Law360 Published Akin Gump Article on SEC’s Mixed Guidance on CSR Shareholder Proposals

Law360 has published the article “Understanding SEC’s Mixed Guidance On Apple Proposals,” written by Akin Gump counsel Kimberly Myers, partner Daniel Feldman and law clerk Thor Petersen, all members of the firm’s international trade practice. The article, which first appeared as a blog post on AG Deal Diary, discusses two shareholder proposals from Apple pertaining to corporate social responsibility (CSR) and whether companies may exclude such proposals from proxy materials.

The authors write that the SEC gave differing rulings on the two proposals. Despite those conclusions, Myers, Feldman and Petersen observe that the decisions appear consistent with a recently issued legal bulletin from the SEC that articulates “a framework for companies to apply to determine whether they may exclude shareholder proposals, including CSR-related proposals, from proxy materials under the ‘ordinary business’ exception (Rule 14a-8(i)(7)).”

The article proceeds to describe what is contained in Legal Bulletin 14I and how the SEC makes its determinations. It then discusses the specific proposals from Apple, which included one pertaining to greenhouse gas emissions and another on human rights. Myers, Feldman and Petersen conclude by suggesting that shareholder proposals “focus on policy issues that are sufficiently significant to the company and not request action that is too specific.” Such proposals may be found to address issues “that transcend day-to-day business matters without seeking to micromanage the company’s operations,” and thus may not be excluded from proxy materials under the “ordinary business” exception.

On the flip side, the article notes, if a company wants to exclude a CSR-related shareholder proposal under the “ordinary business” exception, companies are advised to demonstrate “either that the issue is not ‘sufficiently significant’ in light of their operations and/or that the proposal seeks to micromanage their day-to-day operations.”

To read the full article, please click here.