The Advisors' Blog

– Liz Dunshee

Companies typically aren’t able to exclude from their proxies shareholder proposals that address matters of executive & director compensation – see the Battle Mountain Gold Company no-action letter and Release No. 34-30851, both from way back in 1992. And frequently, shareholder proponents tie executive & director compensation into proposals that would otherwise be excludable under the Rule 14a-8 “ordinary business” & “micro-management” exceptions, in hopes that the pay component will trump any basis for exclusion. Last fall, Corp Fin issued Staff Legal Bulletin No. 14J to clarify how it would review no-action requests for these types of proposals – we blogged about it on TheCorporateCounsel.net and also did a webcast with Corp Fin’s Matt McNair.

Now that we’re into proxy season, we’re able to get even more insight into the Staff’s no-action analysis for “executive pay” proposals that arguably also relate to ordinary business matters or attempt to micro-manage the company. This Cooley blog summarizes the company & proponent arguments – and Staff conclusions – in these recent no-action letters:

1. AT&T: Staff agreed that a proposal could be excluded, because it focused on ordinary business matter of existing debt

2. Verizon: Staff disagreed with the company that a proposal for cybersecurity metrics that might apply to 300 employees was focused on the general workforce, and denied no-action relief

3. Verizon: Staff denied no-action relief for a golden parachute proposal, because it was a significant compensation matter for senior executives

4. AbbVie and Johnson & Johnson: Staff agreed that a proposal that sought to prohibit performance metric adjustments for legal & compliance costs amounted to “micro-management,” and granted no-action relief