March 22, 2016
On March 22, 2016, the staff of the Securities and Exchange Commission provided specific guidance on how a company must describe a Rule 14a-8 shareholder proposal on its proxy card. The guidance principle also applies to management proposals. For some companies this interpretation may require a change from prior practice.
The entirety of the interpretation is set forth below:
Question: Rule 14a-4(a)(3) requires that the form of proxy "identify clearly and impartially each separate matter intended to be acted upon." How specifically must a registrant describe a Rule 14a-8 shareholder proposal on its proxy card?
Answer: The proxy card should clearly identify and describe the specific action on which shareholders will be asked to vote. This same principle applies to both management and shareholder proposals. For example, it would not be appropriate to describe a management proposal to amend a company’s articles of incorporation to increase the number of authorized shares of common stock as "a proposal to amend our articles of incorporation." Similarly, it would not be appropriate to describe a shareholder proposal to amend a company’s bylaws to allow shareholders holding 10% of the company’s common stock to call a special meeting as "a shareholder proposal on special meetings." The following descriptions of shareholder proposals also would not satisfy Rule 14a-4(a)(3):
- A shareholder proposal on executive compensation;
- A shareholder proposal on the environment;
- A shareholder proposal, if properly presented; and
- Shareholder proposal #3
A link to the guidance is here.
If you have any questions on this matter, please do not hesitate to speak to your regular contact at Weil, Gotshal & Manges LLP or to any member of Weil’s Public Company Advisory Group.