Another Ridiculous Letter from Republicans Whining About Proxy Advisors

Nell Minow
7 min readDec 12, 2023


Apparently the money spigot from fossil fuel companies and climate change denying mega-donors has resulted in another made-up meltdown from Republican politicians, this time a letter to the two largest proxy advisory firms from GOP attorneys general expressing “deep concern” that the analyses of shareholder proposals are based on politics and whims and not on financial risks.

We might not be surprised that lawyer/politicans are not specialists in financial risk, but we would expect them to be able to assemble evidence to support their arguments better than this. As we recall, the last tantrum from the GOP was about proxy advisors recommending a small sliver of votes contrary to management’s advice. This time, they are pouting over proxy advisors agreeing with management that a thinly disguised anti-diversity, engagement, and inclusion proposal does not merit shareholder support.

Thomas Nast cartoon

You might also think attorneys general would have a better sense of their jurisdiction, which in no way extends to government interference with the free speech of a commercial enterprise whose products are purchased (or not) by the most financially sophisticated investors in the world.

A few points worth mentioning:

  1. They write: “ Your lack of transparency is troubling. And your voting recommendations on debanking proposals may breach your legal obligations. We seek more transparency and written assurance that you will cease any practice that violates the law, including your duty to act in the best interest of the citizens of our States, or your stated policies on recommendations.” Our response: What legal obligations? The proxy advisory firms produce reports, analyses, and recommendations that have no obligation other than to meet a market test. No government entity has jurisdiction to ask them for further information by calling it transparency. Proxy advisory firms have no duty to act in the best interests of anyone but their shareholders and their customers. When it comes to the transparency expected of elected officials, we call on the signers of this letter to produce all records of meetings, memoranda, and correspondence relating to his preposterous letter and to insist on transparency about the funding for the groups behind these proposals.
  2. The AGs swing the big bat by pointing out that proxy advisors, like other private entities, may not commit fraud. But they produce no basis for alleging any fraud. Both of the major proxy advisory firms, as a matter of business, are very clear about their policies and their recommendations can be and are ignored by their customers based on their own independent judgment as fiduciaries. Markets are based on the differing ideas behind buy/sell/hold decisions. By definition, any transaction is between two entities with different ideas about the value of the item being sold. A judgment about the merits of a shareholder proposal, especially based on clearly disclosed criteria, is not fraudulent.
  3. What is the big sin being committed here? ISS and Glass Lewis recommend votes against the shareholder proposals filed by extremist, dark money-funded groups, the proposals that have failed to get enough shareholder support to qualify for resubmission. Isn’t it curious that the supposedly pro-business, free market advocates of the Republican Party are the ones acting as the nanny state here by telling businesses what their position should be on the value of advisory-only shareholder proposals?

The shareholder proposal the AGs are so excited about is, like all shareholder proposals, advisory only. Even a 100 percent vote can be ignored by the corporate executives. As the letter points out, the proposal got only 2 percent of the vote, which the AGs seem to think is the fault of the proxy advisory firms, who recommended a vote against it. This overlooks the fact that the proxy advisory firm clients represent far less than 98 percent of the voting shares. Furthermore, the AGs fail to explain — because there is no explanation possible — why 98 percent of the voting shareholders should have supported the proposal or why the company’s response, added in full below, does not provide adequate reason to vote against it. Even if the proxy advisory firms and 98 percent of the shareholders were wrong about the proposal, it is not the job of elected officials to tell shareholders how to vote or to tell private corporations what kind of advice to give.

And even if this was a legitimate proposal and even if a majority vote was binding on management and they were required to produce the kind of report the proposal asks for and even if that report showed some corrective action was necessary to ensure fair treatment of all employees, there is no possible reason a recommendation from a proxy advisory firm could have a material impact on the financial institution’s revenues or strategy.

The AG letter, while demanding “transparency,” itself leaves out some key information about the shareholder proponents. The proposal was submitted by the misleadingly named National Center for Public Policy Research as a part of its “Free Enterprise Project.” This is a group that opposes all efforts to improve diversity. They filed a lawsuit against Starbucks for implementing diversity, equity, and inclusion policies as part of the company’s goal of “taking further action toward tangible and lasting change” in company’s internal affairs. NCPPR claimed these policies were racist in their suit, which was dismissed by the court as “frivolous,” meaning that it had no possible legal basis.

