Shareholder Proposal Rule (Video)

Keith Higgins, chair of Ropes & Gray’s securities & governance practice, examines SEC Rule 14a-8, the shareholder proposal rule.

Transcript: 

SEC Rule 14a-8, the shareholder proposal rule, allows a shareholder who's owned at least $2,000 worth of company stock for at least one year to have a proposal included in the company's proxy statement that's distributed to shareholders for an annual meeting.

Business groups this year have come out very strongly against the shareholder proposal rule, saying that companies spend millions of dollars each year dealing with shareholder proposals and countless hours of management time. They point to the fact that a group of about six shareholders, who appear to be acting in concert, account for almost one-third of the shareholder proposals at U.S. public companies every year. The $2,000 threshold, they say, is way too low and companies must include year after year proposals that get almost 90% of the company's shares