Based on its analysis of the 2018 proxy season 18 no-action letters requesting exclusion of proposals on the basis of Rule 14a-8(i)(7) (ordinary business) and/or Rule 14a-8(i)(5) (economic relevance), Cleary Gottlieb concludes in this new memo: "Making Sense of the SEC's 2018 NALs on Shareholder Proposals for the Proxy Statement" that - generally - Staff's perceptions of the degree to which a proposal would micromanage the company (if effected) play a greater role in its disposition of a no-action letter request than the completeness of any accompanying board/committee analysis.
The memo further suggests that requests to exclude lobbying/political activity proposals that received higher vote levels (~40%) of shareholder support in prior years are unlikely to succeed regardless of the quality (detail, completeness, format) of any board/committee analysis, and that attempts to exclude environmental proposals falling in the mid-range of the micromanaging spectrum may benefit from a board analysis. The firm identified proposals' levels of micromanagement based on the topics addressed, specific drafting of the proposal, and the content of the supporting statement.
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The new Staff Legal Bulletin 14I was a focus in a number of meetings and sessions held at the Society's recent Annual Conference in DC. For the benefit of those that did not attend, all signs point to the Staff still mulling over which factors - including a Board/Committee analysis - are relevant (and to what degree) to a no-action request and determination, with a view toward greater clarity evolving over succeeding proxy seasons.
We first reported on Cleary's analysis in last week's Society Alert! Look for another shareholder proposal no-action update in today's Society Alert.
Access additional information and resources on our Shareholder Proposals page.
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