In a partisan 3-2 vote, the U.S. Securities and Exchange Commission approved rule changes that will make it harder for investors to hold corporate CEOs accountable by filing shareholder proposals on environmental, social and governance issues. The AFL-CIO strongly opposed these rule changes as a threat to shareholder democracy.
"Corporate CEOs are rejoicing in reaction to Trump’s SEC vote to restrict the ability of investors to file shareholder proposals,” explained AFL-CIO President Richard Trumka (UMWA). “As a result, working people’s retirement plans will be disenfranchised from having a voice for corporate accountability. This will not stand!”
Today’s SEC vote is not the only effort by the Trump administration to undermine the voting rights of working people’s retirement plans. Earlier this month, the Department of Labor’s Employee Benefits Security Administration proposed new regulations to suppress proxy voting by retirement plans in corporate elections.
Proxy voting is the right to vote at shareholder meetings. It includes voting on important issues such as the election of directors, executive compensation and shareholder proposals on environmental, social and governance issues. For more than three decades, the Labor Department has recognized that the right to vote is a valuable asset.
If adopted, the Labor Department’s new proposed rule making will require that retirement plans first conduct an expensive economic analysis before casting any proxy vote. In effect, the proposed rule’s cost-benefit analysis requirement will act as a deterrent to proxy voting by retirement plans—a form of voter suppression.
Even more radically, the proposed rule encourages retirement plans to always vote with corporate management or to refrain from voting altogether. Such a rule will effectively urge retirement plans to violate their fiduciary duty to cast votes in the best interests of retirement plan participants and beneficiaries.
The AFL-CIO strongly believes the retirement savings of working people are our deferred wages and should be voted in our long-term interests. As the corporate scandals of the Enron and WorldCom era showed, the corporate governance of a company is arguably just as important as a company’s financial performance.
Comments on the Department of Labor’s proposed rule on Fiduciary Duties Regarding Proxy Voting and Shareholder Rights are due on Oct. 5.