What Do Law Professors Think About The Shareholder Proposal System?

The shareholder proposal process, historically administered by the United States Securities and Exchange Commission (SEC), has long been studied by corporate and securities law scholars. In recent years, it has become the subject of wider and increasingly contentious public debate. Once primarily of academic and professional interest—spanning topics from corporate purpose to annual meeting protocols—the system now appears amid broader political and policy disputes across a range of issues.

A companion survey recently examined how the shareholder proposal process operates in practice and produced useful findings. The present survey solicits normative perspectives of law professors—focusing on how the system should function. 

The survey suggests high degrees of disagreement among academic respondents on many fundamental issues, moderate degrees of disagreement on others, and low degrees of disagreement on a handful of specific topics. Only limited topics or sub-topics lean to consensus and responses frequently cluster around two or three competing interpretive positions.  

Respondents disagree deeply over whether the mechanism should function primarily as a tool of company governance and accountability or equally as a forum for shareholder voice or expression. While many believe financial materiality should influence which proposals go forward, professors disagree both on its role and how the concept should be defined. On the other hand, a lower degree of disagreement appeared when the professors ranked the importance attached to proposals being firm specific rather than systemic. 

Respondents are divided over whether the system should rely on uniform national rules or permit firm-specific tailoring. They express less disagreement about the appropriate roles of the SEC, courts, and companies in determining proposal includability, with many favoring shared responsibility among these actors. Respondents also show less disagreement on procedural priorities: predictability, transparency, and consistency across issuers rank highest, while speed and overall cost minimization receive comparatively lower priority. A slight majority express greater concern about the erroneous exclusion of valuable proposals than about the inclusion of proposals of questionable merit, though consensus is elusive here as well.

The professors surveyed show broad support for allowing shareholder proposals on traditional governance subjects, including board structure, voting rights, and executive compensation. Substantial—though more qualified—support also appears for proposals addressing risk oversight, environmental, or human rights issues. Support declines, however, when proposals are framed primarily in portfolio-wide or systemic terms, consistent with respondents’ reduced disagreement about firm-specific relevance. 

Respondents were asked to provide written responses to the following query: “What single reform, conceptual clarification, or commonly held assumption about shareholder proposals do you believe most needs revision—and why?” Responses reveal deep disagreement about the foundational premises of the shareholder proposal system. Four clusters of reform proposals emerged.

One group focused on tightening eligibility and transparency requirements. These respondents emphasized higher ownership thresholds, clearer minimum stake requirements, and enhanced disclosure obligations, including transparency regarding repeat submissions across issuers and private negotiations leading to withdrawal. Some urged that precatory or insubstantial proposals be barred categorically. The unifying concern in this cluster is alignment between proposal rights and meaningful economic stake, coupled with clearer procedural guardrails.

A second set of responses centered on subject-matter scope and firm-specific relevance. These respondents argued that proposals should be tied to the performance, operations, or investment interests of the specific company, rather than serving as vehicles for broad social or public policy debates. Several questioned the treatment of wholly systemic proposals or proposals justified primarily on non-pecuniary grounds. Others, however, defended the inclusion of broader concerns affecting sustainability, externalities, or corporate accountability, rejecting the premise that proposals must be narrowly financial to be legitimate.

A third cluster addressed the structure and legal foundation of Rule 14a-8 itself. Some respondents urged repeal or significant retrenchment, arguing that shareholder proposal rights should be governed primarily by state law or private ordering. Others advocated clarifying that Rule 14a-8 operates as a default rule that companies and shareholders may tailor through charter or bylaw provisions. In contrast, a different group viewed the federal framework as essential to maintaining an accessible, nationally uniform system.

A fourth set of responses challenged commonly held assumptions about value and cost. Some argued that shareholder proposals are wrongly characterized as nuisances or inherently costly, emphasizing their informational and accountability benefits. Others contended that proposals are overvalued or that boards should have greater latitude to decline further engagement once an issue has been addressed. Related disagreements concerned whether the proposal system functions as a channel of shareholder expression, a governance accountability tool, or neither.

The four clusters recapitulate the normative orientations identified throughout the report. Respondents urging repeal, state-law primacy, or private ordering echo the skeptical bloc—those who characterized the system as a limited safety valve or rejected it altogether. Those defending the federal framework as essential to an accessible, uniform system reflect the governance-accountability orientation. And those advocating hybrid or calibrated reforms—tying proposals more closely to firm-specific concerns while preserving expressive or sustainability-related functions—align with the plurality who characterized the system as a hybrid of governance and expressive purposes. That the open-ended reform responses distribute across these same orientations suggests that the normative divisions identified throughout the report are real.

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Lawrence A. Cunningham is Director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

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