Proposed SEC amendments to the procedural requirements and resubmission thresholds of the shareholder proposal rule ("SEA Rule 14a-8") were published in the Federal Register. (See also SEC Attempts to Enhance Accuracy and Transparency of Proxy Voting Advice.) Comments on the proposal must be submitted by February 3, 2020.
SEA Rule 14a-8 requires companies to include shareholder proposals in their proxy statements. The SEC proposal would amend the eligibility requirements, the one-proposal limit and the resubmission thresholds under Rule 14a-8, subject to certain requirements. Specifically, the proposal would:
- replace the $2,000 threshold for shareholder-proponent eligibility with three-tiered thresholds (i.e., requiring continuous ownership of a company's securities of at least (i) $2,000 for three years, (ii) $15,000 for two years or (iii) $25,000 for one year);
- require a shareholder-proponent who uses a representative to provide documentation that affirms that the representative is authorized to submit the proposal;
- require every shareholder-proponent to confirm that the shareholder is able to meet (either in person or via teleconference) with the company between 10 and 30 calendar days after the submission of the shareholder proposal;
- amend the one-proposal restriction to "each person" rather than "each shareholder" for the same shareholders' meeting;
- increase the resubmission thresholds for matters voted on in the last five years to: 5 percent, if previously voted on once; 15 percent, if previously voted on twice; and 25 percent, if previously voted on three or more times (the current thresholds are 3%, 6% and 10%, respectively); and
- allow companies to deny a proposal that has declining shareholder support.
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