Executives and shareholders:

Since the maturation of the industrial age, our nation’s economic success has rested on a delicate balance of power between the investors who fund and own large companies and the executives who run them. That balance is now at risk, as government officials are substantially remaking the rules that govern the relationship between shareholders and corporations. Most imminently, on August 28, the US Securities and Exchange Commission (the SEC) sent the White House a proposal to rescind Rule 14a-8, the right of shareholders to have their proposals presented to fellow shareholders, a right that has been in place in some form for more than seventy years. If this right is eliminated, state law and private ordering will have to fill the gap.

This letter asks that corporate executives and investors come together on a private ordering solution. The alternative is brinksmanship that likely leads to a risky cycle of destabilizing extremes. While simply eliminating Rule 14a-8–reducing shareholder rights–could be seen as an unambiguous win for executives, a sudden shift of power away from capital providers may well have unintended impacts on a market for capital that has generated great wealth for our nation.

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