\155\ See letter from James McRitchie dated February 2, 2020.
---------------------------------------------------------------------------

    The contact information and availability must be the shareholder-
proponent's, and not that of the shareholder's representative, if
any.\156\ We do not agree with commenters who suggested that this
requirement will disadvantage shareholder-proponents who require a
representative's assistance in navigating the shareholder-proposal
process.\157\ We believe that a shareholder-proponent who elects to
require a company to include a proposal in its proxy statement,
requiring the company and other shareholders to bear the related costs,
should be willing and available to discuss the proposal with the
company and not simply rely on its representative to do so. At least
one commenter suggested that shareholders could incur greater costs as
a result of the proposed amendment,\158\ but we believe any cost will
be de minimis given that engagement can take place through inexpensive
means, such as teleconference calls.
---------------------------------------------------------------------------

    \156\ Where a shareholder-proponent is an entity, and thus can
act only through an agent, and the agent's authority to act is
apparent and self-evident such that a reasonable person would
understand that the agent has authority to act on the entity's
behalf, the contact information and availability may be that of the
agent. Cf. supra Section II.B.3.
    \157\ See, e.g., letters from Boston Trust Walden et al. dated
January 27, 2020; Interfaith Center on Corporate Responsibility
dated January 27, 2020; Singing Field Foundation dated January 31,
2020.
    \158\ See Recommendation of the IAC, supra note 18.
---------------------------------------------------------------------------

    We also believe that the ability to engage directly with the
shareholder-proponent may encourage greater dialogue between the
shareholder and the company, and may lead to more efficient and less
costly resolution of these matters. As explained in the Proposing
Release, however, shareholder-proponents may seek assistance and advice
from lawyers, investment advisers, or others to help them draft
shareholder proposals and navigate the shareholder-proposal
process.\159\ The shareholder-proponent's representative also may
participate in any discussions between the company and the
shareholder.\160\ Thus, shareholder-proponents will be able to continue
to seek and utilize the assistance of a representative.
---------------------------------------------------------------------------

    \159\ See Proposing Release at 66468.
    \160\ See supra note 145.
---------------------------------------------------------------------------

    Other than providing the clarifications discussed above, we are not
making any changes to what we proposed. For example, we are not
adopting a requirement suggested by commenters that shareholder-
proponents include a statement with their submission as to whether they
attempted to engage with the company prior to submitting the
proposal.\161\ The company will already know whether the shareholder
attempted to engage prior to submission and the statement suggested by
the commenter would not be available to other shareholders. Thus, there
would be minimal value associated with providing such a statement.\162\
To the extent engagement takes place prior to a proposal's submission,
the new rule will encourage further dialogue between the shareholder-
proponent and company after submission. In addition, although some
commenters stated that shareholders should be required to make a good-
faith effort to meet with a company after stating their availability to
engage,\163\ or that there should be a penalty for failing to
engage,\164\ the rule will not impose requirements governing specific
engagement activities between the shareholder-proponent and the
company.
---------------------------------------------------------------------------

    \161\ See letters from Baillie Gifford & Co. dated February 3,
2020; Stewart Investors dated January 30, 2020.
    \162\ One commenter expressed the view that this information
``would allow other shareholders to assess the attitude of the
proponent and the company to the issue and to engagement
generally.'' See letter from Baillie Gifford & Co. dated February 3,
2020. However, it is unclear how other shareholders would learn of
this information absent imposing a new disclosure requirement on
issuers, which we are not inclined to do at this time.
    \163\ See letter from National Association of Manufacturers
dated February 2, 2020.
    \164\ See letters from Center for Capital Markets
Competitiveness dated January 31, 2020; Nasdaq, Inc. dated February
3, 2020.
---------------------------------------------------------------------------

    Under the new rule, companies will not be required to engage with a
shareholder-proponent or to state that they attempted to engage with
the shareholder-proponent prior to submitting a no-action request, as
some commenters suggested.\165\ Because companies and their
shareholders bear the burdens associated with including a shareholder
proposal in their proxy materials, or seeking no-action relief to
exclude such proposals, we believe companies are sufficiently
incentivized to pursue less costly forms of engagement.
---------------------------------------------------------------------------

    \165\ See letters from AFL-CIO dated February 3, 2020; CalPERS
dated February 3, 2020; Ceres et al. dated February 3, 2020; Church
Investor Group dated January 29, 2020; Council of Institutional
Investors dated January 30, 2020; First Affirmative Financial
Network, LLC dated January 24, 2020; Illinois State Treasurer dated
January 16, 2020; International Brotherhood of Teamsters dated
February 3, 2020; International Corporate Governance Network dated
December 4, 2019; Local Authority Pension Fund Forum dated February
3, 2020; Loring, Wolcott & Coolidge dated January 31, 2020; James
McRitchie dated February 2, 2020; Mercy Investment Services dated
January 31, 2020; New York City Comptroller dated February 3, 2020;
NorthStar Asset Management, Inc. dated February 3, 2020; Pension
Investment Association of Canada dated January 23, 2020; Tom
Shaffner dated December 17, 2019; Shareholder Rights Group dated
February 3, 2020; State Board of Administration of Florida dated
February 3, 2020; Trillium Asset Management dated February 3, 2020;
US SIF dated January 31, 2020; Worker Owner Council of the Northwest
dated February 3, 2020.
---------------------------------------------------------------------------

    In light of a shareholder-proponent's election to use a company's
proxy statement and other resources to solicit proxies for his or her
proposal, we believe it is appropriate to require shareholder-
proponents to state their availability to discuss the proposal with the
company. Although some commenters questioned whether such a requirement
would make it more likely that companies would choose to engage with
shareholders,\166\ we believe that the amendment is likely to eliminate
certain frictions in the engagement process, thereby making it easier
for companies to contact shareholders and, in turn, increasing the
likelihood that engagement will occur.
---------------------------------------------------------------------------

    \166\ See, e.g., letters from Council of Institutional Investors
dated January 30, 2020; Local Authority Pension Fund Forum dated
February 3, 2020; New York State Comptroller dated February 3, 2020.
---------------------------------------------------------------------------

D. One-Proposal Limit

1. Proposed Rule Amendment
    We proposed an amendment to Rule 14a-8(c) to apply the one-proposal
rule to ``each person'' rather than ``each shareholder'' who submits a
proposal, so that the amended rule would state, ``Each person may
submit no more than one proposal, directly or indirectly, to a company
for a particular shareholders' meeting. A person may not rely on the
securities holdings of another person for the purpose of meeting the
eligibility requirements and submitting multiple proposals for a
particular shareholders' meeting.'' In the Proposing Release, we
explained that under the proposed amendment, a shareholder-proponent
would not be permitted to submit one proposal in its own name and
simultaneously serve as a representative to submit a different proposal
on another shareholder's behalf for consideration at the same meeting.
Similarly, we explained that a representative would not be permitted to
submit more than one proposal to be considered at the same meeting,
even if the representative were to submit each proposal on behalf of
different shareholders.
2. Comments on the Proposed Rule Amendment
    We received a number of comments on the proposed rule amendment.
Commenters that expressed support for the proposed amendment indicated
that such an amendment is necessary to

prevent proponents from avoiding the one-proposal limit by submitting
proposals on behalf of other shareholders.\167\ However, a number of
commenters that opposed the proposed amendment stated that it would
interfere with a shareholder's ability to use a representative under
state law and/or interfere with a representative's ability to
effectively represent its clients.\168\ For example, some of these
commenters stated that the proposed amendment could prevent a
shareholder-proponent from using his or her preferred representative if
that representative has already submitted a proposal to the same
company on behalf of another client,\169\ prevent a representative from
being able to represent a client in the shareholder-proposal
process,\170\ raise costs for shareholder-proponents,\171\ or affect
the competitive advantage of representatives that specialize in active
engagement.\172\ Another commenter stated that the proposed amendment
``may limit the ability of institutional investors to select the agent
of their own choosing to represent them for shareholder engagement
purposes.'' \173\
---------------------------------------------------------------------------

    \167\ See letters from Business Roundtable dated February 3,
2020; Center for Capital Markets Competitiveness dated January 31,
2020; Senator Kevin Cramer dated July 28, 2020; Energy
Infrastructure Council dated February 3, 2020; Exxon Mobil
Corporation dated February 3, 2020; General Motors Company dated
February 25, 2020; International Bancshares Corporation dated
January 23, 2020; Manhattan Institute for Policy Research dated
February 3, 2020; Nareit dated February 3, 2020; Nasdaq, Inc. dated
February 3, 2020; National Association of Manufacturers dated
February 3, 2020; Robeco dated January 16, 2002; Society for
Corporate Governance dated February 3, 2020.
    \168\ See letters from AFL-CIO dated February 3, 2020; Emily
Aldridge dated January 31, 2020; American Baptist Home Mission
Societies dated January 31, 2020; Jennifer Astone dated January 17,
2020; As You Sow dated February 3, 2020; Kate Barron-Alicante dated
January 31, 2020; Boston Trust Walden et al. dated January 31, 2020;
Boston Trust Walden et al. dated January 27, 2020; British Columbia
Investment Management Corporation dated February 3, 2020; Jane
Bulnes-Fowles dated February 3, 2020; CalPERS dated February 3,
2020; Brian Canning dated January 31, 2020; Ceres et al. dated
February 3, 2020; Christian Brothers Investment Services, Inc. dated
January 21, 2020; Colorado Public Employees' Retirement Association
dated February 3, 2020; Professor James D. Cox, et al. dated
February 2, 2020; East Bay Municipal Utility District Employees'
Retirement System dated January 15, 2020; John Eing dated January
31, 2020; Harold Erdman dated February 3, 2020; Figure 8 Investment
Strategies dated January 31, 2020; Franciscan Sisters of Allegany,
NY dated January 29, 2020; Global Affairs Associates, LLC dated
February 3, 2020; Harrington Investments, Inc. dated February 3,
2020; Neela Hummel dated January 31, 2020; Interfaith Center on
Corporate Responsibility dated January 27, 2020; International
Brotherhood of Teamsters dated February 3, 2020; Andrew Ish dated
February 2, 2020; Jayce Jordan dated January 17, 2020; Brent Kessel
dated January 31, 2020; Laird Norton Family Foundation dated January
28, 2020; Local Authority Pension Fund Forum dated February 3, 2020;
James McRitchie dated February 2, 2020; James McRitchie dated July
21, 2020; Mercy Investment Services, Inc. dated January 31, 2020;
Laura Morganelli dated January 31, 2020; National Conference on
Public Employee Retirement Systems dated February 3, 2020; Paul M.
Neuhauser dated February 3, 2020; North American Securities
Administrators Association, Inc. dated February 3, 2020; Pension
Investment Association of Canada dated January 23, 2020; PNM
Shareholders for a Responsible Future dated February 3, 2020; Paul
Rissman dated January 15, 2020; Cheryl Ritenbaugh dated January 17,
2020; School Sisters of Notre Dame Cooperative Investment Fund
received January 24, 2020; Segal Marco Advisors dated February 3,
2020; Shareholder Rights Group dated February 3, 2020; Sisters of
St. Ursula dated January 23, 2020; Sisters of the Order of St.
Dominic dated January 24, 2020; State Board of Administration of
Florida dated February 3, 2020; The Arntz Family Foundation dated
January 15, 2020; The Pension Board--United Church of Christ, Inc.
dated January 29, 2020; Trillium Asset Management dated February 3,
2020; Upcyclers Network dated January 17, 2020; Barbara J. Wolf
dated January 31, 2020; Ann W. Woll dated January 18, 2020. See also
Recommendation of the IAC, supra note 18.
    \169\ See letters from AFL-CIO dated February 3, 2020; Boston
Trust Walden et al. dated January 27, 2020; Professor James D. Cox
et al. dated February 2, 2020; James McRitchie dated February 2,
2020; Paul M. Neuhauser dated February 3, 2020; Shareholder Rights
Group dated June 10, 2020.
    \170\ See letters from Segal Marco Advisors dated February 3,
2020; Trillium Asset Management dated February 3, 2020.
    \171\ See letters from Tom Shaffner dated December 17, 2019;
Trillium Asset Management dated February 3, 2020. See also
Recommendation of the IAC, supra note 18.
    \172\ See letter from Shareholder Rights Group dated February 3,
2020.
    \173\ See Recommendation of the IAC, supra note 18.
---------------------------------------------------------------------------

