US Chamber of Commerce says regulator sparks confusion at ‘height of shareholder proposal season’
A coalition of 17 business groups has called on the SEC to reinstate its policy of expressing viewpoints on shareholder proposals that conflict with a management proposal.
In a letter to SEC chairman Mary Jo White, the coalition ‒ which includes the US Chamber of Commerce, the Center on Executive Compensation, the Latino Coalition, the National Black Chamber of Commerce and the Society of Corporate Secretaries and Governance Professionals ‒ says her cancellation of the policy in January underwent insufficient study, was carried out ‘at the height of the shareholder proposal season’ and may violate rules that would require public consultation before a major change.
On January 16, White announced her decision to suspend Rule 14a-8(i)(9), which allows a company to exclude a shareholder proposal that ‘directly conflicts’ with a management proposal, for further study. In the meantime, the commission decided to ‘express no views’ on proposals under the rule for the current proxy season.
White attributed her decision to ‘questions that have arisen about the proper scope and application’ of the rule. Before her announcement, commission staff had agreed to a request by Whole Foods Market to exclude a non-binding shareholder proposal for proxy access.
White’s ‘announcement was made suddenly at the height of the shareholder proposal season on the eve of a three-day holiday weekend,’ states the letter from the coalition of business groups. ‘Indeed, it came not only after the deadline for submission of no-action request letters for many issuers had passed, but also after the boards of many companies had taken action.’
The coalition also asks White to answer a series of questions, including whether a company can submit a proposal that competes with an existing shareholder proposal, and what happens if both are approved. It further asks her opinion on whether companies should seek decisions from federal courts while the commission refuses to state an opinion, and whether companies should exclude shareholder proposals and face the risk of litigation.
