The shareholder proposal mechanism under SEC Rule 14a‑8 occupies a distinctive position in U.S. corporate governance. Created in 1942 as part of the federal proxy system, it enables shareholders to express views on corporate policy while leaving decision-making authority with the board under state law. Though rooted in securities regulation, the mechanism has influenced matters traditionally governed by state corporate law – from board composition to takeover defenses – and has provided a forum for debates over the scope of shareholder voice.

Those debates often invoke a “social versus business” distinction, but state law generally charges boards with managing the corporation in all its dimensions, including policies on stakeholders, externalities, charitable giving, and political activity, given wide deference under the business judgment standard. Rule 14a‑8 accommodated that framework by permitting expression without altering authority.

For decades, this hybrid arrangement proved workable not because federal and state boundaries were conceptually neat, but because the SEC developed a stabilizing administrative practice. Through staff bulletins and no‑action letters, an informal law evolved around concepts such as “ordinary business,” “micromanagement,” and “substantial implementation.”

That equilibrium is now in question.

In late 2025, public signals from the SEC – including remarks by Chair Paul Atkins and a subsequent staff statement – renewed attention to possibilities that had long remained largely academic: not merely changes in the Commission’s approach to Rule 14a-8, but a potential reallocation of responsibility away from the SEC and toward the states. That prospect has intensified long-running debates over shareholder proposals, while also altering the terms of the debate. If the center of gravity shifts – whether formally or in practice – questions about the scope, function, and administration of the shareholder proposal system take on renewed significance.

It is against that backdrop that the Weinberg Center is reporting the results of a new 68-question survey completed by 519 respondents, including shareholders, public company representatives, directors, and professional advisers. The survey seeks to reflect how the shareholder proposal system operates in practice, how it is experienced by its principal users, and where points of convergence and divergence emerge about its future. The survey and accompanying report are descriptive and analytical; this post highlights selected findings and situates them within the current debate.

The Shareholder Proposal Regime Is Not a Voting System

A good place to begin is how to characterize the Rule 14a-8 regime. Although it is often described as a voting system, the data suggest a different account, one that is consistent with the academic literature.[1] In practice, most shareholder proposals never reach the ballot. They are withdrawn or resolved through no-action relief, and the system functions less as an electoral mechanism than as one of engagement, screening, and agenda-setting. Even when proposals do proceed to a vote, majority support is the exception rather than the norm.

Voting outcomes nonetheless remain an essential feature of the system. The consistent failure of most proposals to secure majority approval shapes incentives for engagement, negotiation, withdrawal, and regulatory intervention early in the process.

Seen in that light, the data show that the federal shareholder proposal process is more than a form of “shareholder democracy.” While voting remains the formal endpoint for a subset of proposals, its limited frequency and the low approval rate of proposals suggest that democratic choice plays a role secondary to engagement, regulatory screening, and agenda control.

That feature of the system need not be understood as a deficiency. Under state corporate law, corporations are not designed to operate as democracies, but as hierarchical institutions in which shareholders exercise limited and episodic rights while boards retain plenary authority over corporate affairs subject to fiduciary duties. From that perspective, the modest role of voting – and the rarity of proposal approval – may reflect alignment between federal proxy rules and state law’s allocation of power rather than a failure of the shareholder proposal regime.

Governance Proposals Unite; Environmental and Social Proposals Divide

One immediate implication of the data is that disagreement over shareholder proposals is not evenly distributed across topics—a finding that is consistent with practitioner reviews of annual proxy seasons.[2]The survey reveals broad agreement that proposals addressing traditional governance matters are legitimate but far less agreement about environmental and social proposals.

Across respondent groups, proposals concerning board accountability, executive compensation, takeover defenses, and firm-specific risk receive the highest legitimacy assessments and, when voted upon, the strongest support. By contrast, environmental and social proposals generate substantially more skepticism – particularly among companies and directors – while shareholders and professional advisers tend to view them as more legitimate. Political spending proposals, while prominent in public debate, appear in the data as a relatively small share of proposal activity and elicit especially polarized views.

This pattern matters because it suggests that contemporary disputes over shareholder proposals are not about the institution as a whole, but about its scope – specifically, which subjects should properly fall within the proposal process. In that sense, the debate is less about categorical acceptance or rejection than about boundary-setting.

