Among other things, SEC Staff Legal Bulleting No. 14I provides guidance on excluding images from shareholder proposals. SLB14I provides the Division of Corporation Finance’s view that, consistent with recent no-action letter precedent, the use of images or graphs in shareholder proposals is appropriate. However, SLB14I simultaneously invites issuers to seek exclusion of graphs and/or images under Rule 14a-8(i)(3) where they:
- make the proposal materially false or misleading;
- render the proposal inherently vague or indefinite;
- directly or indirectly impugn character or make charges of improper, illegal, or immoral conduct, without factual foundation; or
- are irrelevant to a consideration of the subject matter of the proposal.
SLB14I also notes that exclusion would also be appropriate under Rule 14a-8(d) if the total number of words in a proposal, including words in the graphics, exceeds 500.
Ford Motor Company seeks to exclude (assuming the SEC staff does not grant no action relief stating the proposal may be excluded on other grounds) a blurry image of a man that Ford states is presented without context. According to Ford the image is irrelevant to the subject matter of the proposal.
Likewise, General Electric Company seeks to exclude images it describes as nonsensical in a proposal related to cumulative voting. The images include a line of text that appears to address two stock transactions by “Immelt” (the Company’s former chief executive officer), one in which each dollar invested returns approximately $7.65 and a second in which each dollar invested returns approximately $2.14. GE states there is no clear connection to how alleged historical securities transactions could be available to shareowners through adoption of cumulative voting. The images should therefore be excluded because they are irrelevant, among other reasons. GE also argues exclusion of the entire proposal and supporting statements is appropriate when detailed and extensive editing would be necessary in order to bring the proposal and supporting statements into compliance with the proxy rules.