Regulatory and Legal Reform

Manufacturers across the United States are driving economic expansion while also supporting sustainable business practices, enhancing diversity in the workforce and combatting climate change. Yet, politically motivated activists threaten to slow this progress by insisting on their own narrow agendas. Recent actions by the Securities and Exchange Commission will empower these groups and divert resources from manufacturers’ investments in job creation and business growth.

As the Financial Services Committee in the House of Representatives begins a monthlong hearing series on environmental, social and governance topics and other issues related to the proxy process, NAM President and CEO Jay Timmons is calling on Congress to rein in the SEC’s regulatory overreach and keep activists out of the boardroom.

Depoliticizing corporate governance: Activists on the left and right are increasingly abusing the proxy ballot to advance narrow social and political agendas. The SEC has taken steps in recent years to support and empower these activists.

• The NAM is suggesting reforms to the rules governing shareholder proposals that will prevent activists from hijacking the proxy ballot in pursuit of political agendas unrelated to long-term business growth and shareholder value creation.

Reining in proxy advisory firms: Despite their significant conflicts of interest, errors and lack of transparency, proxy firms exercise outsized influence on corporate governance. More oversight and accountability are needed to protect manufacturers and Main Street investors from these powerful actors.

• The NAM is pressing Congress to ensure that proxy firms are regulated appropriately by the SEC—including by requiring that the firms disclose and manage their conflicts of interest and allow companies to review their draft recommendations.

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