Shareholder Proposal Schism: Divides Deepen Over Infringed Investor Resolution Rights
16 January 2026
Divides between shareholders, companies and others involved in corporate governance are becoming increasingly clear as the 2026 proxy season approaches following a series of actions from the US Securities and Exchange Commission (SEC) impacting on shareholder proposals.
The John L. Weinberg Center for Corporate Governance’s recently published survey on the SEC’s shareholder proposal process has showcased the clear divergences between shareholders and companies. However, corporate governance expert and Chair of ValueEdge Advisors Nell Minow has chastised the report and stated that it had “produce[d] questionable results”. This is another split between those in the corporate governance arena following an overhaul from the SEC over the past year that threatens do severely sideline shareholders this year.
Key Client Takeaways:
Conflicts Between Corporate Governance Experts
- Nell Minow strongly criticised the survey for “questionable” conclusions — particularly the claim that shareholder proposals rarely gain majority support. Her objections underscore widening divides among corporate governance experts following significant SEC changes to shareholder rights and proposal processes.
Survey Showcases ‘No Action’ Unity, SLB Divisions
- More than 60% of survey respondents found ‘no action’ letters to be at least moderately useful, showing widespread shareholder-company consensus. Yet, divisions were laid bare by shareholders highly preferring SLB 14L over SLB 14M, while companies favoured the latter
Litigation Likely to Increase
- With the SEC stepping back from ‘no‑action’ letters and rising dissatisfaction with the proposal process, shareholders may increasingly rely on litigation or “vote‑no” campaigns to have their concerns addressed.
Minow queried the assertion in the report summarising the findings of the survey that “when proposals reach a vote, they rarely receive majority support”. She rebutted that when shareholder proposals look likely to get a substantial, even majority vote, executives and boards will try to negotiate with the proponent, meaning that the resolution is withdrawn because it succeeded in achieving its aims. Minow said that offering equal weight to the perspectives of CEOs and shareholders was the “biggest” of the survey’s “many mistakes”. She added that “we believe the system should err on the side of allowing shareholders to decide the merits of shareholder proposals”.
Minow pointed to dissatisfaction with the SEC’s ‘no action’ process as being “one area of consensus” among respondents to the survey, also referencing the “major policy swings between Presidential administrations”. Of the survey’s 519 respondents, 42% said that ‘no action’ letters were extremely or very useful and a further 21% finding them moderately useful. Just 9% of respondents found ‘no action’ letters to be not useful. The respondents included 168 shareholders, the largest group of respondents, 156 professional advisors in law, accounting, or consulting, 52 public company representatives and 28 directors.
One of the major policy changes flagged by Minow was the SEC’s controversial decision to not respond to ‘no action’ requests during the 2026 proxy season, which was reported by Minerva Analytics in November. ‘No action’ response letters from the SEC inform companies whether they can exclude shareholder proposals from their proxy statement in reply to a request letter from the firm. The SEC’s decision risks handing unprecedented discretion to corporate management over what shareholder proposal to include and exclude and potentially leaves litigation as shareholders’ only recourse to have their voices heard by investee companies.
The Council of Institutional Investors recently sent a letter to the SEC urging it’s decision to not respond to ‘no action’ requests to be “reconsidered and reversed” by “no later than the end of this proxy season”. It warned that the SEC’s choice could “potentially limit the ability of shareowners to file shareholder proposals that would otherwise meet the existing requirements of Rule 14a-8 and improve corporate governance and long-term shareholder value at the companies they own”.
The SEC also opted to rescind Staff Legal Bulletin (SLB) 14L under Rule 14a-8, replacing it with new guidance in SLB 14M in February during the 2025 proxy season, which was covered in Minerva Analytics’ Shareholder Proposal Voting Trends Report 2025. This reinstated prior staff guidance on micromanagement, permitting shareholder proposals to be excluded more easily by companies and prompted a surge in ‘no action’ appeals. The decision was highly polarising given it made it easier for companies to exclude proposals and further sidelining shareholders, something which can clearly be seen in respondents opinions of the two bulletins.
Respondents to the survey overall slightly favoured SLB 14L over SLB 14M, but opinions were sharply divided between shareholders and companies. Unsurprisingly, shareholders prefer SLB 14L by a significant margin while companies prefer SLB 14M. Nearly all institutional investors favoured SLB 14L over SLB 14M, although asset manager support for the two bulletins was more evenly split.
The survey highlighted that “many respondents view Rule 14a-8 as an essential mechanism for shareholder voice and accountability”. It added that the stakeholders overall had “emphasise[d] its role in promoting transparency, mitigating agency costs, and channelling shareholder discontent into an orderly process”.
Respondents to the survey “identify clear and widely shared advantages of resolving shareholder proposal disputes through the ‘no action’ process rather than litigation”, with the report also noting that “enthusiasm for litigation is limited”. However, as noted by Minerva Analytics, litigation could be the last resort to shareholders following the shift in the SEC’s approach.
This week, New York State Comptroller Thomas DiNapoli reportedly warned that a lack of good faith engagement from companies following the changes from the SEC, adding it could mean shareholders need to use litigation or ‘vote no’ campaigns to hold investee firms to account. He had reached out to ten companies to stress this point, including Ford Motors, JetBlue, Mastercard and Palantir.
Last year, the SEC also looked to make it more difficult for shareholders to file proposals. Under the stewardship of SEC Chair Paul Atkins, Rule 14a-8 has been amended, introducing more stringent requirements over the amount of investment required to file and the support needed to resubmit proposals, as reported by Minerva Analytics. As a result of the changes, shareholders must have invested a minimum of U$25,000 in a company for a year to file a proposal at an AGM, while proposals must receive at least 5% of votes from investors to be refiled. Survey respondents were split on the eligibility threshold for shareholders to submit proposals. Shareholders suggested that the thresholds should be lower, companies that they should be higher, while directors’ and professionals’ responses were mixed.
Respondents to the survey were asked to rate the SEC’s shareholder proposal process and its administration on a five-star scale rating of the SEC’s shareholder proposal process and its administration. Well over a quarter (28%) of the 519 respondents rated the process at two-star or less, while just shy of 23% ranked it as three-stars. “Dissatisfaction with the SEC’s administration of the shareholder proposal process is widespread and consistent,” the report presenting the survey results read. “Evaluations cluster around low user satisfaction, unpredictability, moderate perceptions of fairness, and low to moderate assessments of usefulness.”
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Last Updated: 16 January 2026