{"id":66824,"date":"2025-12-10T15:49:08","date_gmt":"2025-12-10T15:49:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ny\/66824\/"},"modified":"2025-12-10T15:49:08","modified_gmt":"2025-12-10T15:49:08","slug":"how-nyc-is-navigating-the-upcoming-us-proxy-season","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ny\/66824\/","title":{"rendered":"How NYC is navigating the upcoming US proxy season"},"content":{"rendered":"

\"Illustration<\/p>\n

It never rains, but it pours. This is how stewardship professionals may have responded to SEC commissioner Mark Uyeda\u2019s warning last week<\/a> that voting in line with proxy advice on some shareholder proposals may trigger reporting requirements usually reserved for activist investors.<\/p>\n

The upcoming proxy season is already shrouded in uncertainty, given the financial watchdog\u2019s decision last month to abandon mediation of the \u201cno action\u201d process this year \u2013 effectively giving firms free reign to exclude shareholder proposals.<\/p>\n

Michael Garland, New York City\u2019s assistant comptroller and head of corporate governance and responsible investment, tells Responsible Investor that the fund \u2013 which is an active filer \u2013 is approaching the upcoming voting season \u201cwith a degree of trepidation\u201d.<\/p>\n

According to its post-2025 season report<\/a>, published this week, the Comptroller\u2019s office filed proposals at 27 companies and withdrew 16 after companies agreed to take steps to implement its asks.<\/p>\n

Looking ahead to next year, Garland says the office is \u201cploughing forward\u201d with new proposals despite the challenging environment.<\/p>\n

This is an approach that Greg Hershman, head of North America policy at the Principles for Responsible Investment (PRI), believes most filers are taking. \u201cA lot of filers just have the attitude of saying, \u2018Look, this is business as usual\u2019 and hope that companies won\u2019t take advantage of the situation,\u201d he tells RI.<\/p>\n

So far, no companies have sought to take advantage when it comes to New York City\u2019s proposals, details of which the fund plans to start publishing in the New Year.<\/p>\n

But one change Garland has already noticed is that some have been quicker to reach out. Under the SEC\u2019s rules, proposal proponents must provide dates within 30 days of filing to discuss their concerns with the company.<\/p>\n

\u201cThe truth is most companies don\u2019t want to talk that quickly, but this year we have had some take those dates, and we\u2019ve already had some calls\u201d, Garland says.<\/p>\n

This includes with one unnamed company that requested that the talks \u201cmove quickly\u201d. \u201cI asked if it was because of the \u2018no action\u2019 deadline, and they acknowledged it was, so they are clearly thinking about it,\u201d Garland says.<\/p>\n

Legal action and governance focus<\/p>\n

But any decision to omit a shareholder proposal is not without its risks, especially with a filer like New York City.<\/p>\n

\u201cThey can omit it, and the SEC won\u2019t say anything, but the SEC isn\u2019t the final arbiter \u2013 that\u2019s a court,\u201d Garland says.<\/p>\n

New York City has sued companies in the past for not tabling proposals, most recently in 2018 at TransDigm<\/a> \u2013 a case that was settled when the US aerospace firm dropped its challenge against the fund\u2019s proposal.<\/p>\n

The Office of the New York City Comptroller oversees the city\u2019s five public pension funds, representing assets of around $308 billion. Given its size and history, Garland says companies are likely to be more \u201cmindful that they face more legal risk with us than they might with an individual filer\u201d.<\/p>\n

Some have expressed concerns that under the SEC changes there is a danger that proposals will be selected based on things like the status of the filer or the disposition of the company, rather than the quality of the request.<\/p>\n

The potential need to defend a proposal in court is partly behind New York City\u2019s increased \u201cleaning into governance\u201d. \u201cIf we do find ourselves in court, it\u2019s probably going to be easier to defend a G-based proposal than a climate one,\u201d says Garland.<\/p>\n

But he stresses that going to court is not a decision it would take lightly, describing it as \u201ca big step\u201d.<\/p>\n

The aim of any shareholder proposal is to prompt meaningful dialogue with a company. Garland expects companies to still be willing to talk despite the changes but says they \u201cmight be less willing to negotiate reforms\u201d.<\/p>\n

He acknowledges that filers\u2019 weakened position \u201cprobably will have some effect\u201d on its threshold for withdrawing. \u201cWe\u2019d like to hold the line, but you are always mindful of what\u2019s going to happen if you don\u2019t take that deal.\u201d<\/p>\n

Attack on stewardship<\/p>\n

The SEC\u2019s abandonment of the \u201cno action\u201d process this year is just one strand of a broader attempt to weaken investors\u2019 arm in the US.<\/p>\n

As Hershman notes, as a standalone the recent SEC announcement \u201conly affects a small subset of investors who file proposals\u201d. But when taken together with other recent changes, it forms part of a \u201cnotable shift away from enabling shareholders to fully exercise their rights as owners of capital\u201d.<\/p>\n

In February, the SEC published guidance which required more onerous reporting around ownership from large shareholders under Schedule 13D. At the same time, the regulator withdrew an explicit note indicating that ESG issues \u201cwould generally not\u201d trigger a 13D filing.<\/p>\n

Garland, who has been with New York City since 2010, describes the situation in the US as \u201centirely unprecedented\u201d. He agrees that the actions over the past year are a \u201ccoordinated campaign to shut down investor rights\u201d.<\/p>\n

\u201cThey\u2019re not dumb, 13D and 13G was a very clever way to shut down the asset managers having an impact on ESG engagement,\u201d he says.<\/p>\n

Hershman agrees that it has been effective. While a lot of day-to-day stewardship remains unchanged, he says, \u201csome of the larger managers are doing fewer engagements or they\u2019re waiting for a company to reach out to them first\u201d.<\/p>\n

Despite the current climate around stewardship, outgoing New York City comptroller Brad Lander recently took a swipe at BlackRock<\/a> for what he described as its overly conservative approach to engagement with US firms.<\/p>\n

More director votes?<\/p>\n

If shareholders are denied the right to vote on proposals, Garland thinks there will be a shift towards more votes against directors, but questions if it will be enough to move the needle on results.<\/p>\n

The fund itself is likely to oppose the entire board of any company that \u201cunilaterally\u201d omits one of its proposals, he says.<\/p>\n

But others have warned that, given the climate in the US, there is a danger in saying anything publicly about how investors will respond, as it might prompt yet more action from the SEC.<\/p>\n

Garland agrees that the threat to shareholder rights is profound. \u201cThe bear was poked and now there\u2019s an attempt to shut down the whole process,\u201d he says.<\/p>\n","protected":false},"excerpt":{"rendered":"It never rains, but it pours. This is how stewardship professionals may have responded to SEC commissioner Mark…\n","protected":false},"author":2,"featured_media":66825,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[34802,9,56,63,65,64,10315,5913,30038],"class_list":["post-66824","post","type-post","status-publish","format-standard","has-post-thumbnail","category-new-york-city","tag-companies","tag-new-york","tag-ny","tag-nyc","tag-nyc-headlines","tag-nyc-news","tag-pension-funds","tag-regulation","tag-voting-engagement"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/66824","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=66824"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/66824\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/66825"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=66824"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=66824"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=66824"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}