Shareholder Proposals under Rule 14a-8: Practical Guidance for Proxy Season
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Key takeaways:
- Rule 14a-8 of the Securities Exchange Act of 1934 provides a framework allowing a public company shareholder to request that a proposal be included in the company’s proxy statement, to be voted upon at a company’s shareholder meeting.
- The number of shareholder proposals submitted to a vote has increased in recent years, in part as a result of a heightened focus by shareholders on ESG-related matters, as well as changes in the Securities and Exchange Commission’s rules and practices governing the ability of companies to exclude shareholder proposals under certain circumstances.
- As proxy season nears, public companies should take preparatory action relating to potential shareholder proposals, including engaging with shareholders, informing themselves as to the procedural and substantive bases for exclusion of shareholder proposals, considering voluntary adoption or amendment of certain policies to avoid contentious shareholder proposals, and recognizing the steps needed to implement shareholder proposals once received.