US Republicans continue their assault on shareholder rights and ESG

10 July 2016

Sarah Wilson

EU regulation

The US House of Representatives last week voted on a series of proposals designed to dismantle key aspects of Dodd Frank reforms. After June's vote to propose regulation of proxy advisors and rescind the conflict minerals rule, the latest intervention on watering down shareholder rights and ESG removes:

  • the SEC’s authority to enforce the CEO median pay ratio disclosure rules;
  • the ability for the SEC to mandate companies disclose material climate-change risks; and
  • the ability for SEC to give shareholders voting by proxy the ability to vote for a mix of of management and opposition board candidates on the same "univeral ballot card". At present, only shareholders physically present at a meeting are allowed to vote for a mix of candidates from different slates. Shareholders voting by proxy must choose one full slate or another.

The proposals were put forward as "poison pill riders" to a financial-services agencies appropriations bill for the federal budget year beginning October 1. Although the bill was passed and sent to the Senate, the future of the most controversial aspects is uncertain. It is understood that due to the timing of the presidential elections, Republican leaders do not want to pass a budget bill that could lead to a presidential veto that they could not override. A previous vote to reduce SEC funding by $50 million was opposed by Senator John Boozman.

Representative Scott Garrett (Republican, New Jersey), the author of the universal ballot amendments has criticised universal ballots as a representing  activists and the "special interests," of union and public pension funds. Garret believes that the SEC should focus its limited resources on addressing the low levels of participation retail investors in corporate elections. “The adoption of a universal proxy rule would only increase the likelihood of high-profile proxy fights at public companies, which would serve to distract employees and management at these companies from carrying out their core operations,” Garrett said before the vote on his amendment.

Garrett is seen a controversial politician in the US and has attracted criticism from within his own party for anti-gay comments. One of his major backers, the Swiss bank UBS is reported to be reconsidering its donations to Garrett following his remarks. He is, nevertheless, considered to be "one of Wall Street's best friends in Congress".

Latest News

SHareholder meeting

Accountability Versus Allocation: Who Is Corporate Reporting For?

SHareholder meeting

SFDR Review Moves Forward, But Key Questions Remain for Investors

SHareholder meeting

German governance code reform: Minerva supports simplification, but draws a line at investor visibility

SHareholder meeting

FRC’s new regulatory approach signals a shift from rule-making to market stewardship

SHareholder meeting

Shein lists in Hong Kong at reduced valuation after protracted IPO journey

SHareholder meeting

SEC sends executive pay disclosure overhaul to White House for review

Featured Briefings

Minerva Briefing

Shareholder Proposal Voting Trends 2026 H1

Minerva Briefing

Virtual-Only AGMs

Minerva Briefing

UK Proxy Season Review 2026

Minerva is a global provider of sustainable stewardship solutions with over 30 years of expertise. Minerva empowers investors by providing essential tools, including ESG research and data and expert insights, enabling them to navigate the intricate and ever-evolving landscape of stewardship and proxy voting, whilst ensuring their decisions are well-informed and aligned with sustainable principles.

Related Stories

No items found.