    Other commenters sought clarification with respect to the proposed
rule's intended operation, or suggested modifications to the proposed
amendments. For example, some commenters questioned whether the
proposal would affect a representative's ability to present proposals
on behalf of multiple shareholder-proponents at the shareholder
meeting.\174\ One of these commenters also sought clarification on
whether the proposed rule's reference to ``person'' means a natural
person or encompasses discrete entities made up of or employing
multiple natural persons, and whether co-filers of a single proposal
would be precluded from using the same representative.\175\ Another
commenter suggested a modification to the proposed amendment that would
require shareholders to certify that a proposal was submitted of their
own accord and not at the request or solicitation of a representative
that already submitted (or is considering submitting) a proposal to the
same company.\176\ This commenter stated that ``[s]uch a certification
would provide greater assurance that representatives are not actively
soliciting multiple proposals and reduce the chances for abuse.'' \177\
---------------------------------------------------------------------------

    \174\ See letters from AFL-CIO dated February 3, 2020; As You
Sow dated February 3, 2020; Boston Trust et al. Walden dated January
31, 2020; CalPERS dated February 3, 2020; Domini Impact Investments
dated February 3, 2020; New York City Comptroller dated February 3,
2020; New York State Comptroller dated February 3, 2020; PNM
Shareholders for a Responsible Future dated February 3, 2020;
Shareholder Rights Group dated February 3, 2020; Unitarian
Universalist Association dated January 28, 2020.
    \175\ See letter from Boston Trust Walden et al. dated January
27, 2020.
    \176\ See letter from Society for Corporate Governance dated
February 3, 2020.
    \177\ Id.
---------------------------------------------------------------------------

3. Final Rule Amendment
    We are adopting the amendment as proposed. As the Commission
explained when it adopted the one-proposal restriction in 1976, the
submission of multiple proposals by a single proponent ``constitute[s]
an unreasonable exercise of the right to submit proposals at the
expense of other shareholders'' and also may ``tend to obscure other
material matters in the proxy statement of issuers, thereby reducing
the effectiveness of such documents.'' \178\ At the time the one-
proposal limitation was adopted, the Commission explained that it was
``aware of the possibility that some proponents may attempt to evade
the new limitations through various maneuvers, such as having other
persons whose securities they control submit . . . proposals each in
their own names.'' \179\ To combat this type of abuse, the Commission
clarified that the limitation ``will apply collectively to all persons
having an interest in the same securities (e.g., the record owner and
the beneficial owner, and joint tenants).'' \180\
---------------------------------------------------------------------------

    \178\ See 1976 Adopting Release, supra note 88.
    \179\ Id.
    \180\ Id. This limitation will continue to apply under the
adopted amendments.
---------------------------------------------------------------------------

    We continue to believe that this one-proposal limit is appropriate.
In our view, the Commission's stated reasoning for the one-proposal
limit applies equally to representatives who submit proposals on behalf
of shareholders they represent. We believe permitting representatives
to submit multiple proposals for the same shareholders' meeting can
give rise to the same concerns about the expense and obscuring effect
of including multiple proposals in the company's proxy materials,
thereby undermining the purpose of the one-proposal limit.
    Accordingly, the new rule will state that each person may submit no
more than one proposal, directly or indirectly, to a company for a
particular shareholders' meeting. It also will state that a person may
not rely on the securities holdings of another person for

the purpose of meeting the eligibility requirements and submitting
multiple proposals for a particular shareholders' meeting. Under the
new rule, a shareholder-proponent will not be permitted to submit one
proposal in his or her own name and simultaneously serve as a
representative to submit a different proposal on another shareholder's
behalf for consideration at the same meeting. Likewise, a
representative will not be permitted to submit more than one proposal
to be considered at the same meeting, even if the representative were
to submit each proposal on behalf of different shareholders. Using the
rule in this way undermines the one-proposal limit. The amended rule
text will more effectively apply the one-proposal limit to shareholders
and representatives of shareholders.
    While some commenters expressed concern about the effect the
amended rule could have on a shareholder's ability to use a
representative or a representative's ability to effectively represent
its clients,\181\ the amendment is not intended to prevent shareholders
from seeking assistance and advice from lawyers, investment advisers,
or others to help them draft shareholder proposals and navigate the
shareholder-proposal process, nor do we believe it would interfere with
a representative's ability to effectively represent its clients. The
ability to provide such assistance to more than one shareholder is not
affected. However, to the extent that the provider of such services
submits a proposal, either as a proponent or as a representative, it
will be subject to the one-proposal limit and will not be permitted to
submit more than one proposal in total to the same company for the same
meeting. In addition, we do not believe, as suggested by
commenters,\182\ that the amended rule will raise costs to a meaningful
degree for shareholder-proponents or otherwise unduly restrict their
options in selecting a representative because, while in some cases
shareholder-proponents may need to submit a proposal on their own, they
can otherwise enjoy all of the benefits of being represented by a
representative of their choosing. For example, if a shareholder's
representative of choice is unable to submit a proposal for the
shareholder, because it has already made a submission on behalf of
another client, the representative could still assist the shareholder
with drafting the proposal, advising on steps in the submission
process, and engaging with the company. For similar reasons, we do not
agree that the rule will affect the competitive advantage of
representatives that specialize in active engagement.\183\ Nor do we
agree that state agency law should govern the number of proposals a
representative may submit on behalf of proponents when proponents and
agents seek to make use of the opportunities afforded by the federal
proxy rules.\184\
---------------------------------------------------------------------------

    \181\ See supra note 168.
    \182\ See letter from Trillium Asset Management dated February
3, 2020. See also Recommendation of the IAC, supra note 18.
    \183\ Cf. letter from Shareholder Rights Group dated February 3,
2020.
    \184\ See letter from CalPERS dated February 3, 2020.
---------------------------------------------------------------------------

    Some commenters questioned whether the amendment, which addresses
the submission of proposals, would affect a representative's ability to
present proposals on behalf of multiple shareholder-proponents at the
same shareholders' meeting.\185\ In order for shareholder-proponents
who have submitted a proposal for inclusion in a company's proxy
statement to remain eligible to do so at the same company within the
following two years, shareholder-proponents must appear at the meeting
and present their proposal.\186\ However, a shareholder-proponent may
satisfy this requirement by employing a representative who is qualified
under state law to present the proposal on the proponent's behalf. The
amendment is not intended to limit a representative's ability to
present proposals on behalf of multiple shareholders at the same
shareholders' meeting. The conduct of shareholder meetings, including
how proposals are presented, is generally governed by state law, and
does not raise the same concerns that are raised by a proponent's use
of a company's proxy statement under the federal proxy rules. We
believe that compliance with the substantive eligibility requirements
of amended Rule 14a-8(c) will appropriately address the concerns we
have with respect to the one-proposal limit, and we do not believe that
the designation of a representative for the purpose of presenting a
proposal at the shareholder meeting raises similar concerns.\187\
---------------------------------------------------------------------------

    \185\ See letters from AFL-CIO dated February 3, 2020; As You
Sow dated February 3, 2020; Boston Trust Walden et al. dated January
31, 2020; CalPERS dated February 3, 2020; Domini Impact Investments
dated February 3, 2020; New York City Comptroller dated February 3,
2020; New York State Comptroller dated February 3, 2020; PNM
Shareholders for a Responsible Future dated February 3, 2020;
Shareholder Rights Group dated February 3, 2020; Unitarian
Universalist Association dated January 28, 2020.
    \186\ 17 CFR 240.14a-8(h).
    \187\ The Commission has previously stated that allowing a
representative to present a proposal on a shareholder's behalf
``should provide greater assurance that the proposal will be
presented at the meeting and that the proposal will be presented by
a well-informed person.'' See 1982 Proposing Release, supra note 2.
Thus, it may be important at a shareholders' meeting to ensure that
a proposal is presented in accordance with state law by a well-
informed person, and the use of a representative for this purpose
with respect to multiple proposals does not ``constitute an
unreasonable exercise of the right to submit proposals at the
expense of other shareholders'' or ``tend to obscure other material
matters in the proxy statement of issuers, thereby reducing the
effectiveness of such documents.'' Cf. 1976 Adopting Release, supra
note 88.
---------------------------------------------------------------------------

    In response to certain commenters,\188\ we note that under the
final amendment, entities and all persons under their control,
including employees, will be treated as a ``person'' for purposes of
the amendment. As such, if an investment adviser at Advisory Firm A
submits a proposal on behalf of a shareholder-proponent to Company Y,
neither that investment adviser nor any other adviser at Advisory Firm
A would be permitted to submit a proposal on behalf of a different
shareholder-proponent at Company Y for the same meeting. However, the
amendment will not prohibit a single representative from representing
multiple co-filers in connection with the submission of a single
shareholder proposal. Where multiple shareholders co-file a proposal,
the company receives only one proposal and, therefore, the submission
does not raise the types of concerns that Rule 14a-8(c) is intended to
address.
---------------------------------------------------------------------------

    \188\ See letter from Boston Trust Walden et al. dated January
27, 2020. See also Recommendation of the IAC, supra note 18.
---------------------------------------------------------------------------

    We are not adopting a commenter's suggestion to require
shareholders to certify that the proposal has been submitted of their
own accord and not at the request or solicitation of a representative
that already has submitted (or is considering submitting) a proposal to
the same company.\189\ We believe that the representations in Rule 14a-
8(b)(1)(iv) will provide a meaningful degree of assurance as to the
shareholder-proponent's identity, role, and interest in a proposal that
is submitted for inclusion in a company's proxy statement and that,
therefore, the certification suggested by the commenter is unnecessary.
---------------------------------------------------------------------------

    \189\ See letter from Society for Corporate Governance dated
February 3, 2020.
---------------------------------------------------------------------------

E. Resubmission Thresholds

1. Proposed Rule Amendment
    We proposed to amend the resubmission thresholds under Rule 14a-
8(i)(12); specifically, we proposed to replace the thresholds of 3, 6,
and 10 percent with thresholds of 5, 15, and 25 percent, respectively.
Under the

proposed amendment, a shareholder proposal would be excludable from a
company's proxy materials if it addressed substantially the same
subject matter as a proposal, or proposals, previously included in the
company's proxy materials within the preceding five calendar years if
the most recent vote occurred within the preceding three calendar years
and the most recent vote was:
     Less than 5 percent of the votes cast if previously voted
on once;
     Less than 15 percent of the votes cast if previously voted
on twice; or
     Less than 25 percent of the votes cast if previously voted
on three or more times.
    We did not propose changes to the ``substantially the same subject
matter'' test, which focuses on the substantive concerns addressed by a
proposal rather than the ``specific language or actions proposed to
deal with those concerns,'' \190\ or the duration of the cooling-off
period. We did, however, seek comment on whether a change to the
``substantially the same subject matter'' standard was necessary or
appropriate in light of the proposed amendments to the resubmission
thresholds and whether to amend the duration of the cooling-off
period.\191\
---------------------------------------------------------------------------

    \190\ See Proposing Release at 66471 n.115 (citing 1983 Adopting
Release).
    \191\ See Proposing Release at 66473.
---------------------------------------------------------------------------

2. Comments on the Proposed Rule Amendment
    Commenters expressed a wide range of views on the proposed rule
amendment. Commenters that expressed support for the proposed amendment
indicated that it would reduce the burden on shareholders and companies
associated with resubmitted proposals and allow for exclusion of
proposals that are unlikely to earn majority support in the near
term.\192\ Several commenters that were supportive of the proposed
amendment expressed a preference for resubmission thresholds that are
higher than those that were proposed.\193\ A few of these commenters
indicated that higher thresholds would be preferable in light of the
influence proxy voting advice businesses have in the shareholder voting
process.\194\
---------------------------------------------------------------------------

    \192\ See letters from American Securities Association dated
February 3, 2020; Business Roundtable dated February 3, 2020; Center
for Capital Markets Competitiveness dated January 31, 2020; Senator
Kevin Cramer dated July 28, 2020; Energy Infrastructure Council
dated February 3, 2020; Exxon Mobil Corporation dated February 3,
2020; FedEx Corporation dated February 3, 2020; Fidelity Management
& Research LLC dated February 3, 2020; Senator Phil Gramm dated
January 29, 2020; International Bancshares Corporation dated
February 3, 2020; Investment Company Institute dated February 3,
2020; Manhattan Institute for Policy Research dated February 3,
2020; Nareit dated February 3, 2020; Nasdaq, Inc. dated February 3,
2020; National Association of Manufacturers dated February 3, 2020;
Society for Corporate Governance dated February 3, 2020.
    \193\ See letters from Business Roundtable dated February 3,
2020 (supporting thresholds at 6%, 15%, and 30%); Exxon Mobil
Corporation dated February 3, 2020 (supporting thresholds at 10%,
25%, and 50%); FedEx Corporation dated February 3, 2020 (supporting
thresholds at 6%, 15%, and 30%); General Motors Company dated
February 25, 2020 (supporting thresholds at 6%, 15%, and 30%);
Nasdaq, Inc. dated February 3, 2020 (supporting thresholds at 6%,
15%, and 30%); Society for Corporate Governance dated February 3,
2020 (supporting thresholds at 6%, 15%, and 30%).
    \194\ See letters from Business Roundtable dated February 3,
2020; Exxon Mobil Corporation dated February 3, 2020; Society for
Corporate Governance dated February 3, 2020.
---------------------------------------------------------------------------

