Just a quick note to other shareholders who have filed proxy proposals this season. If the company you filed with requested and obtained a no-action letter from the SEC under Rule 14a-8(i)(9), you might obtain a reversal of that sanctioned exclusion. However, as far as I know, you need to ask for reconsideration. I don’t think the SEC is automatically reversing such letters without being requested to do so by the shareholder proponent. See letters to shareowner activist John Chevedden below.
As previously reported (SEC Withdraws No-Action: Rule 14a-8(i)(9) Suspended), the SEC has essentially suspended Rule 14a-8(i)(9) Conflicts with company’s proposal. Chair Mary Jo White issued the following:
Jan. 16, 2015 The Commission’s proxy rules enable shareholders to submit proposals for inclusion in a company’s proxy materials for a vote at a shareholder meeting, subject to certain procedural and substantive exclusions. One of the exclusions, Exchange Act Rule 14a-8(i)(9), allows a company to exclude a shareholder proposal that “directly conflicts” with a management proposal. Due to questions that have arisen about the proper scope and application of Rule 14a-8(i)(9), I have directed the staff to review the rule and report to the Commission on its review.
That was followed immediately by an announcement of the Division of Corporation Finance Related to Exchange Act Rule 14a-8(i)(9) for Current Proxy Season
In light of Chair White’s direction to the staff to review Rule 14a-8(i)(9) and report to the Commission on its review, the Division of Corporation Finance will express no views on the application of Rule 14a-8(i)(9) during the current proxy season.
These actions were prompted by my appeal to the full Commission to reverse its decision to grant no-action relief to Whole Foods Market based on the SEC expanding the definition of Rule 14a-8(i)(9) without required public notice of amending a rule. Several weeks latter Corp Fin issued this reconsideration letter regarding Whole Foods. (Still no word from Whole Foods as to what they will do.)
Now we have evidence from shareowner activist John Chevedden that the SEC reversed no-action relief granted to two companies under Rule 14a-8(i)(9) when requested to do so by the proponent. Download two example reconsideration letters addressed to Mr. Chevedden regarding BorgWarner and Illinois Tool Works.
Take Action: If you submitted a shareholder proposal that is being kept off the proxy because the company successfully invoked Rule 14a-8(i)(9), you could ask the SEC to reconsider their no-action relief letter in order to ensure consistency.