Should Labor Be Allowed to Make Shareholder Proposals?

41 Pages Posted: 23 Dec 2010 Last revised: 24 Aug 2017

See all articles by Randall S. Thomas

Randall S. Thomas

Vanderbilt University - Law School; European Corporate Governance Institute (ECGI)

Kenneth J. Martin

New Mexico State University - Department of Finance & Business Law

Date Written: January 1, 1998


In this Article, we investigate whether labor unions and related entities should be permitted to continue to make shareholder proposals using Rule 14a-8 of the federal securities laws. We focus on the claim that labor is using the shareholder proposal mechanism to further the interests of workers at the expense of other shareholders. In particular, corporate management groups have suggested that when labor is involved in collective bargaining negotiations with management, it should be barred from submitting shareholder proposals because labor proposals seek to further interest not shared by other security holders of company. Using data on shareholder proposals from 1994 proxy season, we find that labor union proposals as a whole get as much or more support than do similar proposals made by other shareholder groups. Furthermore, when we examine a subset of labor union proposals that have been identified by management groups as instances where labor was acting in its own self-interest, we find no significant differences between shareholder support for these proposals and for other shareholders' proposals of similar nature. We conclude that regulatory reform is necessary.

Keywords: labor, shareholders, proposals

Suggested Citation

Thomas, Randall S. and Martin, Kenneth J., Should Labor Be Allowed to Make Shareholder Proposals? (January 1, 1998). Washington Law Review, Vol. 73, No. 1, p. 41, 1998, Available at SSRN:

Randall S. Thomas (Contact Author)

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

Kenneth J. Martin

New Mexico State University - Department of Finance & Business Law ( email )

College of Business Administration & Economics
Las Cruces, NM 88003
United States
505-646-3201 (Phone)
505-646-2820 (Fax)

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