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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 240

[Release No. 34-95267; IC-34647; File No. S7-20-22]

RIN 3235-AM91

Substantial Implementation, Duplication, and Resubmission of Shareholder Proposals

Under Exchange Act Rule 14a-8

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

SUMMARY: The Securities and Exchange Commission (“Commission”) is proposing to update

certain substantive bases for exclusion of shareholder proposals under the Commission’s

shareholder proposal rule. The proposed amendments would amend the substantial

implementation exclusion to specify that a proposal may be excluded if the company has already

implemented the essential elements of the proposal. We also propose to specify when a proposal

substantially duplicates another proposal for purposes of the duplication exclusion. In addition,

we propose to amend the resubmission exclusion to provide that a proposal constitutes a

resubmission if it substantially duplicates another proposal. Under the proposed amendments,

for purposes of both the duplication exclusion and the resubmission exclusion, a proposal would

substantially duplicate another proposal if it addresses the same subject matter and seeks the

same objective by the same means.

DATES: Comments should be received on or before September 12, 2022.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic comments:

•

Use the Commission’s internet comment form

(https://www.sec.gov/rules/submitcomments.htm); or

•

Send an email to rule-comments@sec.gov. Please include File Number S7-20-22 on the

subject line.

Paper comments:

•

Send paper comments to Vanessa A. Countryman, Secretary, Securities and Exchange

Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number S7-20-22. This file number should be included on

the subject line if email is used. To help the Commission process and review your comments

more efficiently, please use only one method of submission. The Commission will post all

comments on the Commission’s website (https://www.sec.gov/rules/proposed.shtml).

Comments are also available for website viewing and printing in the Commission’s Public

Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the

hours of 10 a.m. and 3 p.m. Operating conditions may limit access to the Commission’s Public

Reference Room. All comments received will be posted without change. Persons submitting

comments are cautioned that we do not redact or edit personal identifying information from

comment submissions. You should submit only information that you wish to make available

publicly.

Studies, memoranda, or other substantive items may be added by the Commission or staff

to the comment file during this rulemaking. A notification of the inclusion in the comment file

of any such materials will be made available on our website. To ensure direct electronic receipt

of such notifications, sign up through the “Stay Connected” option at www.sec.gov to receive

notifications by email.

FOR FURTHER INFORMATION CONTACT: Kasey Robinson, Special Counsel, Office of

Chief Counsel, at (202) 551-3500, Division of Corporation Finance, U.S. Securities and

Exchange Commission, 100 F Street NE, Washington, DC 20549.

SUPPLEMENTARY INFORMATION: The Commission is proposing for public comment

amendments to 17 CFR 240.14a-8 (“Rule 14a-8”) under the Securities Exchange Act of 1934 [15

U.S.C. 78a et seq.] (“Exchange Act”).

TABLE OF CONTENTS

I. INTRODUCTION ................................................................................................................. 4

II. DISCUSSION OF THE PROPOSED AMENDMENTS .................................................. 10

A. Rule 14a-8(i)(10) – Substantial Implementation .............................................................. 10

1. Background .................................................................................................................... 10

2. Proposed Amendment .................................................................................................... 14

B. Rule 14a-8(i)(11) – Duplication........................................................................................ 17

1. Background .................................................................................................................... 17

2. Proposed Amendment .................................................................................................... 18

C. Rule 14a-8(i)(12) – Resubmissions .................................................................................. 21

1. Background .................................................................................................................... 21

2. Proposed Amendment .................................................................................................... 27

III. ECONOMIC ANALYSIS ................................................................................................... 30

A. Affected Parties ................................................................................................................. 32

B. Baseline ............................................................................................................................. 35

1. Regulatory Framework ................................................................................................... 35

2. Practices Related to Proposal Submissions .................................................................... 38

C. Potential Costs and Benefits ............................................................................................. 48

1. General Economic Considerations Relevant to Shareholder Proposals ......................... 48

2. Rule 14a-8(i)(10) – Substantial Implementation............................................................ 52

3. Rule 14a-8(i)(11) – Duplication ..................................................................................... 55

4. Rule 14a-8(i)(12) – Resubmissions ................................................................................ 58

D. Anticipated Effects on Efficiency, Competition, and Capital Formation ......................... 61

E. Reasonable Alternatives.................................................................................................... 63

1. Rule 14a-8(i)(10) – Substantial Implementation............................................................ 63

2. Rule 14a-8(i)(11) – Duplication ..................................................................................... 64

