On February 12, the Securities and Exchange Commission’s Division of Corporation Finance (the Division) posted on its website 18 no-action letters relating to the exclusion of proxy access shareholder proposals under Rule 14a-8(i)(10). Rule 14a-8(i)(10) permits a company to exclude a shareholder proposal from its proxy statement if “the company has already substantially implemented the proposal.” In 15 of the 18 letters, the SEC granted issuers requested no-action relief, allowing them to exclude the shareholder proposals. In each case, the shareholder proposal sought adoption of a bylaw amendment that would permit shareholders holding a requisite threshold of shares to nominate board candidates for inclusion in the issuer’s proxy statement (i.e., a proxy access bylaw proposal).
The SEC granted issuers requested no-action relief in situations where the shareholder proposals sought adoption of proxy access bylaws that differed from bylaws that have been adopted by the issuers in that (1) the shareholder proposed bylaws would have required the company to include a number of shareholder nominated candidates up to the greater of (a) two nominees and (b) 25 percent of the board, whereas the issuer’s bylaws limit such candidates, for example, to only 20 percent or 25 percent of the board, or (2) the shareholder proposed bylaws would have permitted unrestricted aggregation of shareholdings among shareholders to achieve minimum ownership thresholds, whereas the issuer’s bylaws allow aggregation, but cap it (e.g., at 20 shareholders). Despite such differences, the SEC did not reject the issuers’ positions that the proxy access proposals had been substantially implemented.
In each of the three no-action letters where relief was not granted to the requesting issuers, those issuers included in their bylaws a 5 percent ownership threshold to nominate directors for inclusion in the issuer’s proxy statement, rather than the 3 percent ownership threshold reflected in the proxy access bylaw proposals.
See complete copies of each of the 18 no-action letters here.