Recent Shareholder Proposal Litigation Underscores The Need For Shareholder Proposal Reform

In Short

The Situation: Since the U.S. Securities and Exchange Commission announced in November 2025 that it would no longer rule on most Rule 14a-8 no-action requests, companies have taken varying approaches to shareholder proposals that continued to be pressed by social mission organizations, public employee unions, retirement systems, and others across the political spectrum. Some added the proposals to their proxy materials, some declined. Six proponents filed suit against companies, arguing that their proposals were improperly excluded.

The Result: While half of the six lawsuits settled, the other half resulted in court decisions that turned on the "ordinary business" exclusion under Rule 14a-8(i)(7)—but with seemingly divergent outcomes.