Last fall, the SEC stopped providing informal guidance on whether companies could exclude shareholder proposals from their ballots, putting the full weight of decision in companies’ hands.
But did the chaos the critics predicted ever materialize?
Skeptics warned of a surge in litigation from proponents whose proposals got left off the ballot. Litigation over excluded proposals increased from its historically rare baseline, but topped out at just six cases. One was resolved in the company’s favor. Three were settled. The wave never came.
Others feared an increase in shareholder proposals being left off the ballot. That was also debunked. Cooley LLP and ISS-Corporate both noted that proxy season trends remained consistent, and the proposal omission rate was similar to years past.
SEC Chairman Paul Atkins put it plainly at the Society for Corporate Governance Conference earlier this month:
“Nearly eight months later, it is clear that neither of these dire predictions materialized, and I am happy to report that the world did not end simply because the Commission staff stopped responding to no-action requests.”
The takeaway: companies are capable of deciding what makes it onto the ballot themselves, especially given years of prior SEC guidance. If the proxy season ran just as smoothly without SEC staff guidance, perhaps the SEC’s time is better spent elsewhere.