SEC Makes It Easier for Shareholders to Have Say

It's now tougher for company management to block proposals.

For years, shareholders have slowly made inroads in pushing their views on the managements of corporations. Boards regularly blunted their reform ideas, but activism seems to be prevailing.

That was the case last week when the U.S. Securities & Exchange Commission came up with new guidelines that make it more difficult for companies to block shareholder proposals from being published in proxy statements and being heard at annual meetings.

The move came when the SEC staff revisited a decision made last year that allowed Whole Food Markets Inc. to exclude a shareholders proposal that would have made it easier for investors to nominate directors. It decided to tighten rules that allow such exclusions only when there is a direct conflict between shareholder and management proposals.

Analysts say that this means that unless there’s something “logically inconsistent or the polar opposite” in what the shareholders are proposing, it will likely have to be included and considered.

Richmond has been the scene of a number of shareholder proposals and battles for years. Altria (and earlier, Philip Morris) has dealt with shareholder proposals to consider the health effects of cigarette smoking. Dominion has heard from environmental groups on climate change. Other shareholder proposals have wanted companies to double down on profit margins or want to protect endangered tropical forests.

The Whole Foods case comes at a time when the pioneering organic grocery chain has been hit on several fronts with bad news.

The Texas-based chain is facing lots of new competition and may be running out of affluent markets in which to sell its goods. It also had a scrap recently involving the use of inaccurate machines to weigh food.

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