SEC Staff Issues Shareholder Proposal Guidance

On October 23, 2018, the Division of Corporation Finance (Staff) of the U.S. Securities and Exchange Commission (SEC) published Staff Legal Bulletin No. 14J (SLB 14J), which provides important guidance concerning shareholder proposals. Specifically, SLB 14J addresses:

• board analyses that may be provided in the context of certain “ordinary business” or “relevance” no-action requests;
• the “micromanagement” prong of the “ordinary business” exclusion; and
• application of the “ordinary business” exclusion to certain proposals addressing senior executive or director compensation.

Board Analyses

At this time last year, the Staff published Staff Legal Bulletin No. 14I (SLB 14I), which invited companies to assist the Staff by including in no-action requests a discussion of the board’s analysis of whether a proposal is “otherwise significantly related” to a company’s business, in the case of a “relevance” no-action request under Rule 14a-8(i)(5), or focuses on