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Issuers Omit Proposals From Proxy Statements

By | March 20, 2015

As noted here, two issuers have omitted shareholder proposals from preliminary proxy statements where no-action letters from the SEC regarding omission of the proposals have been withdrawn.  The blog suggests, within its rights, that shareholders of these companies bring the omissions to the attention of these two companies to help them avoid inadvertent further embarrassment and help ensure shareowner rights are protected.

This area has become controversial ever since the SEC stated it has ceased issuing no-action letters on this topic pending review of SEC action on the proper basis for omitting these proposals.  The surprise action by the SEC left issuers who had received these proposals in a lurch, choosing from a menu of unpalatable options.  Issuers are not required to receive no action relief prior to excluding a shareholder proposal if they believe the propsal is not required, although the proponent has perhaps the option to commence litigation to cause inclusion.  And issuers who omit such proposals must answer to shareholders as well.

And of course these are preliminary proxy statements.  The issuers could include the proposals in their final proxy statements.  One issuer filed a preliminary proxy statement because of inclusion of a management proposal that is shareholder  friendly to allow stockholders to call a special meeting of stockholders.  The other issuer filed a preliminary proxy to include a shareholder friendly agenda item  to declassify its board of directors.  So these companies appear to be anything but shareholder unfriendly to me given these proposals.  Must all shareholder friendly agenda items occur in a single year, especially given the upheaval caused by the SEC, and as issuers explore mechanisms best for their sharehlders?

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