A company ballot is not a town hall
The federal proposal rule turned corporate meetings into a venue for campaigns that shareholders never asked to fund. Ownership questions belong in state law.
Start with the part nobody disputes: corporate governance is state law. Who may vote, on what, and how a company is run are questions answered by the state of incorporation and the company's own charter. The federal rule at issue was an accident of proxy regulation that grew into something else.
What it grew into was a subsidy. A holder of a few thousand dollars of stock can compel a company to print, circulate and defend a proposal to every other owner, at the company's expense. The cost falls on the shareholders as a whole, and most of them never asked for the campaign.
And the campaigns stopped being about the business a long time ago. A proposal about the lobbying of a trade association, about a supplier's politics, about a policy question already before Congress — these use the ballot as a stage because it is the cheapest stage available, not because the owners are the right audience.
Removing the federal rule does not abolish shareholder proposals. It returns the question to the states and to company charters, where a firm can adopt whatever threshold and subject matter its owners will accept, and where investors who dislike the answer can invest elsewhere.
The complaint that states will compete to be permissive to managers cuts both ways. Delaware's franchise exists because investors will pay for the law it offers, and a state that lets boards ignore their owners entirely will find its companies valued accordingly. That is a market for governance, and it is more honest than a federal rule written for a different era.