    A number of commenters expressed concern that the new thresholds
would stifle or delay adoption of shareholder-initiated reforms to the
extent shareholder support develops gradually over time.\195\ Other
commenters expressed the view that the current resubmission thresholds
are effective even though they may not have the same effect on
resubmissions as when initially adopted.\196\
---------------------------------------------------------------------------

    \195\ See, e.g., letters from ACTIAM dated November 21, 2019;
AFL-CIO dated February 3, 2020; ARGA Investment Management dated
December 12, 2019; BC Target Benefit Pension Plan dated November 28,
2019; Senator Sherrod Brown dated August 21, 2020; CalPERS dated
February 3, 2020; Congregation of St. Basil dated December 15, 2019;
Council of Institutional Investors et al. dated July 29, 2020;
Dominican Sisters of Springfield Illinois dated January 9, 2020;
Form Letter Type A; Franciscan Sisters of Allegany, NY dated
December 9, 2019; Franciscan Sisters of Perpetual Adoration dated
December 6, 2019; International Corporate Governance Network dated
December 4, 2019; Jesuit Conference of Canada and the United Stated
dated December 2, 2019; Lancaster Theological Seminary dated
November 19, 2019; Maryknoll Fathers and Brothers dated December 5,
2019; Maryland and USA Northeast Province of the Society of Jesus
dated December 19, 2019; Miller/Howard Investments dated January 3,
2020; New York State Comptroller dated February 3, 2020; Northwest
Coalition for Responsible Investment dated January 27, 2020;
Province of St. Joseph of the Capuchin Order dated December 9, 2019;
Shareholder Rights Group dated January 6, 2020; Shareholder Rights
Group dated June 10, 2020; Sisters of Bon Secours USA dated January
10, 2020; Sisters of Charity of the Blessed Virgin Mary dated
November 21, 2019; Sisters of Mount St. Scholastica dated November
26, 2019; Sisters of the Precious Blood dated November 25, 2019;
Ursuline Convent of the Sacred Heart, Toledo, OH dated November 26,
2019; Zevin Asset Management dated November 27, 2019. Some of these
commenters cited proposals dealing with board declassification,
climate change, and human rights risks as examples of proposals that
took time to garner broader shareholder support. See, e.g., letters
from ACTIAM dated November 21, 2019; BC Target Benefit Pension Plan
dated November 28, 2019; Congregation of St. Basil dated December
15, 2019; Franciscan Sisters of Perpetual Adoration dated December
6, 2019; Lancaster Theological Seminary dated November 19, 2019;
Maryknoll Fathers and Brothers dated December 5, 2019; Province of
St. Joseph of the Capuchin Order dated December 9, 2019; Sisters of
Bon Secours USA dated January 10, 2020; Sisters of Charity of the
Blessed Virgin Mary dated November 21, 2019; Sisters of Mount St.
Scholastica dated November 26, 2019; Sisters of the Precious Blood
dated November 25, 2019; Zevin Asset Management dated November 27,
2019. For example, some commenters noted that proposals addressing
declassified boards received less than 10% support in 1987 and 81%
in 2012, and proposals addressing climate change received less than
5% support in 1998 and now receive ``substantial, and even majority
shareholder votes.'' See, e.g., letters from ACTIAM dated November
21, 2019; AEquo et al. dated January 28, 2020; Church Investment
Group dated January 29, 2020; Rockefeller Asset Management dated
January 31, 2020.
    \196\ See, e.g., letter from Segal Marco Advisors dated February
3, 2020. See also Recommendation of the IAC, supra note 18.
---------------------------------------------------------------------------

    Two commenters that expressed concern about the effects of the
proposed thresholds suggested alternative thresholds of 3, 10, and 15
percent or 5, 10, and 15 percent, respectively, if the Commission
decided to revise the thresholds.\197\ Another commenter stated that
thresholds of 5, 7, and 10 percent would be preferable to the proposed
thresholds.\198\
---------------------------------------------------------------------------

    \197\ See letters from CalPERS dated February 3, 2020;
Washington State Investment Board dated January 22, 2020.
    \198\ See letter from British Columbia Investment Management
Corporation dated February 3, 2020.
---------------------------------------------------------------------------

    A number of commenters expressed the view that the proposed
amendment would have a more pronounced effect at companies with dual-
class voting structures,\199\ and several commenters recommended
adopting alternative vote-counting methodologies for companies with
these voting structures.\200\
---------------------------------------------------------------------------

    \199\ See letters from AFL-CIO dated February 3, 2020; Boston
Trust Walden et al. dated January 31, 2020; CFA Institute dated
February 3, 2020; Connecticut State Treasurer dated January 31,
2020; Council of Institutional Investors dated January 30, 2020;
Council of Institutional Investors et al. dated July 29, 2020;
Representative Bill Foster et al. dated January 31, 2020; Friends
Fiduciary Corporation dated February 2, 2020; Illinois State
Treasurer dated January 16, 2020; International Brotherhood of
Teamsters dated February 3, 2020; International Corporate Governance
Network dated December 4, 2019; Loring, Wolcott & Coolidge dated
January 31, 2020; New York State Comptroller dated February 3, 2020;
Shareholder Association for Research & Education dated January 30,
2020; Trillium Asset Management dated February 3, 2020.
    \200\ See letters from AFL-CIO dated February 3, 2020; Council
of Institutional Investors dated January 30, 2020; Interfaith Center
on Corporate Responsibility dated January 27, 2020; International
Corporate Governance Network dated December 4, 2019; New York State
Comptroller dated February 3, 2020; NorthStar Asset Management, Inc.
dated February 3, 2020.
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    Several commenters expressed the view that the level of shareholder
support is not the sole or most appropriate measure or indication of a
proposal's success.\201\ These

commenters suggested that a proposal may be considered successful if it
leads to a settlement with management--regardless of shareholder
support--or raises management's awareness about an issue.\202\ Two
commenters suggested adopting an exception that would apply in the
event of a change in circumstances that would warrant
resubmission.\203\
---------------------------------------------------------------------------

    \201\ See, e.g., letters from CalPERS dated February 3, 2020;
Center for Political Accountability dated January 31, 2020; Council
of Institutional Investors dated January 30, 2020; New York City
Comptroller dated February 3, 2020; UAW Retiree Medical Benefits
Trust dated January 30, 2020. See also Recommendation of the IAC,
supra note 18.
    \202\ Id.
    \203\ See letters from Baillie Gifford & Co. dated February 3,
2020; Hal S. Scott dated January 6, 2020.
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3. Final Rule Amendment
    After considering the comments, we are adopting the amendment as
proposed. Under amended Rule 14a-8(i)(12), a shareholder proposal will
be excludable from a company's proxy materials if it addresses
substantially the same subject matter as a proposal, or proposals,
previously included in the company's proxy materials within the
preceding five calendar years if the most recent vote occurred within
the preceding three calendar years and the most recent vote was:
     Less than 5 percent of the votes cast if previously voted
on once;
     Less than 15 percent of the votes cast if previously voted
on twice; or
     Less than 25 percent of the votes cast if previously voted
on three or more times.\204\
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    \204\ When calculating the voting results for purposes of
applying this rule, only votes for and against a proposal should be
included in the calculation. Abstentions and broker non-votes should
not be included. In addition, voting results should not be rounded
up for purposes of determining whether the resubmission thresholds
have been met. For example, a voting result of 4.85% should not be
rounded up to 5%.
---------------------------------------------------------------------------

    In the Proposing Release, we expressed a concern that the current
resubmission thresholds of 3, 6, and 10 percent do not adequately
distinguish between proposals that are more likely to obtain broader or
majority support upon resubmission and those that are not.\205\ As
such, we were concerned that the thresholds may not be functioning
effectively to relieve companies and their shareholders of the
obligation to consider, and spend resources on, matters that had
previously been voted on and rejected by a substantial majority of
shareholders without sufficient indication that a proposal could gain
traction among the broader shareholder base in the near future. As a
result, company and shareholder resources may end up being used to
consider and vote on matters that are unlikely to be supported by
shareholders. In the Proposing Release, we also noted that ``the
current thresholds may not have the same effect today on resubmissions
as they did when they were initially adopted.'' \206\ Several
commenters questioned the relevance of the rate of exclusion over
time.\207\ While the resubmission thresholds are not calibrated to
achieve a specific rate of exclusion, we remain concerned that the
current resubmission thresholds do not adequately distinguish between
proposals that have a realistic prospect of obtaining broader or
majority support in the near term and those that do not. The final
amendments to the resubmission thresholds are intended to better
achieve this purpose.
---------------------------------------------------------------------------

    \205\ See Proposing Release at 66470-66471.
    \206\ Id. at 66471.
    \207\ See supra note 196.
---------------------------------------------------------------------------

    We recognize that some proposals may benefit from resubmission,
among other factors, to obtain broader or majority support. However, we
do not believe that companies and other shareholders should repeatedly
bear the costs of proposals that have not demonstrated the potential of
obtaining broader or majority support in the near term absent a
significant change in circumstances. Moreover, if a proposal fails to
generate meaningful support on its first submission, and is unable to
generate significantly increased support upon resubmission, it is
unlikely that the proposal will earn the support of a majority of
shareholders in the near term.\208\ Thus, in our view, a proposal that
is unable to obtain the support of at least 1 in 20 shareholders on the
first submission, 3 in 20 on the second submission, or 1 in 4 by the
third submission should be subject to a temporary cooling-off period to
help ensure that the inclusion of such proposals does not result in
undue burdens on shareholders and companies. After the temporary
cooling-off period, the proposal could once again be submitted to the
company.
---------------------------------------------------------------------------

    \208\ Based on our review of shareholder proposals that received
a majority of the votes cast between 2011 and 2018, approximately
90% received such support on the first submission. Of the remaining
10%, 60% received 40% or more of the votes cast on the initial
submission. See Proposing Release at Section IV.B.3.iv.
---------------------------------------------------------------------------

    We recognize that initial levels of shareholder support may not
always predict how shareholders will vote on an issue in the future.
Nevertheless, we remain concerned that obtaining support of 3, 6, or 10
percent on a first, second, or third submission, respectively, does not
demonstrate sufficient shareholder support, or a sufficient increase
toward greater support, to warrant resubmission. Under the current
thresholds, at least 90 percent of proposals remain eligible for
resubmission.\209\ These resubmitted proposals have been permitted even
though, according to our analysis, only approximately 6.5 percent of
proposals that fail to win majority support the first time go on to
pass in a subsequent attempt.\210\ Accordingly, it appears that under
the current thresholds, the vast majority of shareholder proposals
remain eligible for resubmission regardless of their likelihood of
gaining broader or majority shareholder support, at least in the near
term, requiring companies and shareholders to continually expend
resources and consider proposals with minimal likelihood of success. In
contrast, the new thresholds are designed to serve as better indicators
of a proposal's path toward potentially greater shareholder support.
---------------------------------------------------------------------------

    \209\ See Proposing Release at tbl.3.
    \210\ One commenter questioned the appropriateness of the
baseline of 6.5%, stating, ``The willingness of boards to implement
proposals that a majority of shareholders will support means that
the total universe of majority vote proposals is unobservable.
Accordingly, the 6.5 percent of resubmitted proposals that go on to
receive majority support is the wrong baseline for consideration.''
See letter from AFL-CIO dated February 3, 2020. The baseline
represents observable data and we believe it would be speculative to
categorize implemented proposals that had not received majority
support as ``majority vote'' proposals.
---------------------------------------------------------------------------

    We note that some commenters indicated that achieving majority
support is not the sole or most appropriate way to measure the success
of a proposal.\211\ In this regard, we believe that the new thresholds
may also serve as better indicators of the likelihood that a proposal
will result in an agreement between the company and the shareholder-
proponent or raise management's awareness of an issue. For example, one
observer posited that ``[t]hirty-percent support is the level at which
many boards take note of a proposal topic'' and that ``at 50% support,
if the board is deemed to take insufficient action in response, many
investors will consider voting against incumbent directors at the next
annual meeting.'' \212\ We believe a proposal that satisfies the new
thresholds will more likely be on a path toward broader support and,
therefore, may be more likely to result in an agreement between the
company and the shareholder-

proponent or raise management's awareness of an issue. Moreover, we do
not believe that a proposal must be resubmitted year after year to gain
broader shareholder support or result in an agreement between the
company and the shareholder-proponent.
---------------------------------------------------------------------------

