Tag: shareholder proposals

SEC to hold another proxy roundtable

SEC Chair Jay Clayton announced earlier this week that the SEC will be holding a roundtable to discuss the proxy process, date TBD. Potential topics include the voting process, retail shareholder participation, shareholder proposals, proxy advisory firms and technology and innovation.  In 2010, the SEC issued a concept release soliciting public comment on whether the SEC should propose revisions to its proxy rules to address the infrastructure supporting the proxy system, so-called “proxy plumbing.”  Back then, the SEC had decided that it was time to do some maintenance on the creaky old plumbing system.   However, as then Commissioner Elisse Walter, quoting Kurt Vonnegut, commented at the 2010 open meeting to vote on the concept release: “It’s a flaw in the human character that everyone wants to build, but nobody wants to do maintenance.” That statement was more prophetic than she probably anticipated when she made it: nothing came of the concept release.  Whether more results from this current effort remains to be seen.

Groups take aim—from opposite directions—at shareholder proposals

New groups have recently been formed to take aim at the shareholder proposal process—its use by proponents and its implementation by Corp Fin—from both the right and the left ends of the political spectrum. In one case, the coalition formed is seeking to head off the recent surge of support by various institutional holders of shareholder proposals for environmental, social or governance disclosure or actions. For example, last year, proposals to enhance disclosures regarding climate change won majority votes at three major companies, in large part as a result of support from mammoth asset managers such as BlackRock and Vanguard, and two climate change proposals won majority support this year.  It’s also been reported that nine ESG proposals were successful in winning majority votes this year. (See, e.g., this PubCo post.)  On the other side is a group that is seeking to reform the shareholder proposal process to reverse a turn, as perceived by the group, by Corp Fin toward exclusion of more shareholder proposals related to ESG issues. 

Organizations make recommendations to revitalize the IPO market

In this report, Expanding the On-Ramp: Recommendations to Help More Companies Go and Stay Public, eight organizations—the American Securities Association, Biotechnology Innovation Organization, Equity Dealers of America, Nasdaq, National Venture Capital Association, Securities Industry and Financial Markets Association, TechNet and the U.S. Chamber of Commerce—joined forces to make recommendations about how to revitalize the IPO market and make public company status more appealing. Many of these recommendations have in the past been the subject of legislation or proposed rulemaking or have otherwise been floated in the ether but, nevertheless, have not advanced.  Will the weight of these groups propel any of these recommendations forward?

Tug-of-war over shareholder proposals for lobbying disclosure

Just like the 2017 Consolidated Appropriations Act, the 2018 Consolidated Appropriations Act expressly precluded the use of any of the appropriated funds for issuance or implementation by the SEC of any rule regarding the disclosure of political contributions, contributions to tax exempt organizations or dues paid to trade associations. Not that political spending/corporate lobbying disclosure rules were a hot prospect at the SEC these days anyway.  So what’s a political spending/lobbying disclosure true believer to do? Shareholder proposals, of course.  After all, private ordering seemed to work for proxy access. And now it seems like everyone is getting into the act.

Corp Fin further refines Rule 14a-8(i)(9) exclusion

In past few years, after Corp Fin issued Staff Legal Bulletin 14H redefining the meaning of “direct conflict” under the Rule 14a-8(i)(9) exclusion for “conflicting proposals,” the staff has continued to fill in the outline of what works and what doesn’t work under the new interpretation of the exclusion. In American Airlines Group (avail. April 2, 2018), the staff concluded that the approach taken by the company was coloring outside the lines and denied no-action relief.

ISS highlights trends in shareholder proposals for the 2018 proxy season

In this article, ISS provides a snapshot of shareholder proposals thus far in the 2018 proxy season. The most salient point is that over two-thirds of the proposals in the ISS database related to social or environmental issues, far outpacing the governance- and compensation-related proposals that historically have dominated the agenda. What’s going on?

Corp Fin grants relief under “economic relevance” exclusion of Rule 14a-8(i)(5)

You might recall that, in November last year, Corp Fin issued new Staff Legal Bulletin No. 14I, Shareholder Proposals, which, among other things, addressed the “economic relevance” exclusion of  Rule 14a-8(i)(5). That rule permits a company to exclude a proposal that “relates to operations which account for less than 5 percent of the company’s total assets at the end of its most recent fiscal year, and for less than 5 percent of its net earnings and gross sales for its most recent fiscal year, and is not otherwise significantly related to the company’s business.” The rule had been largely moribund for several decades, as the staff’s most recent restrictive interpretation generally deterred companies from invoking it. Now we have what appears to be the first successful use of the exclusion since the new SLB attempted to rejuvenate it.  The letter is to Dunkin’ Brands Group.