3. Rule 14a-8(i)(12) – Resubmissions ................................................................................ 65

F. Request for Comment ....................................................................................................... 66

IV. PAPERWORK REDUCTION ACT .................................................................................. 68

A. Summary of the Collection of Information ....................................................................... 68

B. Summary of the Proposed Amendments’ Effects on the Collection of Information ........ 69

C. Incremental and Aggregate Burden and Cost Estimates for the Proposed Amendments . 69

V. SMALL BUSINESS REGULATORY ENFORCEMENT FAIRNESS ACT ................ 72

VI. INITIAL REGULATORY FLEXIBILITY ACT ANALYSIS ........................................ 73

A. Reasons for, and Objectives of, the Proposed Action ....................................................... 73

B. Legal Basis ........................................................................................................................ 74

C. Small Entities Subject to the Proposed Rules ................................................................... 74

D. Projected Reporting, Recordkeeping, and Other Compliance Requirements ................... 75

E. Duplicative, Overlapping, or Conflicting Federal Rules .................................................. 76

F. Significant Alternatives .................................................................................................... 77

G. Request for Comment ....................................................................................................... 78

STATUTORY AUTHORITY AND TEXT OF PROPOSED RULE AMENDMENTS....... 79

INTRODUCTION

Exchange Act Rule 14a-8 requires companies that are subject to the federal proxy rules 1

to include shareholder proposals in their proxy statements to shareholders, subject to certain

procedural and substantive requirements. 2 The rule is intended to facilitate shareholders’ right

under state law to present their own proposals at a company’s meeting of shareholders and the

ability of all shareholders to consider and vote on such proposals. 3

Under Rule 14a-8, a company must include a shareholder’s proposal in the company’s

proxy materials unless the proposal fails to satisfy any of several specified substantive

requirements or the proposal or shareholder-proponent does not satisfy certain eligibility or

procedural requirements. Companies and shareholder-proponents do not always agree on the

application of these requirements. If a company intends to exclude a shareholder proposal from

This generally includes issuers with a class of securities registered under Section 12 of the Exchange Act and

issuers that are registered under the Investment Company Act of 1940 (“Investment Company Act”). Foreign

private issuers are exempt from the federal proxy rules. See 17 CFR 240.3a12-3(b). In addition, debt securities

registered under Section 12(b) are exempt from the federal proxy rules, with some exceptions. See 17 CFR

240.3a12-11(b).

17 CFR 240.14a-8. Unless otherwise noted, references to “shareholder proposal,” “shareholder proposals,”

“proposal,” or “proposals” refer to submissions made in reliance on Rule 14a-8.

See, e.g., Procedural Requirements and Resubmission Thresholds Under Exchange Act Rule 14a-8, Release No.

34-87458 (Nov. 5, 2019) [84 FR 66458 (Dec. 4, 2019)] (“2019 Proposing Release”) (“The rule . . . facilitates

shareholders’ traditional ability under state law to present their own proposals for consideration at a company’s

annual or special meeting, and it facilitates the ability of all shareholders to consider and vote on such proposals.”);

Alan Palmiter & Frank Partnoy, Corporations: A Contemporary Approach 482 (1st ed. 2010) (“The shareholder

proposal rule is a federal mechanism to facilitate state-created shareholder voting rights”).

its proxy materials, it is required under Rule 14a-8(j)(1) to “file its reasons” for doing so with the

Commission.4 These notifications are generally submitted in the form of no-action requests,

with companies seeking the staff’s concurrence that they may exclude a shareholder proposal

under one or more of the procedural or substantive bases under Rule 14a-8. For many years the

staffs of the Division of Corporation Finance and the Division of Investment Management, as

applicable, have engaged through the no-action letter process in the informal practice of

expressing whether they would recommend enforcement action to the Commission if a company

excludes a proposal from its proxy materials. 5 The staff offers its views in this manner to assist

companies and shareholder-proponents in complying with the federal proxy rules. 6

The shareholder proposal process has become a cornerstone of engagement between

shareholders and company management. 7 Shareholder proposals provide an important

mechanism for investors to express their views, provide feedback to companies, exercise

oversight of management, and raise important issues for the consideration of their fellow

shareholders in the company’s proxy statement. Moreover, investor support for shareholder

proposal campaigns over the years has helped to shape many current corporate practices and

policies, such as annual director elections, majority vote standards for director elections, and

proxy access rights for shareholders. 8

17 CFR 240.14a-8(j)(1).

See Statement of Informal Procedures for the Rendering of Staff Advice With Respect to Shareholder Proposals,

Release No. 34-12599 (July 7, 1976) [41 FR 29989 (July 20, 1976)] (“Statement of Informal Procedures”).