NCPPR also failed in their effort to challenge Nasdaq’s board diversity rule, which required listed companies to disclose the diversity of their board members and, if there were none, to explain why. NCPPR has ties to extremist groups like ALEC and the State Policy Network, the web of right-wing “think tanks” and tax-exempt organizations in 50 states. It promotes denial of climate change. Its funders include ExxonMobil and “the dark money ATM” Donor’s Trust funded by the Kochs and other billionaires. There is some overlap with the funders of the Repblican Attorneys General Association, which is increasingly connected to crackpot theories about the 2020 election. These are the officials Americans should be able to depend on to enforce the law.

Let us engage in some debunking. There is no such thing as “debanking.” What the GOP AGs are having a meltdown over here is the free market rejecting the ravings of bought-and-paid-for elected officials who we suspect did not even read this ridiculous letter before signing it.

NOTE: For example, here is Paypal’s response to the shareholder proposal cited in the GOP AG letter:

PayPal is an industry leader in providing affordable, convenient and secure financial services to customers of diverse backgrounds and viewpoints.

PayPal is committed to consistently maintaining the highest standards of integrity in our implementation of our policies, procedures and processes, which are intended to ensure that our services are provided fairly to all our customers. PayPal has been an industry leader in providing access to innovative financial products, and in democratizing financial services to small and medium-sized businesses and entrepreneurs who rely on our platform, products and services to reach their own customers. PayPal works to provide historically underbanked populations and businesses access to capital, especially those owned by underrepresented entrepreneurs. PayPal provides services with the goal of inclusivity and of supporting freedom of expression; we do not discriminate in providing services to those with underrepresented or even unpopular viewpoints.

PayPal consistently employs objective, narrowly tailored policies to address account suspension and closure, and those policies are based on ensuring the safety of our customers and protecting PayPal’s legitimate business interests.

PayPal is committed to the integrity of our platform, and to ensuring the safety, security and privacy of our customers and others, while complying with legal requirements. PayPal suspends or closes accounts in accordance with our obligations as a regulated financial institution and to ensure the safety of our platform and our customers. Specifically, PayPal’s risk and compliance framework includes policies and monitoring mechanisms to identify potential fraud and financial crimes, including money laundering, sanctions risks and other illegal activities. The card network, merchant acquirers and banking partners that PayPal relies upon contractually to execute transactions for consumers and merchants also impose restrictions on the types of transactions that we can process on our platform. These partner obligations, and others, including those required by law, are set forth in our Acceptable Use Policy (AUP), in connection with our User Agreement (UA). Collectively, these policies and accompanying processes are intended to protect PayPal’s customers, our platform and the payments ecosystem against illicit and harmful activity such as counterfeiting or fraud.

Suspensions and closures of customer accounts are undertaken to preserve the integrity of our platform and to protect our customers and others from harm. PayPal implements these and other measures with the aim of providing safe and affordable financial services to people of all backgrounds, while, at the same time, supporting freedom of expression and inclusivity. PayPal’s policies are administered without regard to viewpoint, religious beliefs or identity, political opinions, ideologies, or individual identities.

PayPal already publicly provides robust reporting of its diversity and anti-discrimination initiatives.

The Proposal calls for a reporting obligation beyond PayPal’s already robust reporting of our diversity and anti- discrimination programs and would unduly interfere with PayPal’s business operations. Inclusion is one of PayPal’s core values and is reflected in the Company’s mission to democratize financial services. Our anti-discrimination efforts are reflected in our Code of Business Conduct and Ethics and other public disclosures. In addition, we report publicly on our commitment to diversity across multiple dimensions, which is part of our overall anti-discrimination efforts.1 Accordingly, our Board believes that devoting additional time and resources to produce the report the Proponent suggests would only distract from and duplicate the ongoing anti-discrimination and inclusion programs and initiatives underway at PayPal.


Our Board has carefully considered the Proposal, and for the reasons set forth above, the Board believes that devoting additional time and resources to the proposed reporting would be unnecessary, costly and would only distract from the ongoing programs already in place at PayPal. Therefore, our Board believes that the Proposal is not in the best interests of PayPal and its stockholders.



Nell Minow

Movie critic, corporate critic and shareholder advocate, Contributing Editor at @ebertvoices plus @moviemom, and #corpgov #movies and editor at @miniverpress