March 20, 2018

Shareholder Proposals: Chevedden’s First “Notice of Exempt Solicitation”

The battle over the right to call special meetings intensifies. Here’s an excerpt from this Gibson Dunn memo:

Each year some public pension funds and other institutional shareholders voluntarily file with a Notice of Exempt Solicitation with the SEC under Exchange Act Rule 14a-6(g). This rule requires a person who owns more than $5 million of a company’s securities and who conducts an exempt solicitation of the company’s shareholders (in which the person does not seek to have proxies granted to them) to file with the SEC all written materials used in the solicitation. However, these funds also file these Notices, which appear on Edgar as “PX14A6G” filings, typically to respond to a company’s statement in opposition to a shareholder proposal included in the proxy statement or to otherwise encourage (but not solicit proxies from) shareholders to vote a specific way on shareholder proposals, say on pay proposals and in “vote no” campaigns.

In a new twist, this week John Chevedden (the most prolific individual shareholder proponent given that he submits them in his own name and by using “proposal by proxy” to submit proposals for other shareholders) filed his first “Notice of Exempt Solicitation.” Chevedden’s Notice addresses a proposal included in the AES Corp. proxy materials to ratify the company’s existing 25% special meeting ownership threshold. The SEC staff previously concurred that AES could exclude from its proxy materials Chevedden’s shareholder proposal requesting a 10% special meeting threshold pursuant to Rule 14a-8(i)(9) because the company’s ratification proposal and the shareholder proposal conflicted. See The AES Corp. (avail. Dec. 19, 2017).

Shareholder Proposals: Lobbying

As noted in this press release, corporate lobbying disclosure remains a top shareholder proposal topic. A coalition of more than 70 investors have filed proposals at 50 companies asking for lobbying reports that include federal and state lobbying payments, payments to trade associations used for lobbying and payments to any tax-exempt organization that writes and endorses model legislation.

And as reflected in this no-action response to Citi, Corp Fin doesn’t seem to be interpreting its “economic relevance/(i)(5)” guidance under Staff Legal Bulletin #14I to allow exclusion of these proposals…

The Disney Annual Meeting: Fake News

A few weeks ago, I blogged about a press release from “National Center for Public Policy Research” and the drama at the meeting. At the time, I blogged that this looks like a lot of hard spin to me as this organization likes to stir things up at “liberal” company meetings.

I wanted to follow up to address some of the claims in that organization’s press release that I didn’t blog about – claims about Disney’s CEO Bob Iger. After listening to some of the meeting’s audio archive, I can say there seems to be a lot of “fake new” in that press release. As the audio reveals quite nicely, the organization’s leader is well known to Iger from previous encounters – and was allowed to speak – and his hostile harangue was justifiably booed by the audience. Listening to the audio, I thought that Iger handled an aggressively hostile questioner respectfully, under the circumstances. This episode makes a good case to webcast your annual meeting – so that folks can listen to the audio archive if “fake news” comes your way…

Broc Romanek