The staff of the SEC’s Division of Corporation Finance issued Staff Legal Bulletin No. 14E (“SLB 14E”), which provides additional guidance on Rule 14a-8 under the Securities Exchange Act of 1934. Rule 14a-8 gives stockholders the opportunity to place a proposal in a company’s proxy materials for consideration at an annual or special meeting of stockholders, provided certain procedural requirements are met and the proposal does not fall within one of the categories of proposals that the Rule allows a company to exclude. SLB 14E revises the staff’s historical position under which an issuer could generally exclude a shareholder proposal relating to an evaluation of risk or a shareholder proposal involving CEO succession planning matters, in each case in reliance on Rule 14a-8’s exclusion for matters relating to an issuer’s ordinary business operations. Going forward, the staff will analyze whether proposals regarding risk evaluation fall within the ordinary business operations exclusion based on whether the underlying subject matter involves a matter of ordinary business to the issuer. As to proposals relating to CEO succession, SLB 14E indicates that because CEO succession planning raises a significant policy issue regarding an issuer’s governance, a proposal that focuses on CEO succession planning generally will not fall within the ordinary business operations exclusion. SLB 14E also provides that a company or a shareholder proponent that intends to submit correspondence in connection with a no‑action request may notify the SEC staff of its intention, and is encouraged to provide a targeted date of submission.
Alert November 03, 2009