    \211\ See, e.g., letters from CalPERS dated February 3, 2020;
Center for Political Accountability dated January 31, 2020; Council
of Institutional Investors dated January 30, 2020; New York City
Comptroller dated February 3, 2020; UAW Retiree Medical Benefits
Trust dated January 30, 2020.
    \212\ See Jamie Smith, Five Takeaways from the 2019 Proxy
Season, EY Center for Board Matters, July 23, 2019, at 7, available
at https://assets.ey.com/content/dam/ey-sites/ey-com/en_us/topics/cbm/ey-cbm-2019-proxy-season-preview.pdf.
---------------------------------------------------------------------------

    While some commenters suggested higher or lower resubmissions
thresholds, such that the amendments would potentially exclude more or
fewer shareholder proposals, and recognizing that, for a particular
proposal, any generally applicable threshold has the potential to be
over- or under-inclusive, we believe the proposed amendments
appropriately calibrate the resubmission criteria, taking into account
the costs to companies and shareholders of responding to proposals that
do not garner significant shareholder support and are unlikely to do so
in the near future and the benefits to companies and their shareholders
of facilitating an individual shareholder's ability to engage with a
company and other shareholders on successive occasions through the
shareholder-proposal process.
    The amendments represent a modest increase to the initial
resubmission threshold, and more significant increases to the second
and third thresholds. As a result, there will be a 10 percentage point
spread between the first and second threshold and between the second
and third threshold. We believe that the more significant revisions to
the second and third thresholds are appropriate due to the fact that a
proposal will have already been considered by shareholders two or three
times before becoming subject to these thresholds.
    The increase to the initial resubmission threshold from 3 to 5
percent will allow for exclusion of proposals that are very unlikely to
earn majority support upon resubmission and is intended to serve as a
better indicator of proposals that are more likely to obtain majority
support than the current threshold. Based on our analysis of the
proposals that ultimately garnered majority support from 2011 to 2018,
90 percent did so on the first submission, and more than half of the
proposals that were resubmitted garnered more than 40 percent on the
first submission.\213\ Of those that did not garner more than 40
percent on the first submission but subsequently obtained majority
support, nearly all garnered support of at least 5 percent on the first
submission.\214\ While we recognize that there have been a few
instances in which proposals that have failed to receive at least 5
percent of the votes cast have gone on to garner majority support,
these instances appear to be infrequent and may be the result of
factors other than or in addition to the resubmission.\215\
---------------------------------------------------------------------------

    \213\ See Proposing Release at Section IV.B.3.iv.
    \214\ Id.
    \215\ Based on our review of shareholder proposals that received
a majority of the votes cast on a second or subsequent submission
between 2011 and 2018, only 2% of the proposals that have failed to
receive at least 5% of the votes cast have gone on to garner
majority support. See Proposing Release at Section IV.B.3.iv.
---------------------------------------------------------------------------

    The increase to the second and third resubmission thresholds to 15
and 25 percent, respectively, are also intended to establish thresholds
that are better indicators of proposals that have the possibility of
obtaining broader or majority support in the near term than the current
thresholds. We believe that proposals receiving these levels of support
will have better demonstrated a sustained level of shareholder interest
and a broadening of shareholder support to warrant management and
shareholder consideration upon resubmission. We note that these
thresholds are set significantly below the average and median support
for initial submissions of 34 and 30 percent, respectively.\216\ In
addition, of resubmitted proposals that ultimately obtain majority
support, the overwhelming majority garner more than 15 percent on their
second submission and more than 25 percent on their third submission.
Based on our review of shareholder proposals that received a majority
of the votes cast on a second or subsequent submission between 2011 and
2018, 95 percent received support greater than 15 percent on the second
submission, and 100 percent received support greater than 25 percent on
the third or subsequent submission.\217\ In addition, of the 22
proposals that obtained majority support on their third or subsequent
submissions, approximately 95 percent received support of over 15
percent on their second submission, and 100 percent received support of
over 25 percent on their third or subsequent submission.\218\ Thus, as
with the initial resubmission threshold, we expect that these
thresholds will permit exclusion of proposals that are unlikely to
garner broader or majority support in the near term.
---------------------------------------------------------------------------

    \216\ See Proposing Release at 66472.
    \217\ Id.
    \218\ Id. at n.123.
---------------------------------------------------------------------------

    Overall, we believe that the amended resubmission thresholds would
reduce the costs associated with management's and shareholders'
repeated consideration of these proposals and their recurrent inclusion
in the proxy statement while maintaining shareholders' ability to
submit proposals and engage with companies on matters of interest to
shareholders. We also believe that the new resubmission thresholds may
lead to the submission of proposals that will evoke greater shareholder
interest in, and foster more meaningful engagement between, management
and shareholders, as the thresholds will incentivize shareholders to
submit proposals on matters that resonate with a broader shareholder
base to avoid exclusion under the rule.
    While we acknowledge the concern expressed by some commenters that
the new resubmission thresholds could delay consideration of
shareholder-initiated ideas or reforms,\219\ we do not believe that the
new thresholds will stifle such activity because failure to achieve
these levels of support will not act as a permanent bar from the proxy
statement. Instead, shareholders will be able to resubmit substantially
similar proposals for inclusion in the proxy statement after a
temporary cooling-off period. In addition, while shareholder-proponents
will not be permitted to use a company's proxy statement to require a
shareholder vote during the cooling-off period, engagement with the
company and other shareholders can continue during that time, and
proponents can continue to use other methods to seek to broaden support
for their ideas.
---------------------------------------------------------------------------

    \219\ See, e.g., letters from ACTIAM dated November 21, 2019;
AFL-CIO dated February 3, 2020; ARGA Investment Management dated
December 12, 2019; BC Target Benefit Pension Plan dated November 28,
2019; CalPERS dated February 3, 2020; Congregation of St. Basil
dated December 15, 2019; Council of Institutional Investors et al.
dated July 29, 2020; Dominican Sisters of Springfield Illinois dated
January 9, 2020; Form Letter Type A; Franciscan Sisters of Allegany,
NY dated December 9, 2019; Franciscan Sisters of Perpetual Adoration
dated December 6, 2019; International Corporate Governance Network
dated December 4, 2019; Jesuit Conference of Canada and the United
Stated dated December 2, 2019; Lancaster Theological Seminary dated
November 19, 2019; Maryknoll Fathers and Brothers dated December 5,
2019; Maryland and USA Northeast Province of the Society of Jesus
dated December 19, 2019; Miller/Howard Investments dated January 3,
2020; New York State Comptroller dated February 3, 2020; Northwest
Coalition for Responsible Investment dated January 27, 2020;
Province of St. Joseph of the Capuchin Order dated December 9, 2019;
Shareholder Rights Group dated January 6, 2020; Sisters of Bon
Secours USA dated January 10, 2020; Sisters of Charity of the
Blessed Virgin Mary dated November 21, 2019; Sisters of Mount St.
Scholastica dated November 26, 2019; Sisters of the Precious Blood
dated November 25, 2019; Ursuline Convent of the Sacred Heart,
Toledo, OH dated November 26, 2019; Zevin Asset Management dated
November 27, 2019.
---------------------------------------------------------------------------

    The thresholds reflect a careful and appropriate calibration of the

resubmission criteria, taking into account the costs to companies and
shareholders of responding to proposals that do not garner significant
shareholder support (and are unlikely to do so in the near future) and
the benefits to companies and their shareholders of facilitating an
individual shareholder's ability to engage in the shareholder-proposal
process on successive occasions. We note that, under the new rule,
those proposals that are least likely to garner broad or majority
shareholder support will be subject to exclusion, while the vast
majority of proposals will remain eligible for resubmission.\220\
---------------------------------------------------------------------------

    \220\ Of the proposals resubmitted between 2011 and 2018, we
estimate that approximately 85% would have been eligible for
resubmission under the proposed resubmission thresholds. See
Proposing Release at tbl.9. In 2018 alone, we estimate that the
final amendments to the resubmission thresholds would have resulted
in 5% of voted proposals being excludable.
---------------------------------------------------------------------------

    We are not adopting any changes to the vote-counting methodology
used to determine whether a proposal is eligible for resubmission. We
believe that it is most appropriate to treat votes in favor of a
proposal in the same manner as the company when it tabulates votes and
determines whether a proposal has achieved majority support.
Calculating votes in this manner will help ensure that other
shareholders and companies do not continue to bear the burdens
associated with proposals that are unlikely to obtain majority support
and/or be implemented by management. In addition, because issuers are
not required to disclose voting results separately based on affiliate
status or share class, proponents would be unable to readily ascertain
whether the relevant resubmission thresholds have been satisfied if
alternative vote-counting methodologies were adopted.\221\ Accordingly,
we are not adopting alternative vote-counting methodologies. We also
are not adopting an exception to the rule that would allow an otherwise
excludable proposal to be resubmitted if there were material
developments that suggested a resubmitted proposal may garner
significantly more votes than when previously voted on. There was
little support among commenters for this type of mechanism, and we
believe it would be difficult in many cases to determine how the
intervening developments would affect shareholders' voting decisions
and therefore difficult to apply such a provision in practice.
---------------------------------------------------------------------------

    \221\ Cf. Item 5.07 of Form 8-K [17 CFR 249.308] (requiring
disclosure of votes cast for, against, or withheld (in the case of
director elections), as well as the number of abstentions and broker
non-votes as to each matter voted upon); Rule 30e-1(b)(3) [17 CFR
270.13e-1(b)(3)] (similar).
---------------------------------------------------------------------------

F. Momentum Requirement

1. Proposed Rule Amendment
    In addition to proposing new resubmission thresholds of 5, 15, and
25 percent, we proposed to add a new provision to Rule 14a-8(i)(12) to
allow companies to exclude proposals dealing with substantially the
same subject matter as proposals previously voted on by shareholders
three or more times in the preceding five calendar years that would not
otherwise be excludable under the 25 percent threshold if (i) the most
recently voted on proposal received less than a majority of the votes
cast and (ii) support declined by 10 percent or more compared to the
immediately preceding shareholder vote on the matter (the ``Momentum
Requirement'').
    In the Proposing Release, we explained that this requirement would
have relieved management and shareholders from having to repeatedly
consider, and bear the costs related to, matters for which shareholder
interest had declined.\222\ We also noted that it would have applied
only to matters that had been previously voted on three or more times
in the preceding five years, giving shareholder-proponents a number of
years to advocate for, and the broader shareholder base ample
opportunity to consider, the matters raised.\223\
---------------------------------------------------------------------------

    \222\ See Proposing Release at 66473.
    \223\ Id.
---------------------------------------------------------------------------

2. Comments on the Proposed Rule Amendment
    We received a number of comments on the proposed amendment.
Commenters that expressed support for the proposal stated that such a
requirement would relieve management and shareholders from having to
repeatedly consider, and bear the costs related to, matters for which
shareholder interest had declined.\224\
---------------------------------------------------------------------------

    \224\ See letters from American Securities Association dated
February 3, 2020; Business Roundtable dated February 3, 2020;
Corporate Governance Coalition for Investor Value dated February 3,
2020; International Bancshares Corporation dated January 23, 2020;
Manhattan Institute for Policy Research dated February 3, 2020;
Nasdaq, Inc. dated February 3, 2020; National Association of
Manufacturers dated February 3, 2020.
---------------------------------------------------------------------------

    Many commenters objected to the proposed amendment with a number of
them expressing concern that, under the proposed amendment, a proposal
that gets higher overall support (e.g., 44 percent) compared to another
proposal may be excluded if it experiences a decline in support of 10
percent or more, whereas a proposal receiving lower support (e.g., 27
percent) that does not experience a decline in support of 10 percent or
more would not be excludable.\225\ Another commenter indicated that 25
percent support sends a strong signal that shareholders are concerned
about an issue and warrants resubmission.\226\ Some commenters also
stated that the Momentum Requirement would add complexity to the
rule.\227\ Another commenter called for additional explanation and
justification for the proposed amendment.\228\
---------------------------------------------------------------------------

