The Advisors' Blog

– Broc Romanek, CompensationStandards.com

Over on TheCorporateCounsel.net on Friday, I blogged about Corp Fin’s first Staff Legal Bulletin on shareholder proposals in three years – Staff Legal Bulletin No. 14H. The heart of this SLB wraps up Corp Fin’s review of Rule 14a-8(i)(9) due to a flap over proxy access proposals. But the SLB’s new “direct conflicts” standard applies to compensation proposals as well.

Under the SLB’s new “direct conflicts” standard for counterproposals, Corp Fin will only allow exclusion “if a reasonable shareholder could not logically vote in favor of both proposals.” In other words, proposals won’t be found conflicting unless they “directly conflict.” The SLB provides four examples about how a shareholder proposal & management proposal may be found to directly conflict – or not. In fact, one of the Staff’s examples deals with compensation proposals as follows:

Similarly, a shareholder proposal asking the compensation committee to implement a policy that equity awards would have no less than four-year annual vesting would not directly conflict with a management proposal to approve an incentive plan that gives the compensation committee discretion to set the vesting provisions for equity awards. This is because a reasonable shareholder could logically vote for a compensation plan that gives the compensation committee the discretion to determine the vesting of awards, as well as a proposal seeking implementation of a specific vesting policy that would apply to future awards granted under the plan.