SEC-Enabled Shareholder Activists Can Potentially Upend The American Economy

Since 2021, the SEC has amended various rules that govern shareholder proposals, board nominations, and proxy processes. With these changes, shareholders, even those with marginal investments, have more power to nominate and vote for board members or file a shareholder proposal. This has emboldened fringe shareholders, especially activist and political groups, to take advantage of these rules to disrupt business operations in some of the biggest companies in the country. These new rules also put an undo financial burden on companies, shifting resources from innovation and job creation while increasing prices.

Under normal circumstances, shareholders act as a strong overseer of a company’s business operations. As owners of company stock, they have a financial incentive to monitor and evaluate a company’s business model to ensure that the stock that they hold remains valuable. The board members they nominate or the policy proposals they bring forward are usually those that are best fit to maximize value creation for shareholders and consumers alike.