On the heels of the release of SLB 14J, Corp Fin has posted a couple of new no-action letters that shed some more light on the “ordinary business” exclusion of Rule 14a-8(i)(7). As you may recall, in SLB 14J, the staff addressed the nature of the board analysis the staff would find most “helpful” in evaluating a no-action request to exclude a shareholder proposal under Rule 14a-8(i)(7), as well as “micromanagement” as a basis for exclusion under that same Rule. Most impressive is that, in the response letters, the staff actually includes a sentence or two that provides some insight into the staff’s reasoning. If you recall, a request for more clarity from the staff was one of the comments raised at the SEC’s proxy roundtable, and the staff appears to have heard. (See this PubCo post.) Both of the letters were submitted in connection with proposals to Walgreens Boots Alliance.
New SLB 14J on shareholder proposals revisits the economic relevance and ordinary business exclusions
Corp Fin has just released a new staff legal bulletin on shareholder proposals—we’re up to 14J—that once again examines the exclusions under Rules 14a-8(i)(5), the “economic relevance” exception, and 14a-8(i)(7), the “ordinary business” exception. Notably, these rules were also the subject of SLB 14I. More specifically, the new SLB provides guidance with regard to the following:
the nature of the board analysis the staff would find most “helpful” in evaluating a no-action request to exclude a shareholder proposal,
“micromanagement” as a basis for exclusion under Rule 14a-8(i)(7) and
the application of Rule 14a-8(i)(7) to exclude proposals related to senior executive and/or director compensation matters.
On a webcast today, “Shareholder Proposals: Corp Fin Speaks,” presented by TheCorporateCounsel.net, Matt McNair, Senior Special Counsel in Corp Fin’s Office of Chief Counsel, provided some “soft” guidance regarding the implications of the recent SLB 14I on shareholder proposals, particularly the exclusions for “ordinary business” and “economic relevance.” (See this PubCo post.)
Just in time for the beginning of proxy and shareholder proposal season, Corp Fin has posted Staff Legal Bulletin No. 14I, Shareholder Proposals. The SLB addresses four issues:
the scope and application of Rule 14a-8(i)(7) (the “ordinary business” exclusion);
the scope and application of Rule 14a-8(i)(5) (the “economic relevance” exclusion);
proposals submitted on behalf of shareholders (shareholder proposals by proxy); and
the use of graphics and images consistent with Rule 14a-8(d) (the 500-word limitation).
Corp Fin issues new SLB providing guidance on Rule 14a-8 exclusions for “conflicting proposals” and “ordinary business”
by Cydney Posner Corp Fin today posted Staff Legal Bulletin 14H providing guidance on two key issues regarding shareholder proposals under Rule 14a-8: the scope and application of Rule 14a-8(i)(9) (the exclusion for conflicting proposals); and the scope and application of Rule 14a-8(i)(7) (the exclusion for ordinary business) in light of Trinity […]
Trinity Wall Street files cert petition: will SCOTUS delve into the “ordinary business operations” exclusion for shareholder proposals?
by Cydney Posner You might recall Trinity Wall Street v. Wal-Mart Stores Inc, a case involving a shareholder proposal requesting that Wal-Mart’s board of directors develop a policy regarding the sale of high-capacity firearms, such as the AR-15 assault rifle, and other dangerous products. Wal-Mart sought to exclude Trinity’s proposal from […]