SEC Issues New Guidance On Several Exclusions Under Rule 14a-8

On November 1, 2017, the SEC's Division of Corporation Finance (the Division) issued Staff Legal Bulletin No. 14I (the SLB) on shareholder proposals. The SLB provides guidance on: (i) the application of Rule 14a-8(i)(7), the "ordinary business" exception, (ii) the scope of Rule 14a-8(i)(5), the "economic relevance" exception, (iii) documentation requirements for shareholders submitting proposals by proxy, and (iv) the treatment of graphs and images under the 500-word limitation of Rule 14a-8(d).

Staff Legal Bulletin No. 14I

Ordinary Business. Rule 14a-8(i)(7) permits a company to exclude a proposal that deals with a matter relating to its "ordinary business" operations. The SLB explains that under this exclusion a company may exclude a proposal that raises matters that are "so fundamental to management's ability to run a company on a day-to-day basis that they could not, as a practical matter, be subject to direct shareholder oversight," unless it focuses on