The data also show that disagreement is not random or diffuse. Instead, there is relatively stable consensus around core governance matters and more controversy about  environmental, social, and political topics. That asymmetry is consequential, because it indicates that tensions within the process are concentrated rather than systemic – a feature that shapes how participants experience the regime and how any future adjustments might be framed without unsettling areas of broad agreement.

A Most Striking Convergence: Dissatisfaction With SEC Administration

One of the report’s most striking findings is the breadth of dissatisfaction with the SEC’s administration of Rule 14a-8. Unlike views on the legitimacy of particular proposals, dissatisfaction with the process itself is widespread and consistent across respondents.

This pattern differs in kind from the familiar disagreement over environmental and social proposals. Respondents diverge sharply on questions of scope and desirability, but converge in their assessments of administration. Across respondent categories, the no-action process is associated with low satisfaction, limited predictability, and only middling fairness and usefulness.

The significance of this finding lies in its institutional implications. Where disagreement over outcomes is deep, shared concerns about process can take on outsized importance.  The survey data suggest that participants’ experiences of the system turn not only on which proposals prevail, but also on how decisions are made, explained, and timed.

Deeply Divergent Perceptions of Practice, More Convergent Views of Legitimacy

One of the report’s most illuminating sections examines a distinction that is often implicit in debates over shareholder proposals but rarely measured directly: how participants perceive the system’s operation in practice, and how they understand the legitimacy of its aims. The findings reveal deep divergence in perceptions of how the system functions, alongside more notable convergence regarding its proper scope.

Shareholders tend to experience the proposal process as a vehicle for information, accountability, and engagement. Public company representatives, by contrast, more often experience it as agenda-driven and externally imposed. Directors and professional advisers report diverse experiences across this spectrum. Even within each of these groups, there is substantial disagreement about how the system operates .

Views about the system’s legitimacy appear more aligned. Across respondent types, the survey finds broad agreement that proposals are illegitimate if they involve micromanagement or topics of limited relevance to the company or are submitted repeatedly  after failing to gain shareholder approval. Differences arise primarily with respect to proposals framed around public policy, political, societal, or environmental issues.

The coexistence of sharply different perceptions of practice and more agreement about legitimacy is analytically significant. It suggests that disagreement over how the system operates may be more pronounced than disagreement over its underlying aims, highlighting a potential tension between expectations and reality.

Asymmetries Driving Divergent Views

One of the report’s most original contributions is its emphasis on asymmetrical resource deployment as a driver of how participants evaluate the shareholder proposal system.

Shareholder proponents generally report engaging in the process with modest budgets, limited reliance on outside counsel, and substantial discretion over where and whether to proceed, many distributing efforts across multiple issuers. Companies, by contrast, encounter the system episodically and firm by firm, under heavier procedural and legal constraints, and with more external legal and compliance costs – reported to exceed $500,000 annually for some larger issuers.

This asymmetry is not merely a distributional observation. It helps explain why participants can describe the same system in sharply different terms. For a proponent, the marginal cost of submitting an additional proposal may be relatively low; for a company, the marginal cost of responding – particularly where counsel is engaged, and precedent is uncertain – may be relatively high.

When such asymmetries exist, it becomes easier to understand why proponents often characterize the system as valuable and companies as burdensome, even in the absence of philosophical disagreement.

Eligibility Rules: Polarization With Small Islands of Consensus

Eligibility requirements are among the most contested aspects of Rule 14a-8. The report’s data show deep disagreement over share-ownership thresholds, whether framed in terms of dollars or percentages.

Shareholders tend to favor lower thresholds, while company representatives and directors tend to prefer higher ones. This divergence is unsurprising, reflecting the differing access costs borne by each group.

The report, however, reveals a more nuanced pattern. Respondents often express dissatisfaction with single-metric gatekeeping and instead favor multi-factor eligibility standards that combine ownership, duration, and related elements.

Most notably, the survey indicates striking convergence around ownership duration. Across respondent groups, a share-holding period of one to three years emerges as the most widely supported eligibility criterion. In a debate where dollar and percentage thresholds generate pronounced role-based polarization, duration functions as a rare point of agreement.