    \225\ See letters from 444S Foundation et al. dated January 31,
2020; AFL-CIO dated February 3, 2020; Zehra R. Asghar dated February
3, 2020; As You Sow dated February 3, 2020; Kam Bellamy dated
February 3, 2020; Samuel Bonsey dated February 3, 2020; Boston Trust
Walden et al. dated January 31, 2020; Ghislaine Boulanger dated
January 30, 2020; Andrew Boyd dated January 29, 2020; David Bragin
dated February 1, 2020; Lisa Brick dated January 31, 2020; British
Columbia Investment Management Corporation dated February 3, 2020;
Marshall Brooks dated February 5, 2020; Thomas Buckner dated
February 3, 2020; Laura J. Campos dated January 14, 2020; Canadian
Coalition for Good Governance dated February 3, 2020; Hilary Clark
dated February 3, 2020; Delbert Coonce dated January 30, 2020;
Council of Institutional Investors dated January 30, 2020; Professor
James D. Cox et al. dated February 2, 2020; Domini Impact
Investments dated February 3, 2020; Christopher Hormel dated January
30, 2020; Artemis Joukowsky dated January 29, 2020; Mona Kanin dated
January 29, 2020; Joyce Kutz dated February 1, 2020; Anna Lefer Kuhn
dated February 3, 2020; Hanna Mahon dated January 31, 2020; Helene
B. Marsh dated January 28, 2020; New York State Comptroller dated
February 3, 2020; Judith Norell dated January 29, 2020; Angela Ocone
dated February 3, 2020; Hayden Reilly dated January 29, 2020; Sarah
Rose dated January 29, 2020; Hiroko Sakurazawa dated February 2,
2020; Elizabeth Schnee dated January 29, 2020; Ellen Seh dated
January 28, 2020; Sarah Sills dated January 29, 2020; Emmanuel R.
Sturman dated January 30, 2020; Jed Sturman dated February 1, 2020;
Marilyn and Emanual Sturman dated January 30, 2020; Richard
Teitelbaum dated February 2, 2020; UAW Retiree Medical Benefits
Trust dated January 30, 2020; US SIF dated January 31, 2020; Peter
Vandermark dated January 29, 2020; Julie & Steve Woodward dated
January 29, 2020; Wright-Ingraham Institute dated February 3, 2020.
    \226\ See letter from International Corporate Governance Network
dated December 4, 2019.
    \227\ See, e.g., letters from AFL-CIO dated February 3, 2020;
CalPERS dated February 3, 2020; Canadian Coalition for Good
Governance dated February 3, 2020; NorthStar Asset Management, Inc.
dated February 3, 2020; Stewart Investors dated January 30, 2020; US
SIF dated January 31, 2020.
    \228\ See Recommendation of the IAC, supra note 18.
---------------------------------------------------------------------------

    Several commenters suggested modifications to the proposed
amendment. Some commenters recommended requiring a decline in
shareholder support greater than 10 percent.\229\ Two commenters
suggested requiring shareholder support to increase for a proposal to
remain

eligible for resubmission upon a third or subsequent submission in five
years,\230\ and another commenter recommended requiring a 10 percent
increase in shareholder support to remain eligible for
resubmission.\231\ One commenter that opposed the Momentum Requirement
stated that the rule, if adopted, should include ``an exception in the
event of a material change in the company's situation between the
previous vote and the filing deadline.'' \232\
---------------------------------------------------------------------------

    \229\ See, e.g., letters from Baillie Gifford & Co. dated
February 3, 2020 (suggesting a 25% decline); Investment Company
Institute dated February 3, 2020 (suggesting a 30% decline).
    \230\ See letters from General Motors Company dated February 25,
2020; Society for Corporate Governance dated February 3, 2020.
    \231\ See letter from Exxon Mobil Corporation dated February 3,
2020.
    \232\ See letter from Council of Institutional Investors dated
January 30, 2020. See also letters from Baillie Gifford & Co. dated
February 3, 2020; Hal S. Scott dated January 6, 2020, supra note
203.
---------------------------------------------------------------------------

3. Final Rule Amendment
    After considering the comments, we are not adopting the proposed
amendment. We agree with commenters that the Momentum Requirement, as
proposed, could at least in theory lead to anomalous results because,
for example, under the proposed amendment, a proposal that gets higher
overall support (e.g., 44 percent) compared to another proposal may be
excluded if it experiences a decline in support of 10 percent or more,
whereas a proposal receiving lower support (e.g., 27 percent) that does
not experience a decline in support of 10 percent or more would not be
excludable. In addition, we agree with commenters that the Momentum
Requirement, as proposed, could render the resubmission basis for
exclusion unnecessarily complex. Finally, we note that further
consideration of a momentum requirement may be appropriate once the
Commission has had an opportunity to evaluate its experience with the
revised resubmission thresholds.

G. Other Matters

1. Response to Constitutional Objections
    Several commenters raised First Amendment objections to the
proposed amendments to the rule's procedural requirements.\233\ We do
not believe their arguments have merit. For decades, Rule 14a-8 has
provided a procedural mechanism, subject to neutral eligibility
criteria, for shareholders to submit proposals to companies for the
company to include in its own proxy statement at the company's expense.
The amendments do not disturb the basic functioning of this
longstanding mechanism, but merely enhance existing limits on the
ability of shareholders to make use of it. Because this mechanism
``govern[s] speech by a corporation to itself,'' it ``do[es] not limit
the range of information that the corporation''--or shareholders--``may
contribute to the public debate.'' \234\ Rather, it simply
``allocate[s] shareholder property between management and certain
groups of shareholders.'' \235\ The amendments do not restrict
shareholders from speaking out on any issue, or from communicating
their views to management by any means at their own expense. Nor do
they prevent shareholders from seeking and relying on the assistance of
others in doing so. Even to the extent a shareholder may have a First
Amendment right to engage in internal corporate speech with other
shareholders, any such right would not be infringed by the Commission's
decision to limit the circumstances in which other shareholders must
subsidize that speech.\236\
---------------------------------------------------------------------------

    \233\ See letters from CalPERS dated February 3, 2020;
Shareholder Rights Group dated February 3, 2020; Shareholder Rights
Group dated March 18, 2020; Ellen L. Weintraub, Commissioner,
Federal Election Commission dated February 3, 2020.
    \234\ Pacific Gas & Electric Co. v. Public Utilities Comm'n of
California, 475 U.S. 1, 14 n.10 (1986).
    \235\ Id.
    \236\ Cf. Regan v. Taxation with Representation, 461 U.S. 540,
549 (1983).
---------------------------------------------------------------------------

    Furthermore, the amendments do not impose content-based or
viewpoint-based limitations on the kinds of proposals a shareholder may
submit for inclusion in a company's proxy statement. The amendments
reasonably limit access to a company's proxy statement based on
content-neutral and viewpoint-neutral criteria designed to
appropriately consider the ability of a shareholder-proponent to put
forth proposals for shareholder consideration, on the one hand, and the
costs to the company and other shareholders associated with the
inclusion of such proposals in the company's proxy statement, on the
other.
2. Proposals Submitted to Open-End Investment Companies
    In the Proposing Release, the Commission requested comment on
whether any special eligibility provision should be made for
shareholder proposals submitted to open-end investment companies since,
unlike other issuers, open-end investment companies generally do not
hold shareholder meetings annually.\237\ In some cases, years may pass
between the submission of a shareholder proposal and the next
shareholder meeting. Due to the passage of time that may occur before
an open-end investment company holds a shareholder meeting, the
submission may no longer reflect the interests of the shareholder-
proponent or may be in need of updating, or the proponent may no longer
own the requisite amount of shares to require the company to include a
proposal in its proxy statement. In response to these issues, we asked
whether we should consider any special provisions to the effect that a
proposal would expire after the passage of a specified amount of time,
unless the shareholder-proponent reaffirmed the proposal.
---------------------------------------------------------------------------

    \237\ See Proposing Release at 66465.
---------------------------------------------------------------------------

    Several commenters responded to the request for comment. Two
commenters suggested that a provision such as what was described in the
request for comment could ease the administrative burden for investment
companies.\238\ Another commenter stated that it could support a
requirement for reconfirmation of the proponent's interest, ``as long
as the procedural requirements are well designed and not geared only to
suppressing voicing of dissent.'' \239\ A separate commenter expressed
concern about ``adding additional process requirements'' with respect
to submissions at open-end investment companies.\240\
---------------------------------------------------------------------------

    \238\ See letters from Fidelity Management & Research LLC dated
February 3, 2020; Investment Company Institute dated February 3,
2020.
    \239\ See letter from Council of Institutional Investors dated
January 30, 2020.
    \240\ See letter from Investors Against Genocide dated February
14, 2020.
---------------------------------------------------------------------------

    At this time, we are not adopting a requirement that shareholder-
proponents reaffirm their interest in a proposal submitted to an open-
end investment company after the passage of a specified amount of time.
We note that few commenters supported such a provision. We also
understand that open-end investment companies currently may seek to
obtain a shareholder-proponent's reaffirmation in such situations
before including a proposal in their proxy statements and that where
they are unable to confirm a shareholder-proponent's continuing
ownership interest, the staff may agree that such proposals may be
excluded from the proxy statement.\241\ We may, however, revisit this
issue in the future if it becomes necessary to do so.
---------------------------------------------------------------------------

    \241\ See, e.g., Fidelity Management & Research Co., SEC No-
Action Letter 2015 WL 4911599 (Aug. 12, 2015).
---------------------------------------------------------------------------

3. Commission and Staff Role in the Rule 14a-8 Process
    In the Proposing Release, we requested comment on whether the Rule
14a-8 process generally works well and whether the Commission and
staff's role in the process should be altered.\242\ For

example, we asked whether the Commission staff should continue to
review proposals companies wish to exclude, or whether the Commission
should instead review these proposals. We also asked whether there is a
different structure that might better serve the interests of companies
and shareholders, and whether states are better suited to establish a
framework governing the submission and consideration of shareholder
proposals.
---------------------------------------------------------------------------

    \242\ See Proposing Release at 66465.
---------------------------------------------------------------------------

    Several commenters responded to these requests for comment.\243\
Most commenters seemed generally supportive of the Commission and
staff's involvement in the process, but several expressed criticism of
certain aspects of the no-action process.\244\ For example, one
commenter expressed the view that, while the no-action process
generally works well and is less costly than alternatives, frequent
changes in staff positions can increase uncertainty and costs for
issuers and proponents.\245\ Another commenter argued the rule lacks a
clear statutory mandate.\246\ Another commenter seemed supportive of
Commission and staff involvement in the process, but stated that the
vast majority of its members ``do not believe the [staff's] `no-action'
letter process is administered in a consistent and transparent
manner.'' \247\ This commenter suggested that the Commission consider
alternatives to improve consistency, such as ``considering whether the
`no-action' letter process should be converted into an SEC advisory
opinion process, whereby the SEC would issue opinions on major policy
issues rather than issuing `no-action' letters,'' or revising the no-
action process ``to allow for enhanced review and oversight mechanisms
to achieve greater consistency.'' \248\ This commenter also suggested
other modifications to the shareholder-proposal rule.\249\
---------------------------------------------------------------------------

    \243\ See letters from Business Roundtable dated February 3,
2020; Center for Capital Markets Competitiveness dated January 31,
2020; Council of Institutional Investors dated January 30, 2020;
Exxon Mobil Corporation dated February 3, 2020; Local Authority
Pension Fund Forum dated February 3, 2020; Manhattan Institute for
Policy Research dated February 3, 2020; James McRitchie dated
February 2, 2020; National Association of Manufacturers dated
February 3, 2020; New York State Comptroller dated February 3, 2020;
State Board of Administration of Florida dated February 3, 2020;
John Taylor dated November 14, 2019.
    \244\ See letters from Business Roundtable dated February 3,
2020; Center for Capital Markets Competitiveness dated January 31,
2020; Council of Institutional Investors dated January 30, 2020;
Local Authority Pension Fund Forum dated February 3, 2020; James
McRitchie dated February 2, 2020; National Association of
Manufacturers dated February 3, 2020; New York State Comptroller
dated February 3, 2020; John Taylor dated November 14, 2019.
    \245\ See letter from New York State Comptroller dated February
3, 2020.
    \246\ See letter from Manhattan Institute for Policy Research
dated February 3, 2020.
    \247\ See letter from Business Roundtable dated February 3,
2020.
    \248\ Id.
    \249\ Id.
---------------------------------------------------------------------------

    Two commenters suggested that the shareholder-proposal process
should be allowed to be governed by state law and a company's
bylaws.\250\ One of these commenters indicated that such a mechanism
would allow for greater flexibility on a company-by-company basis,
taking into consideration a company's shareholder base, and that
dispute resolution at the state-court level could allow a consistent
body of law to develop ``as opposed to conflicting decisions in
different federal courts.'' \251\ The other commenter suggested that
companies should have the option to elect a system governed by state
law, which could improve market efficiency, but expressed the view that
``most publicly traded companies would opt for the stable expectations
of sticking with the SEC default rule'' rather than a state-law option
at least in the near term.\252\ Another commenter questioned whether
``state governments are better equipped to establish a framework for
submission and consideration of shareholder proposals,'' and expressed
the view that a shareholder-proposal process governed by state law
would increase administrative and legal costs for shareholders and
companies, as well as state governments.\253\ A separate commenter also
objected to the notion of allowing the shareholder-proposal process to
be governed by state law, and expressed the view that the staff's no-
action process ``is superior to litigation of differences over
inclusion of shareholder proposals.'' \254\
---------------------------------------------------------------------------

