Financial Services Committee Passes Congresswoman Maxine Waters’ Amendment Ensuring Shareholder Access to Proxy Rights

The House Financial Services Committee today passed an amendment by Congresswoman Maxine Waters (D-CA) that would authorize the Securities and Exchange Commission (SEC) to implement rules and procedures granting shareholders the opportunity to nominate at least one director to a corporation's board of directors, a right known as proxy access. Without Congresswoman Waters' amendment – which was co-sponsored by Congressman Gary Peters (D-MI) – the SEC would have most likely faced a lawsuit from corporations and their industry groups who would falsely allege that the SEC lacked authority to grant shareholders this right.

"Proxy access is necessary for shareholders to have a meaningful choice in exercising their right to vote for board members, and thus to hold boards accountable," said Congresswoman Waters, a senior member of the Committee. "Board nominees are typically selected by the very management that the board is meant to oversee, creating a board indebted to management, potentially weakening the board's accountability and oversight, and diluting the power of shareholders.  This amendment provides shareholders with a meaningful say in the process."

Regulation of proxy access and disclosure is a core function of the SEC and is one of the original responsibilities that Congress assigned to the Commission when it was created in 1934. Congresswoman Waters' amendment will not create a new federal right to proxy, but will ensure that the already-written laws on the right to proxy are upheld.

"Not surprisingly, there are some who oppose this amendment because it gives shareholders a seat at the table," said Congresswoman Waters. "My amendment enables the SEC to move forward with its pending, time-sensitive and important project on proxy access so I am encouraged that the Financial Services Committee has passed it. A voice for shareholders is one of the many steps that will help prevent us from reaching another economic downturn of this magnitude."

Congresswoman Waters expressed her appreciation to Congressman Peters for co-sponsoring the amendment and for his own work on legislation to improve corporate governance, and also acknowledged the important role of CalPERS and CalSTRS in helping draw Congress' attention to the need for the amendment. With $130.3 billion in assets, the California State Teachers Retirement System (CalSTRS) is the largest teachers' retirement fund in the United States. The California Public Employees' Retirement System (CalPERS) is the largest public pension fund in the United States, providing health and retirement benefits for California's police, firefighters, and other public employees. "Today's vote was a vote for America's public pension funds and the firefighters, teachers, police, and other essential government employees who rely on them for their retirement and benefits," Congresswoman Waters said.

This amendment to comprehensive financial regulatory reform legislation being considered by the Committee is largely supported by institutional investors seeking to promote the long-term health of their investments. Congresswoman Waters' amendment is supported by: the California State Teachers' Retirement System (CalSTRS); California Public Employees' Retirement System (CalPERS); The National Association of Shareholder and Consumer Attorneys (NASCAT); American Federation of State, County, and Municipal Employees (AFSCME); Washington State Investment Board; Colorado Public Employees' Retirement Association; State of Wisconsin Investment Board, Oregon Public Employees' Retirement Fund; Ohio Public Employees' Retirement System; Los Angeles Fire and Police Pensions; Los Angeles County Employees' Retirement Association; New York State Common Retirement Fund; Connecticut Retirement Plans and Trust Fund; North Carolina Retirement Systems; Pennsylvania Public School Employees' Retirement System; Pennsylvania State Employees' Retirement System, and the Council of Institutional Investors. 

###