Letter to Paul Ryan: The Financial CHOICE Act of 2017

Jeff Mahoney is General Counsel of the Council of Institutional Investors. This post is based on an open letter from CII, sent on behalf of over 50 co-signatories.

May 17, 2017

The Honorable Paul Ryan
Longworth House Office Building, Room 1233
United States House of Representatives
Washington, DC 20515-4901

Re: The Financial CHOICE Act of 2017

Dear Speaker Ryan:

On behalf of the Council of Institutional Investors and the undersigned investors, I am writing to share with you our concerns about several provisions currently included in the Financial CHOICE Act of 2017 (Act).

The Council of Institutional Investors (CII) is a nonprofit, nonpartisan association of corporate, public and union employee benefit funds and endowments with more than 120 members with combined assets that exceed $3 trillion. In addition, our associate (nonvoting) members include more than 50 asset management firms that manage assets in excess of $20 trillion.

Member funds include major long-term shareowners with a duty to protect the retirement assets of millions of American workers. CII strives to educate it members and the public about good corporate governance, shareowner rights and related investment issues, and to advocate on our members’ behalf.

As significant long-term investors, CII member funds have a deep, abiding interest in ensuring that the U.S. capital markets are on a sound footing. Americans suffered enormously from the 2001 Enron scandal and the 2008 financial crisis—they lost jobs, homes and retirement savings—and we can’t go back.

We are deeply troubled by provisions of the Act that would threaten prudent safeguards for oversight of companies and markets, including sensible reforms that investors need to hold management and boards of public companies accountable, and that foster trust in the integrity of the markets.

We stand ready to work with you and your colleagues in Congress to ensure that U.S. markets are safe, vibrant and fair for all investors and all Americans. Our concerns with the Act include the following five key areas:

The bill would:

  1. Set prohibitively costly hurdles on shareholder proposals. The bill would require a shareholder wishing to put a proposal on a company’s annual meeting ballot to own at least 1% of the stock for three years (the current requirement is $2,000 worth of stock for one year). That would raise the ownership threshold to file a shareholder proposal to $7.5 billion at Apple, $3.4 billion at Exxon Mobil and $2.6 billion at Wells Fargo, for example.
  1. Roll back curbs on abusive pay practices. Shareholders would get an advisory vote on executive compensation only when there is undefined “material” change in CEO pay; most U.S. public companies offer investors say-on-pay votes annually. Clawbacks of unearned executive compensation would be limited.
  1. Restrict the right of shareholders to vote for directors in contested elections for board seats. The bill would bar the use of “universal proxy” cards that give investors freedom of choice to vote for the specific combination of director nominees they believe best serves their interests.
  1. Create an intrusive new regulatory scheme for proxy advisors that provide shareholders with independent research they need to vote responsibly. The bill would drive up costs for investors, and potentially would muzzle critical commentary from proxy advisory firms, and even drive some proxy advisors out of business.
  1. Shackle the Securities and Exchange Commission (SEC), including with excessive cost-benefit analysis requirements, unwise limits on enforcement and Congressional review requirements that appear designed to foster the ability of special interests to block needed rules. These provisions would severely undercut the SEC’s ability to fulfill its mission to protect investors, police markets and foster capital formation.


Jeff Mahoney
General Counsel
Council of Institutional Investors

Marcie Frost
Chief Executive Officer
California Public Employees’ Retirement System

Gail H. Stone
Executive Director
Arkansas Public Employees Retirement System

Anne Sheehan
Director of Corporate Governance
California State Teachers’ Retirement System

Gregory W. Smith
Executive Director
Colorado Public Employees’ Retirement Association

Nancy K. Kopp
Maryland State Treasurer
Maryland State Treasurer’s Officer

Denise L. Nappier
Connecticut State Treasurer
Connecticut Retirement Plans and Trust Funds

Mansco Perry III
Executive Director and CIO
Minnesota State Board of Investment

Sheila Morgan-Johnson
Interim Executive Director/CIO
District of Columbia Retirement Board

Thomas Lee
Executive Director and CIO
New York State Teachers’ Retirement System

Michael McCauley
Senior Officer
Investment Programs & Governance
Florida State Board of Administration

Scott Stringer
New York City Comptroller

Scott Zdrazil
Senior Investment Officer
Corporate Governance
Los Angeles County Employees Retirement Association

Thomas P. DiNapoli
New York State Comptroller

R. Dean Kenderdine
Executive Director
Secretary to the Board
Maryland State Retirement and Pension System

Karen Carraher
Executive Director
Ohio Public Employees Retirement System

Tobias Read
Oregon State Treasurer
Oregon State Treasury

Jay Huish
Executive Director
San Francisco Employees’ Retirement System

Randi Weingarten
American Federation of Teachers Pension Plan

Mindy Lubber
President and CEO

Helen Ninos
Interim Executive Director
School Employees Retirement System of Ohio

Dieter Waizenegger
Executive Director
CtW Investment Group

Jeff Davis
Executive Director
Seattle City Employees’ Retirement System

Theresa Whitmarsh
Executive Director
Washington State Investment Board

Tim Driscoll
Executive Vice President
International Union of Bricklayers & Allied Craftworkers

Alfred Campos
Federal Lobbyist
National Education Association

Heather Slavkin Corzo
Director, Office of Investment

Janice J. Fueser
Research Coordinator, Corporate Governance

Charles Jurgonis
Plan Secretary
AFSCME Employees Pension Plan

Kurt Kreienbrink, CFA
Manager, Socially Responsible Investing & Investor Advocacy
Portico Benefit Services

Anita Skipper
Senior Analyst – Corporate Governance
Aviva Investors

David H. Zellner
Chief Investment Officer
Wespath Benefits and Investments

Brian Minns
Manager, Sustainable Investing
Addenda Capital

Kathleen Woods
Chair, Corporate Responsibility Committee
Adrian Dominican Sisters, Portfolio Advisory Board

Andrew Behar
Chief Executive Officer
As You Sow

Bryan Thomson
SVP, Public Equities
British Columbia Investment Management Corporation

Karen Watson
CFA Chief Investment Officer
Congregation of St. Joseph

Sister Teresa George, D.C.
Provincial Treasurer and Chair of Investment Committee
Daughters of Charity, Province of St. Louise

Tim Goodman
Director – Engagement
Hermes Investment Management

Louise Davidson
Chief Executive Officer
Australian Council of Superannuation Investors

Andrew Shapiro
Managing Member & President
Lawndale Capital Management, LLC

Clare Payn
Head of Corporate Governance
Legal & General Investment Management

Kwai San Wong, CFA
Stewardship Analyst
Sarasin & Partners

Cllr Kieran Quinn
Local Authority Pension Fund Forum

Euan A. Stirling
Head of Stewardship and ESG Investment
Standard Life Investments

Jerry Judd
Senior Vice President & Treasurer
Mercy Health

Susan Makos
Vice President of Social Responsibility
Mercy Investment Services

Michelle de Cordova
Director, Corporate Engagement and Public Policy
NEI Investments

Larisa Ruoff
Director of Shareholder Advocacy
and Corporate Engagement
The Sustainability Group of Loring, Wolcott & Coolidge

Jonas D. Kron
Senior Vice President
Trillium Asset Management

Freddie Woolfe
Responsible Investment Analyst
Newton Investment Management

Paul Clark
Head, Corporate Governance
UBS Asset Management

Bess Joffe
Managing Director
Head of Stewardship & Corporate Governance
Nuveen, the investment management arm of TIAA

Elizabeth Fernando
Head of Equities
USS Investment Management Ltd

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