    \250\ See letters from Exxon Mobil Corporation dated February 3,
2020; Manhattan Institute for Policy Research dated February 3,
2020.
    \251\ See letter from Exxon Mobil Corporation dated February 3,
2020.
    \252\ See letter from Manhattan Institute for Policy Research
dated February 3, 2020.
    \253\ See letter from New York State Comptroller dated February
3, 2020.
    \254\ See letter from Council of Institutional Investors dated
January 30, 2020.
---------------------------------------------------------------------------

    The primary purpose of seeking public comment on these issues was
to gain a better understanding of commenters' views regarding the
current role of the Commission and staff in the shareholder-proposal
process and to solicit input with respect to possible areas for
improvement. While we did not receive many comments in response to the
requests for comment, the comments received were helpful in evaluating
at a high level what generally works well and whether the Commission
and staff's role in the process should be altered.
    We acknowledge commenters' concerns regarding the need for a
consistent application of Rule 14a-8. As the Commission has previously
stated, ``the staff's views on certain issues may change from time-to-
time, in light of re-examination, new considerations, or changing
conditions which indicate that its earlier views are no longer in
keeping with the objectives of Rule 14a-8.'' \255\ We continue to
believe that changes in staff views may be necessary on occasion. For
this reason, and although the staff strives to apply the rule in a
consistent and transparent manner, participants in the shareholder-
proposal process ``should not consider the prior enforcement positions
of the staff on proposals submitted to other issuers to be dispositive
of identical or similar proposals submitted to them.'' \256\
---------------------------------------------------------------------------

    \255\ See Statement of Informal Procedures for the Rendering of
Staff Advice with Respect to Shareholder Proposals, Release No. 34-
12599 (July 7, 1976) [41 FR 29989 (July 20, 1976)], at 29990
(``Statement of Informal Procedures'').
    \256\ Id.
---------------------------------------------------------------------------

    As noted above, one commenter suggested that greater oversight by
the Commission could help with consistency and transparency.\257\ As
the Commission has previously stated, ``The Commission does not engage
in any formal proceedings in connection with shareholder proposal
matters, nor has it adopted any formal procedures in that regard.''
\258\ While we are not adopting such formal proceedings at this time,
we note that the staff may seek the Commission's views on certain
matters related to Rule 14a-8, including certain changes in staff
positions.\259\
---------------------------------------------------------------------------

    \257\ See letter from Business Roundtable dated February 3,
2020.
    \258\ See Statement of Informal Procedures, supra note 255.
    \259\ See 17 CFR 202.1(d).
---------------------------------------------------------------------------

    With respect to the commenters that supported companies' ability to
elect a shareholder-proposal process governed by state law or a
company's bylaws, we note that shareholder voting rights are governed
by state rather than federal law and that shareholder-proponents must
own shares entitled to vote on their proposals.\260\ We further note
that a shareholder proposal must be a proper subject for action under
state law to be eligible for inclusion in a company's proxy
statement.\261\ Thus, while Rule 14a-8 provides a federal process for
proxy voting and solicitation with respect to a shareholder proposal,
matters of corporate organization such as voting rights and whether a
proposal

is a proper subject for action remain governed by state law.
---------------------------------------------------------------------------

    \260\ See Rule 14a-8(b)(1).
    \261\ See Rule 14a-8(i)(1).
---------------------------------------------------------------------------

    Although we are not implementing changes in these areas at this
time, we will consider the comments received in connection with any
future rulemaking or modifications to the no-action process.

III. Transition Matters

    The final amendments will become effective 60 days after they are
published in the Federal Register and will apply to any proposal
submitted for an annual or special meeting to be held on or after
January 1, 2022. However, a shareholder that has continuously held at
least $2,000 of a company's securities entitled to vote on the proposal
for at least one year as of January 4, 2021, and continuously maintains
at least $2,000 of such securities from January 4, 2021 through the
date he or she submits a proposal, will be eligible to submit a
proposal to such company, and need not satisfy the amended share
ownership thresholds under Rule 14a-8(b)(1)(i)(A)--(C), for an annual
or special meeting to be held prior to January 1, 2023.\262\ A
shareholder relying on this transition provision must follow the
procedures set forth in Rule 14a-8(b)(2) to demonstrate that the
shareholder (i) continuously held at least $2,000 of the company's
securities entitled to vote on the proposal for at least one year as of
January 4, 2021 \263\ and (ii) continuously held at least $2,000 of
such securities from January 4, 2021 through the date the proposal is
submitted to the company. The shareholder will also be required to
provide the company with a written statement that the shareholder
intends to continue to hold at least $2,000 of such securities through
the date of the shareholders' meeting at which the proposal will be
considered. This temporary provision will expire on January 1, 2023.
---------------------------------------------------------------------------

    \262\ See Rule 14a-8(b)(1)(i)(D).
    \263\ To determine whether a shareholder satisfies this
ownership threshold, the shareholder should look at whether, on any
date within the 60 calendar days before January 4, 2021, the
shareholder's investment is valued at $2,000 or greater. See supra
note 55. Aggregation will not be allowed for purposes of determining
compliance with this temporary provision.
---------------------------------------------------------------------------

IV. Other Matters

    If any of the provisions of these rules, or the application thereof
to any person or circumstance, is held to be invalid, such invalidity
shall not affect other provisions or application of such provisions to
other persons or circumstances that can be given effect without the
invalid provision or application.
    Pursuant to the Congressional Review Act,\264\ the Office of
Information and Regulatory Affairs has designated these amendments as a
``major rule,'' as defined by 5 U.S.C. 804(2).
---------------------------------------------------------------------------

    \264\ 5 U.S.C. 801 et seq.
---------------------------------------------------------------------------

V. Economic Analysis

    We are mindful of the costs and benefits of the rule amendments.
The discussion below addresses the economic effects of the amendments,
including their anticipated costs and benefits, as well as their likely
effects on efficiency, competition, and capital formation.\265\ We also
analyze the potential costs and benefits of reasonable alternatives to
the amendments. Where possible, we have attempted to quantify the
costs, benefits, and effects on efficiency, competition, and capital
formation expected to result from the final rule amendments.
---------------------------------------------------------------------------

    \265\ Section 3(f) of the Exchange Act, Section 2(b) of the
Securities Act of 1933, and Section 2(c) of the Investment Company
Act require us, when engaging in rulemaking that requires us to
consider or determine whether an action is necessary or appropriate
in (or, with respect to the Investment Company Act, consistent with)
the public interest, to consider, in addition to the protection of
investors, whether the action will promote efficiency, competition,
and capital formation. Additionally, Section 23(a)(2) of the
Exchange Act requires us, when making rules or regulations under the
Exchange Act, to consider, among other matters, the impact that any
such rule or regulation will have on competition and states that the
Commission shall not adopt any such rule or regulation which will
impose a burden on competition that is not necessary or appropriate
in furtherance of the Exchange Act.
---------------------------------------------------------------------------

    We have provided both a qualitative assessment and, where feasible,
quantified estimates of the potential effects of the rule amendments.
We also have incorporated data and other information provided by
commenters to assist in the analysis of the economic effects of the
rule amendments. However, as explained in more detail below, because we
do not have, have not received, and, in certain cases, do not believe
we can reasonably obtain data that may inform certain economic effects,
we are unable to quantify those effects. We further note that even in
cases where we have some data or have received some data regarding
certain economic effects, the quantification of these effects is
particularly challenging due to the number of assumptions that we would
need to make to estimate the benefits and costs of the rule amendments.
    For example, on August 14, 2020, a preliminary draft analysis
(``Preliminary Staff Analysis'') conducted by Commission staff in
October 2019 using certain data obtained from Broadridge Financial
Solutions, Inc. (``Broadridge'') was placed in the public comment file
for the Proposing Release.\266\ As noted in the Proposing Release and
discussed in the memorandum accompanying the Preliminary Staff
Analysis, the data supplied by Broadridge suffered from significant
limitations. In noting certain limitations in the Proposing Release, we
encouraged commenters to submit additional data to the public comment
file.\267\
---------------------------------------------------------------------------

    \266\ Memorandum Regarding Analysis of Data Provided by
Broadridge Financial Solutions, Inc. (Aug. 14, 2020)
(``Memorandum''), Appendix A, available at https://www.sec.gov/comments/s7-23-19/s72319-7645492-222330.pdf.
    \267\ See Proposing Release at 66498 n.245; Memorandum.
---------------------------------------------------------------------------

    We concur with the conclusions of the Commission's Chief Economist
set forth in the August 14, 2020 memorandum accompanying the
Preliminary Staff Analysis. Despite the staff's attempts to analyze the
data set, as a result of its significant limitations, neither the data
set nor the associated Preliminary Staff Analysis could be used to
reliably assess the potential impact of our rule amendments on retail
shareholders.

A. Introduction

    We are amending certain procedural requirements of--and the
provision relating to resubmitted proposals under--Rule 14a-8, the
shareholder-proposal rule. The Commission has conducted various forms
of outreach over the years on the proxy process, including hosting the
Proxy Process Roundtable and soliciting public input on both the Rule
14a-8 ownership thresholds and the costs of submitting shareholder
proposals.\268\ That input informed our economic analysis in the
Proposing Release and this release. We also requested comment on the
estimates and data in the Proposing Release to help us refine our
economic analysis. We considered all of this information thoroughly,
leveraging our decades of experience with Rule 14a-8, when evaluating
the effects of the rule amendments.
---------------------------------------------------------------------------

    \268\ See supra Section I.A.
---------------------------------------------------------------------------

    After carefully reviewing all of the comments received, we
supplemented our analysis to investigate certain issues raised by
commenters. We are adopting the rule amendments substantially as
proposed and, based on our analysis of the available evidence and data,
and our consideration of the comments received, our primary conclusions
about the likely economic effects of the rule amendments have not
changed substantively. The benefits of the rule are largely
attributable to direct cost savings for companies that may process
fewer shareholder proposals annually

and certain benefits to shareholders directly, as well as through their
ownership in companies, derived from an ability to focus on shareholder
proposals that are more likely to garner majority-voting support. The
costs of the rule are attributable to certain costs to shareholder-
proponents in navigating the new thresholds and becoming eligible to
submit proposals under the new thresholds, as well as any costs that
would arise if the final rules result in the exclusion of shareholder
proposals that otherwise would have garnered majority support or
garnered majority support more quickly. We discuss the benefits and
costs of the rule amendments in detail in Sections V.D and V.E below.
    Some commenters concurred with our assessment of the effects of the
proposed rule amendments \269\ while other commenters raised concerns
with our analysis and conclusions in the Proposing Release.\270\ Before
addressing specific comments in more detail throughout the Economic
Analysis, we address certain overarching issues raised by commenters.
---------------------------------------------------------------------------

    \269\ See, e.g., letters from American Securities Association
dated February 3, 2020; Business Roundtable dated February 3, 2020;
Center for Capital Markets Competitiveness dated January 31, 2020;
Compass Lexecon dated December 23, 2019.
    \270\ See, e.g., letters from Lucian A. Bebchuk dated February
3, 2020; CalPERS dated February 3, 2020; John Coates and Barbara
Roper dated January 30, 2020; Shareholder Rights Group dated January
6, 2020.
---------------------------------------------------------------------------

    First, a number of commenters expressed the view that the
Commission had not identified an economic need for the rule amendments
because the economic analysis in the Proposing Release did not document
a market failure or other basis for the amendments. For example, some
commenters argued that the decreasing trend in the number of submitted
proposals, the increasing trend in the average voting support for
certain proposals, and the fact that most companies do not receive any
proposals during any given year suggests that there is no economic
justification for the rule amendments.\271\ As a general matter, we
believe it is appropriate for the Commission to engage in retrospective
review, including revisiting our rules on shareholder proposals, to
ensure that they are functioning as intended. As discussed in the
Proposing Release, certain aspects of the shareholder-proposal rule--
including the ownership thresholds--had not been reviewed by the
Commission in more than 20 years prior to the Proposing Release. As
part of that review, we observed that (1) the overwhelming majority of
shareholder proposals are submitted by a very small number of
proponents and (2) a significant number of proposals that are eligible
to be resubmitted under the current resubmission thresholds continue to
receive low levels of support from fellow shareholders.\272\ Because,
in part, shareholder proposals impose direct and opportunity costs on
shareholders and indirect costs on shareholders through their ownership
in companies, the Commission has long held the view that it is
appropriate to condition eligibility for those that submit shareholder
proposals pursuant to Rule 14a-8 on indicia of an alignment of interest
with non-proponent shareholders and to provide for a cooling-off period
for proposals that receive low levels of support.\273\ In addition,
shareholders' ability to communicate with companies and other
shareholders has evolved due to technological advancements and
developing market practices. As a result, shareholders now have more
tools at their disposal to engage with a company's board and
management, as well as other shareholders, in ways that may be more
efficient for all parties than under the Rule 14a-8 process. The
amendments we are adopting are designed to revise the thresholds to
better ensure that the significant attendant burdens for other
shareholders and companies associated with the inclusion of such
proposals in the company's proxy statement are incurred in connection
with those proposals that are (i) submitted by shareholders with an
economic stake or investment interest in the company that demonstrates
a reasonably sufficient alignment of interest with non-proponent
shareholders and (ii) with respect to resubmissions, more likely to
receive support from fellow shareholders and, accordingly, are more
likely to lead to an action that is approved by its shareholders.\274\
---------------------------------------------------------------------------