See id. No-action letters issued under Rule 14a-8 by the Divisions of Corporation Finance and Investment

Management are available at https://www.sec.gov/corpfin/shareholder-proposals-no-action and

https://www.sec.gov/investment/investment-management-no-action-letters, respectively.

See infra note 8.

See, e.g., Emiliano M. Catan & Marcel Kahan, The Never-Ending Quest for Shareholder Rights: Special Meetings

and Written Consent, 99 B.U. L. REV. 743 (2019), available at

https://www.bu.edu/bulawreview/files/2019/06/CATAN-KAHAN.pdf (discussing the impact of shareholder

activists on the elimination of staggered boards and other governance matters); Yaron Nili & Kobi Kastiel, The

Since Rule 14a-8 was adopted in 1942, 9 the Commission has amended the rule on

numerous occasions, as necessary to improve the operation of the shareholder proposal process

and to provide its views on the application of the rule’s procedural and substantive

requirements. 10 The most recent amendments to Rule 14a-8, adopted on September 23, 2020,

relate to certain procedural requirements as well as the resubmission exclusion under Rule

14a-8(i)(12), as discussed below in Section II.C.1. 11

The proposed amendments are intended to improve the shareholder proposal process

based on modern developments and the staff’s observations. The amendments we propose to

each of Rule 14a-8(i)(10), 14a-8(i)(11), and 14a-8(i)(12) would facilitate shareholder suffrage

and communication between shareholders and the companies they own, as well as among a

company’s shareholders, on important issues. In this regard, the proposed amendments are

intended to “insure that public investors receive full and accurate information about all security

holder proposals that are to, or should, be submitted to them for their action . . . [and] have . . .

Giant Shadow of Corporate Gadflies, 94 S. CAL. L. REV. 569, 571–76 (2021), available at

https://www.sec.gov/comments/s7-23-19/s72319-6733874-207512.pdf (discussing the influence of corporate

“gadflies” over corporate governance practices); Kosmas Papadopoulos, ISS Analytics, The Long View: The Role of

Shareholder Proposals in Shaping U.S. Corporate Governance (2000-2018), HARVARD LAW SCHOOL FORUM ON

CORPORATE GOVERNANCE (Feb. 6, 2019), https://corpgov.law.harvard.edu/2019/02/06/the-long-view-the-role-ofshareholder-proposals-in-shaping-u-s-corporate-governance-2000-2018/ (discussing the impact of shareholder

proposals on corporate governance).

Release No. 34-3347 (Dec. 18, 1942) [7 FR 10655 (Dec. 22, 1942)]. At the time, the rule did not set forth

substantive bases for exclusion. It provided as follows: “In the event that a qualified security holder of the issuer has

given the management reasonable notice that such security holder intends to present for action at a meeting of

security holders of the issuer a proposal which is a proper subject for action by the security holders, the management

shall set forth the proposal . . . .”

See Amendments To Rules On Shareholder Proposals, Release No. 34-40018 (May 21, 1998) [63 FR 29106 (May

28, 1998)] (“1998 Adopting Release”) (noting that the Commission would “continue to explore ways to improve the

[shareholder proposal] process as opportunities present themselves”).

Procedural Requirements and Resubmission Thresholds Under Exchange Act Rule 14a-8, Release No. 34-89964

(Sept. 23, 2020) [85 FR 70240 (Nov. 4, 2020)] (“2020 Adopting Release”).

the opportunity to vote” on such proposals. 12 The proposed amendments also would enhance the

ability of shareholders to express diverse objectives and various ways to achieve those objectives

through the shareholder proposal process. In addition, the proposed amendments would set forth

a clearer framework for the application of certain of the rule’s substantive bases for the exclusion

of proposals and should thereby provide greater certainty and transparency to shareholders and

companies as they evaluate whether these bases would apply to particular proposals.

