Chamber Urges SEC to Curb Special Interest Shareholder Activism

WASHINGTON, D.C.—The United States Chamber of Commerce today urged the Securities and Exchange Commission (SEC) to take steps to prevent special interest groups from abusing the proxy process to advance their own agendas.

"While such debates are important and necessary, they are inappropriate when conducted via the proxy ballot," said Thomas J. Donohue, Chamber president and CEO. "The forthcoming proposals are but the latest transparent example of special interest groups using the proxy process to advance their own agendas. These proposals are not about increasing shareholder value, but rather about getting companies to cave to the demands of unions and other groups."

In a letter to SEC Chairman Christopher Cox, Donohue cited the recent announcement by the AFL-CIO that it plans to file proxy proposals calling for companies to expand health care coverage and to force companies to support a government-run health system.

Shareholders, often with only a nominal economic interest in a company, increasingly use proxy proposals as a means of inserting the collective bargaining process, as well as national policy debates, into the proxy process. In the most recent proxy season, activists filed over 1,000 proposals.

"It all comes down to tyranny of the minority–small groups of special-interest shareholders hijacking the process to the detriment of the interests of other shareholders," said Donohue. "It is incumbent on the Commission to stop this abuse and to prevent special interest groups from using the proxy process to achieve objectives they've been unable to reach through more direct means."

The U.S. Chamber of Commerce is the world's largest business federation representing more than 3 million businesses and organizations of every size, sector and region.

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