Resubmission and “Substantial Implementation”: Harder Problems

Eligibility concerns not only initial access to the shareholder proposal process, but also persistence over time – most notably through resubmission thresholds and the exclusion of proposals deemed substantially implemented. These aspects of Rule 14a-8 raise more difficult questions, and the report again finds substantial disagreement, along with clues about what drives it.

With respect to resubmission thresholds, respondents are divided across multiple possible frameworks. Company representatives and directors tend to favor stricter escalation thresholds, while shareholders tend to support more permissive ones. The divide reflects predictable incentives: companies seek to limit repeated submissions, while proponents value the ability to reintroduce issues as shareholder sentiment evolves.

Views on substantial implementation are likewise varied. Some respondents regard the current balance as appropriate; others see companies as having either too much or too little flexibility. The report’s qualitative synthesis suggests that disagreement often centers less on the rule’s text than on how it is applied. Participants frequently point to variability in SEC staff interpretation across seasons and administrations – particularly with respect to duplication, micromanagement, and ordinary business.

Federal vs. State Authority: Disagreement on the “Who,” Convergence on the “What”

The report indicates substantial disagreement over whether responsibility for the shareholder proposal process should remain primarily federal or shift toward states. At the same time, it reveals notable convergence on what any viable regime – federal or state – would need to address.

Across respondent groups, there is broad agreement on core design considerations. These include the need for statutory clarity, supporting institutional infrastructure at the state level, private ordering alongside meaningful protection for shareholder voice, stability insulated from partisan fluctuation, and an approach to interstate competition that balances experimentation with coordination.

This convergence is analytically valuable. It suggests that even where views diverge sharply on the appropriate locus of authority, there is a shared understanding of the functional requirements that any legitimate and workable system must satisfy.

Implications

What, then, does the survey imply? It does not compel any particular normative conclusion, nor does it resolve the debates surrounding shareholder proposals. Its contribution lies instead in adding useful data points to a contentious context. The report maps where disagreements persist and where convergence unexpectedly emerges, at a moment when Rule 14a-8 may be subject to renewed scrutiny.

For scholars, the findings provide a baseline and point to further questions – especially regarding how administrative uncertainty shapes bargaining dynamics, cost allocation, and the distribution of proposal activity across firms.

For regulators, the message is more immediate. Dissatisfaction with the administration of the shareholder proposal process is now broadly shared across constituencies. That convergence suggests that improvements in process – more predictability and transparency and better timing – may matter at least as much as continued debate over substantive scope.

For state policymakers, the survey offers a different kind of insight. Even among respondents skeptical of shifting authority away from the federal level, there is notable agreement on the requirements that any state regime would need to satisfy to be workable and legitimate.

Taken together, the findings underscore that the shareholder proposal system is not primarily a mechanism of proxy democracy, but a negotiated and front-loaded administrative pipeline. The report reflects deep, role-based disagreement over contested subject matters, yet also suggests areas of convergence that cut across those divides – most notably with respect to administration and institutional design.

In a period of uncertainty about the future direction of Rule 14a-8, that kind of survey evidence does not dictate outcomes. But it can help ground the conversation in shared realities rather than rhetorical positions.

ENDNOTES

[1] E.g., John G. Matsuaka and Oguzhan Ozbas, “A Theory of Shareholder Approval and Proposal Rights,” The Journal of Law, Economics, and Organization 33 (2017): 377; Gregory Burke, “SEC Rule 14a-8 Shareholder Proposals: No-Action Requests, Determinants, and the Role of SEC Staff,” Journal of Accounting and Public Policy 42 (2023): 107048.

[2] E.g., Gibson, Dunn & Crutcher LLP, Shareholder Proposal Developments During the 2025 Proxy Season (August 8, 2025) ; EY Center for Board Matters, 2025 Proxy Season Review: Four Key Takeaways (July 7, 2025).

Lawrence A. Cunningham is the presiding director of the University of Delaware’s John L. Weinberg Center for Corporate Governance and the Henry St. George Tucker III Research Professor Emeritus at The George Washington University. This post is based on the Shareholder Proposal Survey Report and Analysis of Results, available here.