Shareowner rights advocacy group Shareholder Rights Group in a Tuesday, Feb. 25, letter to the Securities and Exchange Commission pushed back on GOP commissioner Hester Peirce’s recent remarks targeting shareholder proposals.

In a Jan. 27 speech, Peirce said the agency should consider hiking ownership thresholds for submitting shareholder proposals, and she also suggested that the agency could limit proposals to governance topics, purportedly to discourage measures focused on environmental and social issues.

In the speech, Peirce said the ownership threshold should be changed to ensure that “a [shareholder proposal] proponent has some meaningful economic stake” in the company. This, she said, would protect investors from “expensive corporate diversions.” Historically, shareholder proposals were “focused on governance topics that had a direct relationship to the financial prospects of a company,” Peirce said.

Shareholder Rights Group in its letter Tuesday countered that Peirce’s statements ignore the potential negative impacts from increasing the ownership requirements for filing shareholder proposals. In her speech, the group said, Peirce argued that “governance proposals are more meritorious and value-producing, yet she proposes raising ownership thresholds as a way of aligning proposals with value maximization.”

Meanwhile, raising thresholds to submit proposals turns a blind eye to the outsized role of small investors in deploying the shareholder proposal process to drive governance reforms, it added.

Since the 1940s, small individual shareholders, including John and Lewis Gilbert, John Chevedden, James McRitchie, Kenneth Steiner, Wilma Soss, Evelyn Davis and Emil Rossi, have played a leading role in filing governance-related shareholder proposals, according to a report that Shareholder Rights Group, the Interfaith Center on Corporate Responsibility and the U.S. Sustainable Investment Forum published on Monday.

Many of these small shareholders’ proposals helped advance governance reform on many topics, including eliminating staggered director terms, reducing supermajority voting thresholds, requiring independent board chairs, eliminating dual-class voting, requiring shareholder approval of bylaw amendments and requiring majority voting in uncontested director elections, the report said.

“[Yet] raising filing ownership requirements for shareholder proposals would disenfranchise smaller investors,” the Shareholder Rights Group letter said.

Editor’s note: The original, full version of this article was published Feb. 26, 2025, on The Deal’s premium subscription website. For access, log in to TheDeal.com or use the form below to request a free trial.