During this proxy season, we’ve seen a spate of lawsuits filed by proponents in reaction to companies attempting to exclude their shareholder proposals. In this announcement, Trillium highlights that it recently threatened to use a different tactic if the company didn’t include the shareholder proposal it had submitted.
Trillium states it would have used the pathway provided in the company’s bylaws to submit that proposal – as well as additional “good corporate governance” proposals – and would have conducted a solicitation campaign. In the face of that pressure, the company decided to include Trillium’s original shareholder proposal in its proxy.
Trillium’s announcement included these six items to highlight there are ways other than litigation to pressure companies that intend to exclude proposals:
“1. Protecting shareholder rights in a non-litigation form: Exclusion disputes are increasingly ending up in court. This outcome demonstrates that there can be credible and effective alternatives that protect shareholder rights.
2. Clarifying the risk landscape for companies: When a proposal is omitted in this SEC-created vacuum, companies should be aware that they face multiple legal, governance, and reputational risks – including independent proxy solicitations.
3. Reinforcing that process choices have consequences: This outcome underscores that attempts to exclude legitimate and valid shareholder proposals can trigger alternative, bylaw-based routes and the prospect of a broader ballot.
4. Setting an expectation for how exclusion disputes are handled: As the SEC’s posture shifts, the practical “rules of the road” are increasingly shaped by what companies do when challenged. This outcome sends a clear signal that exclusion in this new SEC regime is not a low-friction default and that investors can respond with credible escalation pathways.
5. Protecting the shareholder voice and vote in an uncertain environment: In a period of reduced regulatory refereeing, boards have more responsibility to avoid actions that constrain shareholder voice. This outcome highlights that shareholders can and will use multiple available mechanisms to ensure important issues reach the proxy.?
6. Demonstrating meaningful options without resorting to court: Investors are not confined to a binary choice between acquiescing to omission and filing suit. Without shifting the dispute to the judiciary, shareholders retain credible, well?established procedural tools, including independent solicitations, that can change the equation.”
The announcement also states, “We are proud to join other committed shareholders in the exploration of multiple paths to protect our rights as shareholders.”
Authored by
Broc Romanek