    \271\ See, e.g., letters from As You Sow dated February 3, 2020;
CalPERS dated February 3, 2020; Council of Institutional Investors
dated January 30, 2020; First Affirmative Financial Network, LLC
dated January 24, 2020; Interfaith Center on Corporate
Responsibility dated January 27, 2020; Richard A. Liroff dated
January 28, 2020; Local Authority Pension Fund Forum dated February
3, 2020; James McRitchie dated February 2, 2020; Presbyterian Church
dated January 28, 2020; Tom Shaffner dated December 17, 2019;
Shareholder Rights Group dated January 6, 2020; UAW Retiree Medical
Benefits Trust dated January 30, 2020; US SIF dated January 31,
2020. See also Recommendation of the IAC, supra note 18. Some other
commenters also raised concerns about amending the resubmission
thresholds. In particular, commenters argued that the low number of
excludable proposals under current resubmission thresholds does not
imply that the resubmission thresholds are currently too low because
proponents now tend to modify resubmitted proposals to increase the
voting support they receive, proponents engage in more outreach than
in the past which improves voting outcomes, and more active
participation of proxy voting advice businesses and institutional
investors can improve voting outcomes ultimately resulting in low
numbers of excludable resubmitted proposals. In addition, some
commenters argued that the rule amendments are unnecessary because
shareholders already are unlikely to resubmit proposals that garner
low levels of support. See, e.g., letters from AFL-CIO dated
February 3, 2020; Principles for Responsible Investment dated
February 3, 2020; Segal Marco Advisors dated February 3, 2020.
Nevertheless, we believe that shareholder proposals impose direct
and opportunity costs on shareholders and companies, and the amended
resubmission thresholds are designed to decrease those costs by
imposing a cooling-off period for proposals that receive low levels
of support.
    \272\ Under the current thresholds, at least 90% of proposals
remain eligible for resubmission. These resubmitted proposals have
been permitted even though, according to our analysis, previously
only approximately 6.5% of proposals that fail to win majority
support the first time achieve majority support in a subsequent
attempt. See supra notes 209 and 210 and accompanying text.
    \273\ See supra Section II.A.3 and II.E.3.
    \274\ See supra note 2 and accompanying text.
---------------------------------------------------------------------------

    Second, some commenters argued that the Proposing Release did not
consider all of the potential benefits of various shareholder proposals
and thus did not adequately analyze the costs of the amendments to
companies and, as a result, to their shareholders, that could result
from the exclusion of shareholder proposals.\275\ We recognize that
shareholder proposals may bring benefits to companies and their
shareholders and that the potential loss of those benefits resulting
from the exclusion of certain proposals that are not otherwise proposed
by other shareholders would be a cost of the rule. Thus, to the extent
that the final rule amendments may exclude proposals that may bring
benefits to companies and their shareholders, we qualitatively describe
the cost that may arise. We do not focus on specific types of
shareholder proposals or attempt to quantify whether excluded proposals
would have resulted in economically beneficial changes, as suggested by
some commenters.\276\ As a threshold matter, under state corporate law,
those evaluations are properly left to the company's owners--the
shareholders. In addition, our regulation of shareholder proposals
under Rule 14a-8 has not been, nor would it be under the final

amendments,\277\ designed to judge the economic value of any particular
shareholder proposal, or intended to take a position on the merits of
any shareholder proposal topic.\278\ By way of example, it would be
inappropriate and outside of our regulatory remit to make a
determination that any particular proposal, for example one that has
been disapproved by 90 percent of a company's voting shareholders,
would have been beneficial (or costly) to those shareholders as it is
the shareholders who ultimately determine the value of a proposal to a
particular company. Rather, the rule focuses on setting thresholds at
which it is appropriate for a shareholder proposal--regardless of its
substance--to be included in the company's proxy materials at the
expense of the other shareholders (directly and indirectly as owners of
the company), either as an initial submission, or as a resubmission.
---------------------------------------------------------------------------

    \275\ See, e.g., letters from AFL-CIO dated February 3, 2020;
Lucian A. Bebchuk dated February 3, 2020; Center for Political
Accountability dated January 31, 2020; Council of Institutional
Investors dated January 30, 2020; Richard A. Liroff dated January
28, 2020; UAW Retiree Medical Benefits Trust dated January 30, 2020.
See also Recommendation of the IAC, supra note 18.
    \276\ See infra note 426. See also infra Section V.E.2.
    \277\ For purposes of the economic analysis, we use the term
``final amendments'' to refer collectively to the amendments to
Rules 14a-8(b), 14a-8(c), and 14a-8(i)(12).
    \278\ See Statement of Informal Procedures, supra note 255
(stating that the Commission has no interest in the merits of
particular security holder proposals and that its ``sole concern is
to insure that public investors receive full and accurate
information about all security holder proposals that are to, or
should, be submitted to them for their action''). This is consistent
with the federal securities laws' general approach to public company
disclosure, which eschews merit-based regulation and instead focuses
on the need to provide information material to investment and voting
decisions.
---------------------------------------------------------------------------

    Moreover, even if the statutory remit and historic approach of the
Commission to such matters were to change fundamentally, focus on the
potential economic effects of specific types of shareholder proposals
would be inherently speculative, as it would require us to opine on the
merits, and estimated costs and benefits, of proposals--or categories
of proposals--without knowing sufficient details of the proposals or
the companies for which they are advanced. Moreover, there are
significant methodological and empirical challenges to quantifying
whether excluded proposals would have resulted in economically
beneficial changes to the company, including the difficulty of
assessing whether a particular proposal would be beneficial to a
particular company, for example because any decision driven by such a
proposal would be part of an overarching array of decisions that
collectively affect the company's business and prospects. It is also
difficult to disentangle the effect of shareholder proposals from other
effects such as the effect of direct communication of shareholders with
management. A proposal that is subject to a cooling-off period may be
approved in the future or, instead of waiting, shareholders who
supported the proposal may use other methods to engage with the company
on the issue. Consequently, the marginal cost of not allowing a
shareholder proposal that would have benefited the company to go
forward during the cooling-off period may be quite low. In addition,
the relevant data does not exist and existing data cannot be
generalized to estimate the benefits of shareholder proposals across a
broad set of those proposals.\279\
---------------------------------------------------------------------------

    \279\ See infra Section V.E.2.
---------------------------------------------------------------------------

    Finally, some commenters criticized the data and method used to
estimate the benefits of the proposed rule amendments, which we
primarily expect to come in the form of cost savings to shareholders
directly and through their ownership in companies.\280\ As a response
to these comments, we discuss in more detail below the limitations
associated with our estimates of those savings, including that we are
unable to predict how shareholder-proponents might modify their
behavior in response to the final amendments. We also have revised our
cost savings analysis to take into account the additional cost
estimates provided by commenters.\281\
---------------------------------------------------------------------------

    \280\ See, e.g., letters from AFL-CIO dated February 3, 2020; As
You Sow dated February 3, 2020; Better Markets dated February 3,
2020; CalPERS dated February 3, 2020; John Coates and Barbara Roper
dated January 30, 2020; Council of Institutional Investors dated
January 30, 2020; Impax Asset Management dated January 20, 2020;
Interfaith Center on Corporate Responsibility dated January 27,
2020; International Brotherhood of Teamsters dated February 3, 2020;
Richard A. Liroff dated January 28, 2020; Paul M. Neuhauser dated
February 3, 2020; Segal Marco Advisors dated February 3, 2020; Tom
Shaffner dated December 17, 2019; UAW Retiree Medical Benefits Trust
dated January 30, 2020.
    \281\ See infra Section V.D.1.i.
---------------------------------------------------------------------------

    The economic analysis proceeds as follows. Section V.B discusses
the baseline against which we will measure the costs and benefits of
the rule amendments and the effects of the rule amendments on
efficiency, competition and capital formation. Section V.C provides our
estimate of the reduction in the number of shareholder proposals as a
result of the rule amendments. As discussed in more detail below, the
net effect of the rule amendments will be the result of a combination
of factors as there will likely be an increase in the number of
excludable proposals from the baseline, but any such increase in the
number of excludable proposals as a result of the changes to the
initial submission thresholds may be mitigated by changes in proponent
behavior as a response to the rule amendments. Any shareholder that
meets the current initial submission threshold (e.g., holding $2,000 of
company stock for at least one year), but does not already meet the
length of holding or other thresholds under the amended rule and
desires to submit a proposal can hold onto the company stock until it
satisfies the three-year holding period or can otherwise adjust his or
her holdings to meet the amended thresholds. As this discussion
illustrates, the changes in shareholder-proponent behavior, in
particular, in the areas of investment amount and holding period, and
the effects thereof are difficult to quantify, including as a result of
the relatively small percentage of shareholders that submit shareholder
proposals. Section V.D discusses the benefits, costs, and effects on
efficiency, competition, and capital formation of the rule amendments
by type of affected party. In particular, Section V.D.1 discusses the
effects of the rule amendments on companies that receive shareholder
proposals, Section V.D.2 discusses the effects of the rule amendments
on the non-proponent shareholders of those companies, and Section V.D.3
discusses the effects of the rule amendments on shareholder-proponents.
Finally, Section V.E discusses other effects of the rule that were
raised by commenters,\282\ and Section V.F discusses reasonable
alternatives to the amendments.
---------------------------------------------------------------------------

    \282\ Section V.E also discusses additional baseline
considerations raised by commenters.
---------------------------------------------------------------------------

B. Economic Baseline

    The baseline against which we measure the costs, benefits, and the
impact on efficiency, competition, and capital formation of the final
rule amendments consists of the current regulatory framework \283\ and
the current practices for shareholder proposal submissions.\284\ The
final amendments

to Rule 14a-8(b), Rule 14a-8(c), and Rule 14a-8(i)(12) will affect all
companies subject to the federal proxy rules that receive shareholder
proposals, shareholders of these companies, and the proponents of these
proposals.\285\ We discuss each one of these affected parties below.
---------------------------------------------------------------------------

