The shareholder proposal process is currently the subject of renewed scrutiny and critique. Detractors have raised concerns about cost, legitimacy, and federalism. The Securities and Exchange Commission has announced its intent to conduct a formal rulemaking to alter the shareholder proposal rule, but in the meantime, it has taken a series of consequential staff and interpretive actions that affect the operation of Rule 14a-8. Those actions include suspending most substantive no-action review for the 2025-2026 proxy season and preventing smaller shareholders from filing notices of exempt solicitation on EDGAR. In this environment, policy choices risk being shaped by mere claims about how the system functions rather than by a careful assessment of what the evidence shows.

A recent contribution to this debate is a report by the Delaware-based Weinberg Center for Corporate Governance. The report interprets the results of a survey on shareholder proposals administered by the center in late 2025. The survey and report provide a useful case study in how interpretive framing and methodological choices can materially affect the conclusions. The report’s author, Lawrence Cunningham, in related commentary has advanced interrelated narratives to criticize the SEC’s shareholder proposal process, highlight alleged cost asymmetries, and report on the purported legitimacy of certain proposal topics.

However, a closer review of the survey data and report reveals analytical choices that overstate dissatisfaction with the current shareholder proposal process, mischaracterize costs, and understate support for environmental and social proposals and the SEC’s shareholder proposal process and administration. A more comprehensive analysis is available here.

A central claim is that dissatisfaction with the SEC’s administration of Rule 14a-8 is “nearly universal” and “widespread and consistent.” The survey data do not support this. Approximately 60 percent of respondents described the SEC process as somewhat to very fair, and respondents across categories consistently indicated that the SEC’s no-action process is preferable to litigation because it is faster, cheaper, and less adversarial.

Interpreting these results as evidence of broad dissatisfaction suggests anything short of strong approval is failure. The data reasonably support a more measured conclusion: The system is imperfect, but most participants prefer it to the available alternatives, implying room for incremental improvements rather than rejection of the SEC process.

The discussions of cost asymmetry similarly warrant closer scrutiny. The report emphasizes that submitting shareholder proposals is inexpensive, while responding to them is costly, arguing that this imbalance affects how participants evaluate the shareholder proposal process. Yet behind this conclusion is a consequential analytical error in the report. The survey asked companies to approximate total direct costs incurred over four proxy seasons, but the results are repeatedly discussed as annual costs, inflating reported burdens by a factor of four. Either way, the reported cost ranges appear immaterial for large public companies and trivial relative to profits, market capitalization, or routine proxy-season expenditures.

Regardless, the cost figures should be interpreted with caution. They are self-reported by company respondents, who may have an incentive to emphasize burdens and may conflate proposal-specific expenses with ordinary governance and disclosure activities, such as engaging with investors around the annual meeting.

Moreover, most company costs related to proposals are voluntary and self-imposed. Companies decide how resource-intensive their responses become – whether to seek exclusion, hire outside counsel, or contest extensively.

At the same time, comparatively little attention is given to the benefits of shareholder proposals. Although the survey did not ask respondents to quantify benefits in dollar terms, it shows that a majority believe the benefits of Rule 14a-8 outweigh its costs, and nearly two-thirds rate those benefits as modest, substantial, or irreplaceable. Discussions that foreground costs while largely sidelining benefits presents an incomplete picture of how participants perceive the system.

The treatment of environmental and social proposals reflects similar framing choices. The survey report highlights disagreement over whether such proposals are “legitimate,” but the survey questions  embed assumptions by grouping categories – such as “primarily” environmental, societal, or political issues – with defects like irrelevant proposals or those that seek to micromanage. This survey structure implicitly treated subject matter as a proxy for legitimacy, without considering whether the environmental or social issues are potentially material to the company receiving the proposal.

Also, support for the legitimacy of environmental and social proposal topics in the survey was substantial, often approaching or exceeding 40 percent. Characterizing those levels as marginal discounts a significant portion of investors whose investment strategies view these issues as material. The study also assumed that established governance categories define the boundaries of shareholder concern. Corporate governance norms, however, have evolved along with public opinion, and many issues now regarded as core governance matters were once viewed as peripheral.

The portrayal of “polarization,” and sharp divergence in views, over eligibility thresholds obscures how the survey’s design itself shaped those divisions. While it is perhaps unsurprising that shareholders prefer lower thresholds and company respondents prefer higher ones, those responses were elicited without providing respondents the baseline of existing Rule 14a-8 eligibility (which allows proposals from holders of as little as $2,000 held for three years), and instead through hypothetical alternatives that contemplated thresholds so high they would effectively eliminate all shareholder proposals and proponents currently active in the market.

The survey report also interprets the high rate of proposal withdrawals or exclusions, and the relatively small number of majority vote outcomes, as evidence that the shareholder proposal process falls short as “shareholder democracy.” That interpretation reflects a narrow conception of the system’s function. Rule 14a-8 operates as a tool for surfacing issues, facilitating engagement, and signaling shareholder concerns. Withdrawals often reflect negotiated resolutions, enhanced disclosures, or policy changes, while minority vote levels can meaningfully influence board decisions to address concerns of substantial blocs of investors. Framing these outcomes as incompatible with shareholder democracy overlooks one of the process’ central democratic functions: leveling the playing field among heterogeneous shareholders. Large institutional investors typically have direct access to boards and management; smaller investors do not. The shareholder proposal process provides an avenue for those voices to be heard.

Finally, to the extent the survey is framed as providing concrete details to inform an emerging federalism debate and raising questions about whether the SEC should continue to administer Rule 14a-8, its conclusions are misleading. The survey report states, “[r]espondents split about whether to retain federal authority over the shareholder proposal process or devolve responsibility to states.” Here again, the survey data tell a different story. Nearly 70 percent of respondents favor retaining Rule 14a-8 at the federal level. While respondents disagree over how much discretion the SEC should exercise, a clear minority supports granting authority to the states or permitting company-defined proposal regimes – 13 percent and 11 percent, respectively.

As debate about the shareholder proposal process increases, so does the need to ground that debate in facts. Filtering the “facts” through a narrative that contains material errors and selective framing  risks misleading the media and policymakers and weakening shareholder rights without a sound, factual basis.

Sanford Lewis is the head of Sanford Lewis & Associates and director of the Shareholder Rights Group, and Khadija Foda is a legal adviser to the Shareholder Rights Group.