SEC Will Not Consider No-Action Requests To Omit Shareholder Proposals Under Rule 14a-8(i)(9)
The SEC recently announced that, pending a staff review of the scope and application of Exchange Act Rule 14a-8(i)(9), it will “express no views on the application of [that rule] during the current proxy season.” Rule 14a-8(i)(9) allows a company to exclude a shareholder proposal that directly conflicts with a management proposal in the same proxy. The rule is the basis for the controversial exclusion of a proxy access shareholder proposal by Whole Foods for its annual meeting to be held in 2015. Lack of staff guidance in this area may present a predicament for companies hoping to exclude a proposal due to a management counterproposal. While companies are not required to seek no-action relief to exclude a shareholder proposal, obtaining a no-action letter reduces (but does not eliminate) a company’s litigation risk. Companies that were considering a management counterproposal may now opt to include both the shareholder’s and management’s proposal in the same proxy statement, raising additional practical concerns on how best to do so. Read the SEC announcement, which includes Chair White’s directive to the staff to review Rule 14a-8(i)(9).