In January 2015, SEC Chair White announced that, “Due to questions that have arisen about the proper scope and application of Rule 14a-8(i)(9), I have directed the staff to review the rule and report to the Commission on its review.” The SEC’s Division of Corporation Finance in turn announced that, effective for the 2015 proxy season, it would not grant no-action relief under Rule 14a-8(i)(9) on the grounds that a shareholder proposal directly conflicts with a management proposal.
In June 2015, five large law firms that together handle a significant volume of shareholder proposal work on behalf of corporate clients, including Sidley, sent a joint letter to the SEC urging it to continue its long-standing practice of permitting companies to exclude shareholder proposals that directly conflict with management proposals on the basis of Rule 14a-8(i)(9).
In a speech in late June 2015, SEC Chair White noted that, notwithstanding concerns that shareholders would be confused by two competing proposals, “shareholders were able to sort it all out and express their views.” She also expressed her hope that the Staff’s review of Rule 14a-8(i)(9) will be completed prior to the 2016 proxy season.
On July 16, 2015, Jonathan Ingram, Deputy Chief Counsel of the SEC, provided an update on the Staff’s review of Rule 14a-8(i)(9) at a meeting of the SEC’s Investor Advisory Committee. He indicated that the Staff’s research on the subject is complete and that he expects the Staff to recommend various alternatives for changes to the rule and/or its application. It has not been determined whether any changes would be implemented through SEC rulemaking versus interpretive guidance.