    \283\ See Proposing Release at 66474 for a detailed description
of state laws, corporate bylaws prepared under state law, and
federal securities laws that jointly govern the shareholder-proposal
process.
    \284\ See Proposing Release at 66476 for a detailed description
of current market practices related to shareholder proposals,
including general trends documenting the number of shareholder
proposals and voting support over time, the distribution of
ownership across shareholder-proponents, disclosures associated with
the use of a representative, and shareholder proposal resubmissions.
    We believe that the 2018 data used in the Proposing Release to
describe the economic baseline is representative of current market
practices surrounding the shareholder-proposal process because 2018
was a year of low market stress and 2018 data are recent. Our review
of industry publications also suggests that the 2018 proxy season is
largely representative of recent proxy seasons, including the 2019
proxy season (e.g., Broadridge & PwC, ProxyPulse: 2019 Proxy Season
Review, available at https://www.broadridge.com/_assets/pdf/broadridge-proxypulse-2019-review.pdf; Sullivan & Cromwell Report,
supra note 60). Further, our review of comment letters suggests that
the results of our analysis of the effects of the amendments to the
resubmission thresholds using 2011-2018 data likely would be
qualitatively similar if we expanded our sample to include 2019
data. See letter from Council of Institutional Investors dated May
19, 2020.
    A commenter criticized the use of one year of data for some of
this analysis arguing that a single year of data may not be
representative of current practices. See letter from Boston Trust
Walden et al. dated January 27, 2020. We believe the 2018 data are
representative.
    For most of our analysis both in this release and in the
Proposing Release we use data from 2018 because we believe that
using more recent data would not materially alter our conclusions.
Nevertheless, we acknowledge that certain market developments, such
as the Covid-19 pandemic, may affect certain aspects of our
statistics, such as the adjustment of the $2,000 threshold for the
growth in Russell 3000. Whenever relevant, we have updated certain
relevant statistics throughout the release using more recent data.
    \285\ The amendments may also have second-order effects on
providers of administrative and advisory services related to proxy
solicitation and shareholder voting. Nevertheless, we believe that
any such effects likely will be small because shareholder proposals
are a small fraction of management proposals and so any potential
change in the number of excludable shareholder proposals as a result
of the rule amendments likely will have a limited effect on the
business of providers of administrative and advisory services
related to proxy solicitation and shareholder votes.
    Some commenters argued that the economic analysis in the
Proposing Release did not consider the impact of the rule amendments
on groups other than shareholders, such as the company's employees
and society in general. See, e.g., letters from Better Markets dated
February 3, 2020; Council of Institutional Investors dated January
30, 2020; Local Authority Pension Fund Forum dated February 3, 2020;
Pulte Institute for Global Development dated January 31, 2020. We
acknowledge that the rule amendments may affect groups other than a
company's shareholders, but we lack information that would allow us
to reliably estimate the number of those entities and the effects of
the rule amendments on those entities.
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    1. Companies
    The final amendments will affect companies that expect to receive
shareholder proposals. For each shareholder proposal a company
receives, the company will incur costs to consider the proposal. For
each shareholder proposal that meets the eligibility criteria, a
company will incur costs associated with its response, which could
include engaging with the proponent, including the proposal in the
company's proxy statement, or submitting a no-action request to
Commission staff.\286\ Although not required, no-action letters are
submitted by most companies seeking to exclude shareholder proposals
from their proxy statements.\287\ For the proposals that are not
eligible for submission under Rule 14a-8, the company may incur the
costs associated with submitting a no-action request to Commission
staff. More specifically, the costs that companies incur include, to
the extent applicable, costs to: (i) Review the proposal and address
issues raised in the proposal (including time dedicated by internal
legal, corporate governance, communications, and investor relations
staff, law firms and other service providers, subject matter experts,
executive management, and the board of directors on evaluating each
proposal); (ii) engage in discussions with the proponent(s); (iii)
print and distribute proxy materials, and tabulate votes on the
proposal; (iv) communicate with proxy voting advice businesses and non-
proponent shareholders (e.g., proxy solicitation costs) and engage with
non-proponent shareholders; (v) if the company intends to exclude the
proposal, file a notice with the Commission; and (vi) prepare a
statement of opposition to the submission.
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    \286\ As we discuss in detail in Sections V.B.2 and V.D.2 below,
the company's costs and benefits are indirectly borne by its
shareholders.
    \287\ See Rule 14a-8(j). While Rule 14a-8(j) requires a company
to ``file its reasons'' for exclusion with the Commission, most
companies provide such information in the form of a no-action
request.
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    Some commenters added that the costs that companies incur to
consider a shareholder proposal depend on, among others: (i) Whether
the proposal is an initial submission or resubmission; \288\ (ii)
whether or not the company seeks no-action relief from Commission
staff; \289\ (iii) the nature of the proposal, including whether the
topic of the proposal is one with which the company is familiar; \290\
(iv) whether the company engages with the proponent, whether the
proponent engages with the company, and, if there is engagement, the
manner of the engagement (e.g., face-to-face meetings versus phone
calls); \291\ (v) the corporate governance of the company, and any
changes thereto, over the course of the years of submission; \292\ (vi)
the importance of the issue raised in the proposal to the company and
the proponent and the resources each utilizes; \293\ and (vii) the need
to seek outside legal advice, proxy solicitation services, consulting
services, or other advisory services to respond to the proposal.\294\
Hence, there is variation in the costs that companies incur to process
shareholder proposals.\295\
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    \288\ For example, some commenters stated that in the case of
statements in opposition of resubmitted proposals, companies often
repeat the arguments made in a prior year, which should result in a
lower cost of responding to resubmissions relative to first-time
submissions. See, e.g., letters from AFL-CIO dated February 3, 2020;
CalPERS dated February 3, 2020; Council of Institutional Investors
dated January 30, 2020; Interfaith Center on Corporate
Responsibility dated January 27, 2020; International Brotherhood of
Teamsters dated February 3, 2020; Principles for Responsible
Investment dated February 3, 2020; UAW Retiree Medical Benefits
Trust dated January 30, 2020. See also letter in response to the
Proxy Process Roundtable from Shareholder Rights Group dated
December 4, 2018. In certain instances, however, resubmissions could
be costlier than initial submissions. For example, companies might
decide to challenge a resubmission or to make a concession to the
proponent in exchange for the proposal being dropped and incur the
associated costs following low support for the initial submission.
    \289\ See, e.g., letters from CalPERS dated February 3, 2020;
John Coates and Barbara Roper dated January 30, 2020; Council of
Institutional Investors dated January 30, 2020; International
Brotherhood of Teamsters dated February 3, 2020; Richard A. Liroff
dated January 28, 2020.
    \290\ See, e.g., letters from Council of Institutional Investors
dated January 30, 2020; Richard A. Liroff dated January 28, 2020.
    \291\ See, e.g., letters from Council of Institutional Investors
dated January 30, 2020; International Brotherhood of Teamsters dated
February 3, 2020; Richard A. Liroff dated January 28, 2020.
    \292\ See, e.g., letter from Richard A. Liroff dated January 28,
2020.
    \293\ See, e.g., letter from Council of Institutional Investors
dated January 30, 2020.
    \294\ See, e.g., letters from John Coates and Barbara Roper
dated January 30, 2020; Council of Institutional Investors dated
January 30, 2020; Richard A. Liroff dated January 28, 2020.
    \295\ We requested from commenters, but did not receive, data
that would allow us to estimate the opportunity costs associated
with shareholder proposals. One commenter noted that there is no
reliable evidence that companies have to forgo economically
beneficial activities because of the need to respond to shareholder
proposals. See letter from Council of Institutional Investors dated
January 30, 2020. Other commenters, however, agreed that shareholder
proposals impose opportunity costs on companies and their
shareholders. See, e.g., letters from American Securities
Association dated February 3, 2020; Business Roundtable dated
February 3, 2020; Nareit dated February 3, 2020; National
Association of Manufacturers dated February 3, 2020; Society for
Corporate Governance dated February 3, 2020.
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    The benefits of shareholder proposals to companies (and indirectly
their shareholders) generally are the facilitation of shareholder
engagement with the company and other shareholders and, in the case of
a shareholder proposal that is adopted, the potential benefit of that
proposal to the company (and indirectly its shareholders). These
benefits are difficult to isolate from other forms of engagement and
corporate activities, and cannot be reasonably quantified.\296\ In any
event, as discussed below we do not expect the amendments to

significantly reduce shareholder engagement.\297\
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    \296\ See infra Section V.E.2 for additional details.
    \297\ See infra Section V.C.
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    We estimate that 18,594 companies are subject to the federal proxy
rules and thus could potentially be affected by the final rule
amendments; out of the 18,594 companies, 5,637 actually filed proxy
materials with the Commission during calendar year 2018.\298\ Among all
Russell 3000 companies that held annual meetings in calendar year 2018,
439 (15 percent) received at least one shareholder proposal.\299\ Among
S&P 500 companies, 266 (53 percent) received at least one shareholder
proposal in 2018.
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    \298\ The affected companies (i.e., 18,594) comprise 5,758
companies with a class of securities registered under Section 12 of
the Exchange Act, 20 companies without a class of securities
registered under Section 12 of the Exchange Act that filed proxy
materials, and 12,718 registered management investment companies,
and 98 Business Development Companies. Of 5,690 entities that filed
proxy materials with the Commission, we identified 53 that were not
companies, and have excluded these from our estimate of companies
that filed proxy materials during calendar year 2018.
    We estimate the number of registrants with a class of securities
registered under Section 12 of the Exchange Act by reviewing all
Forms 10-K filed during calendar year 2018 with the Commission and
counting the number of unique registrants that identify themselves
as having a class of securities registered under Section 12(b) or
Section 12(g) of the Exchange Act. Foreign private registrants that
filed Forms 20-F and 40-F and asset-backed registrants that filed
Forms 10-D and 10-D/A during calendar year 2018 with the Commission
are excluded from this estimate. This estimate excludes BDCs that
filed Form 10-K in 2018.
    We identify the issuers without a class of securities registered
under Section 12 of the Exchange Act that filed proxy materials as
those (1) subject to the reporting obligations of Exchange Act
Section 15(d) but that do not have a class of equity securities
registered under Exchange Act Section 12(b) or 12(g) and (2) that
filed any proxy materials during calendar year 2018 with the
Commission. The proxy materials we consider in our analysis are
DEF14A; DEF14C; DEFA14A; DEFC14A; DEFM14A; DEFM14C; DEFR14A;
DEFR14C; DFAN14A; N-14; PRE 14A; PRE 14C; PREC14A; PREM14A; PREM14C;
PRER14A; PRER14C. Form N-14 can be a registration statement and/or
proxy statement. We manually review all Forms N-14 filed during
calendar year 2018 with the Commission and we exclude from our
estimates Forms N-14 that are exclusively registration statements.
To identify registrants reporting pursuant to Section 15(d) but not
registered under Section 12(b) or Section 12(g), we review all Forms
10-K filed in calendar year 2018 with the Commission and count the
number of unique registrants that identify themselves as subject to
Section 15(d) reporting obligations but with no class of equity
securities registered under Section 12(b) or Section 12(g).
    We estimate the number of unique registered management
investment companies based on Forms N-CEN filed between June 2018
and August 2019 with the Commission. Open-end funds are registered
on Form N-1A. Closed-end funds are registered on Form N-2. Variable
annuity separate accounts registered as management investment
companies are trusts registered on Form N-3.
    BDCs are entities that have been issued an 814- reporting
number. Our estimate includes 88 BDCs that filed Form 10-K in 2018
as well as BDCs that may be delinquent or have filed extensions for
their filings. Our estimate excludes six wholly-owned subsidiaries
of other BDCs.
    The entities that filed proxy materials with the Commission
(i.e., 5,690) are subset of affected entities (i.e., 18,594) that
filed any of the following proxy materials during calendar year 2018
with the Commission: DEF14A; DEF14C; DEFA14A; DEFC14A; DEFM14A;
DEFM14C; DEFR14A; DEFR14C; DFAN14A; N-14; PRE 14A; PRE 14C; PREC14A;
PREM14A; PREM14C; PRER14A; PRER14C.
    \299\ Several companies received multiple shareholder proposals
during calendar year 2018. In addition, a few proposals were
submitted to companies outside of the Russell 3000 index. Using
FactSet's corporate governance database, SharkRepellent (available
at https://sharkrepellent.net), we estimate that in 2018, there were
19 voted shareholder proposals at 11 companies outside of the
Russell 3000 index. Our analysis focuses on proposals submitted to
companies within the Russell 3000 index because this sample
represents the vast majority of submitted shareholder proposals.
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2. Non-Proponent Shareholders
    The final amendments may also affect non-proponent shareholders of
companies receiving shareholder proposals. These shareholders,
particularly when considered in the aggregate, may incur significant
costs to consider and vote on these proposals. Several commenters to
the Commission's proposed amendments to the exemptions from the proxy
rules for proxy voting advice, particularly institutional investors who
typically vote a large number of proposals (which may include company
and shareholder proposals) each proxy season, expressed that they face
significant resource challenges in determining how to vote on those
proposals.\300\ In addition, all shareholders may incur passed-through
costs associated with companies' consideration and processing of
shareholder proposals and experience the economic impact of shareholder
proposals that are implemented. According to a recent study based on
the 2016 Survey of Consumer Finances, approximately 65 million
households owned stocks directly or indirectly (through other
investment instruments).\301\ Our analysis of Form N-CEN data shows
that there were 14,605 registered investment companies as of May
2020.\302\ Non-proponent shareholders may benefit from shareholder
proposals as a component of overall engagement as discussed above and,
in certain cases, certain shareholders may benefit if they otherwise
would have incurred the costs to submit a substantially similar
proposal.
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    \300\ See, e.g., letters from Investment Company Institute dated
February 3, 2020; New York State Comptroller dated February 3, 2020;
Ohio Public Employees Retirement System dated February 3, 2020. We
received mixed comments from some of these commenters on the
proposed amendments to Rule 14a-8.
    \301\ See Jesse Bricker et al., Changes in U.S. Family Finances
from 2013 to 2016: Evidence from the Survey of Consumer Finances,
103 Fed. Res. Bull. at 20, 39 (Sept. 2017), available at https://www.federalreserve.gov/publications/files/scf17.pdf (``Bricker et
al. (2017)'') (51.9% of the 126.0 million families represented owned
stocks). This is a triennial survey, and the latest data available
as of this time is from the 2016 survey.
    \302\ Data is retrieved from Form N-CEN filings with the
Commission as of May 2020. Form N-CEN only covers institutional
investors that are registered investment companies.
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3. Proponents of Shareholder Proposals
    Proponents of shareholder proposals can be motivated by
expectations of pecuniary and non-pecuniary benefits and may be
affected by the final amendments, which may limit their ability to
submit shareholder proposals. We estimate that there were 170
proponents--38 individual proponents and 132 institutional proponents--
that served as lead proponent or co-proponent during calendar year 2018
and submitted a shareholder proposal that was included in a proxy
statement.\303\ As broad context, we note that the ratio of the number