislation requiring changes in SEC rules.
    Jay Clayton, President Donald Trump's choice to run the SEC,
is slated to go before the Senate Banking Committee on Thursday
for his confirmation hearing, where Senators may ask about his
views on the subject.

 (Reporting by Sarah N. Lynch; Editing by David Gregorio)
 ((sarah.n.lynch@thomsonreuters.com; 202-354-5831;))


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