We are proposing modifications to, and seeking public comment on, three of the rule’s

substantive bases for exclusion: Rule 14a-8(i)(10), Rule 14a-8(i)(11), and Rule 14a-8(i)(12). In

addition, while we do not propose to amend Rule 14a-8(i)(7), 13 the ordinary business exclusion,

at this time, we reaffirm the standards the Commission articulated in 1998 for determining

whether a proposal relates to ordinary business for purposes of Rule 14a-8(i)(7). 14

As shown in Table 1, the bases for exclusion in Rule 14a-8(i)(10), Rule 14a-8(i)(11), and

Rule 14a-8(i)(12) collectively represent a significant percentage of the no-action requests the

staff has received under Rule 14a-8. 15

See Statement of Informal Procedures, supra note 5.

17 CFR 240.14a-8(i)(7).

In the 1998 Adopting Release, supra note 10, the Commission stated: “The policy underlying the ordinary

business exclusion rests on two central considerations. The first relates to the subject matter of the proposal. . . .

[P]roposals relating to [ordinary business] matters but focusing on sufficiently significant social policy issues . . .

generally would not be considered to be excludable, because the proposals would transcend the day-to-day business

matters and raise policy issues so significant that it would be appropriate for a shareholder vote. . . . The second

consideration relates to the degree to which the proposal seeks to ‘micro-manage’ the company by probing too

deeply into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an

informed judgment.” The Commission also clarified that specific methods, time-frames, or detail do not necessarily

amount to micromanagement and are not dispositive of excludability.

Table 1 shows requests received by the Division of Corporation Finance and the Division of Investment

Management from October 1 through June 30 of each time period shown. The percentages in parentheses in each

column of the table represent percentages of the total number of no-action requests that assert Rule 14a-8(i)(10),

Rule 14a-8(i)(11), and Rule 14a-8(i)(12), respectively (as noted in each respective “Number of Requests” row).

Conformed to Federal Register version

Table 1

2020-2021

(Total: 266)

Rule 14a-8(i)(10) – Substantial Implementation

Number of Requests

110

Granted on (i)(10)

36 (33%)

Granted on Other Basis

10 (9%)

Denied

31 (28%)

Withdrawn

33 (30%)

Rule 14a-8(i)(11) – Duplication

Number of Requests

Granted on (i)(11)

3 (25%)

Granted on Other Basis

1 (8%)

Denied

5 (42%)

Withdrawn

3 (25%)

Rule 14a-8(i)(12) – Resubmissions

Number of Requests

Granted on (i)(12)

1 (50%)

Granted on Other Basis

1 (50%)

Denied

Withdrawn

2019-2020

(Total: 238)

2018-2019

(Total: 226)

45 (50%)

8 (9%)

24 (27%)

13 (14%)

37 (45%)

6 (7%)

21 (25%)

19 (23%)

4 (44%)

1 (11%)

4 (44%)

7 (44%)

6 (38%)

2 (13%)

1 (6%)

1 (33%)

1 (100%)

First, we propose to amend Rule 14a-8(i)(10), the substantial implementation exclusion,

which allows companies to exclude a shareholder proposal that “the company has already

substantially implemented.” 16 This standard has remained substantively unchanged since

1983. 17 We propose to amend this rule to specify that a proposal may be excluded if “the

company has already implemented the essential elements of the proposal.” The proposed

amendment would provide a clearer standard for exclusion and promote more consistent and

predictable determinations regarding the exclusion of proposals under the rule.

17 CFR 240.14a-8(i)(10).

See Amendments to Rule 14a-8 Under the Securities Exchange Act of 1934 Relating to Proposals by Security

Holders, Release No. 34-20091 (Aug. 16, 1983) [48 FR 38218 (Aug. 23, 1983)] (“1983 Adopting Release”).

Second, we propose to amend Rule 14a-8(i)(11), the duplication exclusion, which allows

companies to exclude a shareholder proposal that “substantially duplicates another proposal

previously submitted to the company by another proponent that will be included in the

company’s proxy materials for the same meeting.” 18 The duplication exclusion has not been

substantively updated by the Commission since its adoption in 1976. 19 The proposed

amendment would specify that a proposal “substantially duplicates” another proposal if it

“addresses the same subject matter and seeks the same objective by the same means.”

