Shareholder proposals allow investors to ask companies to take specific actions and are one of the few ways investors can express their preference for management practices.

In 2025, the SEC announced it would no longer decide disputes between proposal proponents and companies. The SEC historically has acted as a neutral referee in determining when companies can exclude proposals from a vote at their annual meetings. During the 2026 proxy season, most companies continued to engage with shareholders and put qualified proposals on their proxy ballot. However, some companies took the chance to exclude proposals, resulting in six lawsuits filed by shareholders against companies.

CalSTRS reviewed each proposal exclusion, and in some cases, voted against board members for what CalSTRS believes was abuse of the updated policy. The SEC decision to stop opining on shareholder proposals is supposed to be temporary through September 2026. That said, the agency has not made any announcements about resuming its prior role as a neutral referee.

CalSTRS is closely monitoring how the SEC adjusts going forward, including whether the agency decides to take further steps to curb shareholder proposals.

A December 2025 presidential executive order directed the SEC to consider regulations that could limit proxy advisors’ ability to provide timely, independent analyses of proxy voting matters. CalSTRS uses proxy advisors to cast votes at more than 10,000 company annual general meetings each year. Proxy advisors perform other important functions such as providing independent research on voting items at companies and translating international company proxy materials.

To date, the SEC has not taken any action or introduced any new rulemaking to implement this executive order. CalSTRS is closely monitoring such actions and has been actively educating policymakers at the state and federal levels on the importance of proxy advisors.

So far in 2026, the SEC has published a series of rulemaking that could ultimately result in a less robust and transparent disclosure framework.

• The SEC launched an open-ended consultation on potential changes to Regulation S-K. This rule governs qualitative disclosure requirements of companies on a broad array of topics such as human capital management, executive compensation, ongoing legal proceedings and corporate governance practices. While the consultation did not indicate any specific changes being considered, the announcement by the SEC alluded to a desire to reduce disclosures it characterized as immaterial to a reasonable investor.
• The SEC proposed a rule to remove the requirement for companies to conduct quarterly financial reporting. While companies may still maintain their reporting schedule, they would now only be mandated to report semi-annually. As a result, investors will receive less timely information. Efficient markets depend on regularly available public information about a company’s financial situation. Less frequent reporting is likely to increase the information asymmetries between those with close ties to the company and other investors. This creates challenges for the accurate pricing of stocks and puts everyday investors at a disadvantage.
• The SEC also proposed a rule to consolidate the number of filing statuses available to companies from five to two. Filing statuses determine what information companies have to disclose and how quickly they need to disclose it. While the SEC characterizes the change as simplifying filing statuses and allowing reporting flexibility to small and mid-size companies, it will relax important company internal controls and provide investors with less disclosure to inform their decisions. For example, under the proposed rules, far fewer companies will be required to obtain auditor attestation of the effectiveness of internal control over financial reporting. This could reduce the reliability of company financial statements. Additionally, many more companies would no longer be required to disclose information related to the pay-versus-performance of company executives, which CalSTRS uses to determine if executives are appropriately compensated.
• The SEC proposed reversing the climate-related disclosure rules first adopted in 2024. The climate rules were intended to provide investors with more information about climate-related financial risks of companies. The rule sought to bring consistency to company reporting. Reversing the rule represents a continuation of the fragmented reporting environment that harms comparability of company disclosures and ultimately detracts from investors’ ability to identify and price climate-related risks.

CalSTRS responded to the first three proposed rules and will submit comments on the last rule by August. Our comments clearly state these changes greatly decrease company disclosures.

In addition, the SEC does not offer data-driven evidence showing how these new rules would be of value to investors, which is not aligned with the SEC’s mission. CalSTRS will continue to monitor corporate disclosure practices and engage companies to press for robust disclosure through this period of regulatory uncertainty.