Tag Archives: shareholder proposals

SEC continues to grant no-action relief in connection with proxy access fix-it proposals

by Cydney Posner

The SEC has posted a number of additional Corp Fin responses to requests for no-action, as well as to requests for reconsideration of previous denials of relief, regarding shareholder proposals to amend proxy access bylaws, so-called “fix-it” proposals. In all cases, the companies argued that they should be permitted to exclude the fix-it proposals as “substantially implemented” under Rule 14a-8(i)(10). The requests were successful in obtaining no-action relief in all cases except one. As in the past, the staff has not identified the key determining factor, but companies now seem to have found a formula for successfully excluding these proposals. Continue reading

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Another theory on Corp Fin’s position on proxy access fix-it proposals

by Cydney Posner

Corp Fin has refined its position with regard to exclusion of proposals to amend existing proxy access bylaws.  However, the basis for the staff’s determination to grant or refuse no-action relief in that context remains a conundrum.
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Shareholder proposals regarding lead director tenure: a harbinger of things to come?

by Cydney Posner

The topic of director tenure has increasingly become the focus of both academics and investors. Some argue that long-term directors contribute deep knowledge of the company and provide experience, historical memory and continuity to the board — along with the gravitas sometimes necessary to challenge management. Others contend that directors with long tenure are “stale” and rarely contribute fresh perspectives.  Moreover, they suggest, the independence of directors with long tenure may even be compromised — not in the technical sense of the NYSE or Nasdaq definitions of course, but rather more in the sense of “social independence,” meaning that the development over time of shared social connections might bias them or taint their objectivity. According to the WSJ, the head of a corporate governance center at the Conference Board has observed that “’[t]he tenure issue is one that is bubbling below the surface.’“ (See this PubCo post and this PubCo post.) Continue reading

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Why does management seek to exclude shareholder proposals?

by Cydney Posner

In this recent preliminary working paper, Why Do Managers Fight Shareholder Proposals? Evidence from No‐Action Letter Decisions, academics at the USC Marshall School of Business attempt to determine why corporate management seeks to exclude shareholder proposals: are corporate managers acting as “responsible managers” who view shareholder proposals as “value‐destroying — either misguided or intended to benefit the narrow interests of proponents” —  or as a “self‐interested managers” who oppose shareholder proposals “to preserve corporate practices that provide them with private benefits”?  Apparently, the results of prior studies have supported both views. Although proponents of shareholder proposals may insist otherwise, the results of this study led the authors to conclude that, in using the no‐action letter process to try to exclude shareholder proposals, managers act “based on a genuine concern that shareholder proposals harm firm value, and… not merely [to provide] a convenient rationalization in order to preserve managerial private benefits.” Continue reading

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Environmental shareholder proposals increase in frequency and sophistication, but will they continue to be viable?

by Cydney Posner

In this article, the WSJ discusses the increased frequency and sophistication of shareholder proposals regarding the environment. In particular, the piece observes that shareholder proposals focusing on environmental issues have evolved “from requests for greenhouse gas emissions cuts to demands for disclosure of strategies to manage climate risks and for linking executive pay with sustainability performance.” But, with the imminent change to a new administration at the federal level, will these sustainability proposals continue to be viable?  Continue reading

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Corp Fin issues no-action relief for exclusion of a proxy access “fix-it” proposal (but rejects other requests)

by Cydney Posner

In September, I blogged about several pending no-action requests seeking exclusion of proposals from the McRitchie/Chevedden group to revise existing proxy access bylaws on the basis that they had been “substantially implemented” under Rule 14a-8(i)(10). As I described it back then, the burning question was whether there would be any “evolution in Corp Fin’s position in H&R Block, in which the staff refused to grant no-action relief to a proposal to amend the company’s existing proxy access bylaw — a so-called “fix-it” proposal.  In particular, there were two pending no-action requests that applied different approaches in efforts to overcome the result in H&R Block (and two more similar requests have subsequently been submitted). Corp Fin has now acted on all four of these letters. One of them received a favorable response.  Continue reading

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Has Corp Fin “evolved” on exclusion of proxy access proposals under Rule 14a-8(i)(10)?

by Cydney Posner

Until yesterday, there were five no-action requests regarding proxy access proposals from the McRitchie/Chevedden group awaiting responses from Corp Fin as to whether the proposals could be excluded on the basis that they had been “substantially implemented” under Rule 14a-8(i)(10). The burning question was whether there would be any “evolution in Corp Fin’s position in H&R Block?  Corp Fin has now acted on three of them, and the answer to the question is “not yet.” Continue reading

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