Copied below is a long excerpt from Broc’s blog on thecorporatecounsel.net, which raises the question of whether Corp Fin’s prior position on 14a-8(i)(9), the exclusion for directly conflicting proposals, is the only position regarding shareholder proposals they are reconsidering this proxy season. Should we expect more “reflecting” on established positions? Hopefully, if more longstanding positions are being reconsidered, the staff will issue an SLB in advance to avoid blindsiding issuers trying to navigate shareholder proposals this proxy season.
“It looks like the Corp Fin Staff has reversed course on a line of proposals that asks the board to adopt a policy that the board chair shall be an independent director who is not a current or former employee of the company, and whose only nontrivial professional, familial or financial connection to the company or its CEO is the directorship. After Pfizer received a no-action response from the Staff in December allowing the exclusion of this type of proposal for being vague & indefinite under (i)(3) (which itself was an extension of this Abbott Labs letter dated 1/13/14 – there the proposal said that the directorship could be the “only connection” to the company and the Staff allowed exclusion as vague under (i)(3)), a number of companies filed similar no-action requests.
Then last week, the Staff started to issue responses to those requests (eg. this one to Boeing) and it appears to have changed its tune. Here’s an excerpt from those Staff responses:
‘We are unable to concur in your view that ____ may exclude the proposal under rule 14a-8(i)(3). You have expressed your view that the proposal is vague and indefinite because it does not explain whether a director’s stock ownership in accordance with the company’s stock ownership guidelines is a permissible ‘financial connection.’ Although the staff has previously agreed that there is some basis for your view, upon further reflection, we are unable to conclude that the proposal, taken as a whole, is so vague or indefinite that it is rendered materially misleading. Accordingly, we do not believe that ______ may omit the proposal from its proxy materials in reliance on rule 14a-8(i)(3). (emphasis added)’
I highlighted the ‘upon further reflection’ language above because I don’t recall ever seeing that language in a Staff response before. So with the (i)(9) debate raising the profile of the shareholder proposal process, it’s possible that the playing field may continue to evolve for no-action requests under Rule 14a-8…”