There will be no rush to binding proxy access proposals, thanks to a July 21 denial of a no-action request filed by H&R Block. Corporations continue with Wile E. Coyote type plots to derail genuine proxy access. However, in this case we foiled the latest plot to keep corporate governance a democratic-free zone without resorting to binding proxy access proposals.
Although SEC staff essentially gutted the meaning of Rule 14a-8(i)(10) – the “substantially implemented” exclusion – through a series of no-action letters issued on February 12, it now appears the primary damage was to delay meaningful proxy access proposals by at least a year… but not to deny the right of shareholders to continue to seek real proxy access through the precatory proposal process.
The action by SEC staff on February 12 allowed companies to slip their own version of proxy access ‘lite’ into the bylaws, rather than allowing shareholders to choose between real proxy access and fake proxy access. A huge wave of proxy access ‘lite’ provisions has since ensued. Soon most of the S&P 500 will be able to say they have ‘proxy access,’ having drunk from the same Kool Aid.