CEOs Under Pressure on Shareholder Proposals

Stay up-to-date with the latest developments in securities law through access to both news and all statutes and regulations. Find relevant corporate filings through a searchable EDGAR database. And...

By Andrea Vittorio

JPMorgan Chase & Co. chief executive officer Jamie Dimon and other business leaders are getting appeals from shareholder advocates who don’t want to lose their access to the corporate ballot.

Dimon chairs a Washington-based lobbying group for CEOs called Business Roundtable that recently raised the idea of reworking the process for shareholder proposals. That idea has since been incorporated into Republican-backed legislation in Congress that would block all but the biggest investors from proposing measures for consideration at a company’s annual meeting.

Now he and close to 50 members of the roundtable are hearing about it. For Dimon, the topic came up at JPMorgan Chase’s annual meeting May 16. For the rest of the CEOs, it’s come up in letters from shareholders including the nation’s second largest public pension fund.

The roundtable, which declined to comment, says that proposals have been taken over by a handful of investors who own small stakes and are pursuing “special interests” that don’t relate to shareholder value. Investors say the issues they’re raising in proposals, such as diversity and climate change, are relevant to shareholder value and should be able to go to a vote.

‘Attack’ on Proposals

Any investor seeking to put a proposal up for a vote of their peers would need to hold a minimum of 1 percent of outstanding stock for three years under the bill (H.R. 10) put forward by Rep. Jeb Hensarling (R-Texas) in the House. Currently, shareholders holding as little as $2,000 in shares for a year or more can do so.

To file a resolution with JPMorgan Chase, “I would need at least $3 billion,” Sister Nora Nash said during a question and answer session at the company’s meeting. “That is an intentionally planned impossibility.”

Nash, a nun who is part of a faith- and values-based investor coalition that collectively represents more than $200 billion in invested capital, urged Dimon to use his role as the Business Roundtable’s chairman to end the “attack” on shareholder resolutions.

Dimon, who didn’t respond to Nash, has cited “self-serving shareholder activity and proposals not intended to benefit the company” as one of the reasons for the drop in the number of public companies in the U.S. A JPMorgan Chase spokesperson declined to comment after the meeting.

Investor Letters

Anne Sheehan, director of corporate governance at the California State Teachers’ Retirement System (CalSTRS), and Tim Smith, who leads Walden Asset Management’s shareholder engagement, have also sent letters to the CEOs of nearly 50 companies that are members of the roundtable asking where they stand on shareholder proposals.

“We do not believe that the Business Roundtable is reflecting the views of companies with a history of meaningful and constructive engagement with investors,” the letters say.

Another letter from Sheehan and other institutional investors with more than $4 trillion in combined assets was sent May 17 to all members of the House of Representatives as they gear up to vote on the bill soon. Majority Leader Mitch McConnell (R-Ky.) is pessimistic about the prospects for a Dodd-Frank overhaul in the Senate, where he doubts Republicans can secure enough Democratic votes.

What the legislation lays out goes beyond the reforms that the roundtable had suggested in October. It advocated for making the proposal submission threshold a sliding scale based on a company’s market capitalization and raising the bar for resubmitting proposals that fail to pass.

To contact the reporter on this story: Andrea Vittorio in Washington at

To contact the editor responsible for this story: Yin Wilczek at

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Securities & Capital Markets on Bloomberg Law