Here’s a brief note I just sent to the SEC:
Dear Chairman Mary Schapiro and Mr. Greg Belliston:
On April 12 I alerted you to the fact that Kinetic Concepts has said they will exclude a shareowner proposal from Mr. John Chevedden even though the SEC refused to issue them a no-action letter. I warned that if the SEC does not enforce the law and require companies to meet the burden of proof required by 14a-8(g), we should expect a flood of copycats. Today’s bulletin from Duane Morris LLP & Affiliates can be expected to accelerate erosion of the SEC’s authority.
To those of us who believe that shareowners should have the right to submit proxy proposals, I can’t emphasize enough the importance of e-mailing your concerns to the SEC so that we maintain that right.
The title of the above referenced alert from the Duane Morris law firm is “To Seek Exclusion of Shareholder Proposals, Companies May Bypass ‘No-action Letter Request’ and Go Directly to Federal Court.” SEC rules regarding shareowner proposals have been in place since 1942. Is this a right we are willing to lose without a fight? Unless shareowners demand that the SEC take action, we can expect to have to fight our way through the courts each time we submit a proposal.
Send quick e-mails to the Office of Chief Counsel at [email protected] and the Chairman at [email protected]. I also recommend you fill out the complaint form at https://tts.sec.gov/oiea/QuestionsAndComments.html, since this will go to the Division of Enforcement, the office that could take action. Your note could be as simple as the following:
I understand Kinetic Concepts informed the SEC they would exclude a shareowner proposal from John Chevedden even though the SEC rejected a “no-action” request from them on March 21. This company and others taking similar action have not met the burden of 14a-8(g), which required companies to demonstrate they are entitled to exclude proposals.
I believe taking action against Kinetic Concepts should be a high priority for the SEC. Otherwise, a growing number of companies will simply believe they can ignore shareowner resolutions, which form an important cornerstone of corporate governance.