Last week, Cooley’s Reid Hooper attended the annual meeting of shareholder proposal stakeholders that Corp Fin hosts. Here are a few facts to help you glean some information about these meetings from Reid, who has been an active participant in them for many years:
- Who attends the meeting?
– The Corp Fin staff annually invites 10 to 15 participants from the company, shareholder proponent and law firm communities to have a roundtable discussion of the hot topic shareholder proposal and no-action letter issues from the latest proxy season – with a look ahead to the upcoming season.
– The stakeholder meeting used to always be held in person at the SEC’s HQ in Washington, DC, but the meeting has been virtual since Covid. - What is the flow of the meeting?
– The Corp Fin staff always begins the meeting with a summary of the previous proxy season. This includes a description of the staff’s Shareholder Proposal Task Force from the prior season, in addition to a summary of a year-to-year comparison of statistics related to the number of no-action letters received by the staff, how many no-action letters were granted and denied, new and unique proposals, the most common arguments made in no-action letters (both substantive and procedural) and which of those arguments were the most successful. The staff’s season statistics are measured from October 1st to September 30th.
– The staff then provides administrative reminders and comments on issues that popped up during the prior season. This includes any issues with submitting no-action letter requests via the online portal on the SEC’s website and a reminder to companies to inform the staff of any impending proxy print dates in order to assist the staff in the timing and review of pending no-action letter requests or certain procedural matters related to submitting no-action requests (i.e., not having to provide a copy of Rule 14a-8 in the submission or any copies of deficiency notices, if there are no procedural arguments made in the submitted request).
– The staff then turns the meeting over to the panelists for a roundtable discussion among the stakeholders. The staff will – at times – take part in the discussion if needed, but it is primarily an interactive discussion of issues brought to the table by the panelists representing the various issuer, proponent and law firm communities.
– The meeting has always been meant for an open discussion of issues, but Rule #1 for the meeting is that no specific mention or discussion of specific staff no-action letter decisions from the prior season – or identification or impugning of character, specific issuers, stockholder proponents, or law firms – will be tolerated.
– The meeting typically runs between 90 minutes to two hours depending on the agenda. - How substantive is the meeting?
– The meeting is typically very substantive, with the panelists bringing up various staff interpretations of Rule 14a-8 substantive and procedural issues from the prior season.
– Depending on how the prior season went – and what issues popped up during the season – the staff might evaluate an issue that is flagged and then address it in a Staff Legal Bulletin to be issued before the next proposal season. However, the staff doesn’t issue a Staff Legal Bulletin every year on shareholder proposals. - Do the people attending the meeting get to know each other?
– The staff invites panelists every year to take part in the meeting, with meeting invites generally going out to the most active Rule 14a-8 participants from their respective stakeholder base or to various thought leaders on shareholder proposal issues.
– Many of the participants work together throughout the proxy season on various proposals and no-action letters and have come to know each other quite well over the years. This helps the meeting discussion to be more cordial, professional and naturally flowing.
Authored by
Broc Romanek