Third, we propose to amend Rule 14a-8(i)(12), the resubmission exclusion, which allows

companies to exclude a shareholder proposal that “addresses substantially the same subject

matter as a proposal, or proposals, previously included in the company’s proxy materials within

the preceding five calendar years” if the matter was voted on at least once in the last three years

and did not receive at least:

•

5 percent of the votes cast if previously voted on once;

•

15 percent of the votes cast if previously voted on twice; or

•

25 percent of the votes cast if previously voted on three or more times. 20

Although the resubmission thresholds themselves were reviewed and amended by the

Commission in 2020, 21 the “substantially the same subject matter” test has been in place since

1983. 22 We propose to amend the resubmission exclusion to provide that a resubmission is a

shareholder proposal that “substantially duplicates” a proposal previously included in a

17 CFR 240.14a-8(i)(11).

See Adoption of Amendments Relating to Proposals by Security Holders, Release No. 34-12999 (Nov. 22, 1976)

[41 FR 52994 (Dec. 3, 1976)] (“1976 Adopting Release”).

17 CFR 240.14a-8(i)(12).

See 2020 Adopting Release, supra note 11.

See 1983 Adopting Release, supra note 17.

company’s proxy materials, which would replace the current “substantially the same subject

matter” test. This proposed amendment would align the “resubmission” standard with the

“duplication” standard under Rule 14a-8(i)(11), in consideration of the similar objectives of

these exclusions. As noted above with respect to the proposed amendment to Rule 14a-8(i)(11),

we also propose to specify for purposes of Rule 14a-8(i)(12) that a proposal “substantially

duplicates” another proposal if it “addresses the same subject matter and seeks the same

objective by the same means.”

We welcome feedback and encourage interested parties to submit comments on any or all

aspects of the proposed amendments. When commenting, it would be most helpful if you

include the reasoning behind your position or recommendation.

II.

DISCUSSION OF THE PROPOSED AMENDMENTS

Rule 14a-8(i)(10) – Substantial Implementation

Background

Rule 14a-8(i)(10), the substantial implementation exclusion, allows a company to exclude

a shareholder proposal that “the company has already substantially implemented.” 23 The

purpose of the exclusion is to “avoid the possibility of shareholders having to consider matters

which have already been favorably acted upon by the management.” 24 During the 2021, 2020,

and 2019 proxy seasons, the staff received 110, 90, and 83 no-action requests, respectively,

asserting the substantial implementation exclusion. Of these, the staff concurred in the exclusion

17 CFR 240.14a-8(i)(10).

Proposals by Security Holders, Release No. 34-12598 (July 7, 1976) [41 FR 29982, at 29985 (July 20, 1976)]

(“1976 Proposing Release”).

of 36, 45, and 37 of the requests, respectively, on the basis of the substantial implementation

exclusion.

Prior to 1983, Rule 14a-8(i)(10) did not include a concept of “substantial

implementation,” and exclusion under the rule was permitted only in those cases in which a

proposal had been fully effected. 25 In 1983, however, the Commission announced an

interpretive change to permit exclusion of proposals that had been “substantially implemented by

the issuer.” 26 The Commission acknowledged that the interpretive position would “add more

subjectivity to the application of the provision” but believed the change was necessary as the

“previous formalistic application of this provision defeated its purpose,” 27 given that the

exclusion was available only when a proposal had been fully effected—that is, when a company

had taken all of the actions requested by the proposal. 28 In 1998 the Commission adopted the

current language of Rule 14a-8(i)(10) to reflect the interpretation it announced in 1983. 29 The

Commission has not revised Rule 14a-8(i)(10) since that time, except to add a note to paragraph

(i)(10) to clarify the status of shareholder proposals that seek an advisory shareholder vote on

executive compensation or that relate to the frequency of shareholder votes approving executive

compensation. 30

At the time, the rule text provided for exclusion where “the proposal has been rendered moot.”

See 1983 Adopting Release, supra note 17.

Id.

See Proposed Amendments to Rule 14a-8 Under the Securities Exchange Act of 1934 Relating to Proposals by

Security Holders, Release No. 34-19135 (Oct. 14, 1982) [47 FR 47420 (Oct. 26, 1982)], at 47429 (“1982 Proposing

Release”).

See 1998 Adopting Release, supra note 10.

See Shareholder Approval of Executive Compensation and Golden Parachute Compensation, Release No. 3463768 (Jan. 25, 2011) [76 FR 6010 (Feb. 2, 2011)].

Because of the fact-intensive nature of the rule, over the years the staff has applied

various, but similar, interpretive frameworks to determine whether a shareholder proposal has

been substantially implemented by a company. For instance, the staff has indicated that a

“determination that the [c]ompany has substantially implemented the proposal depends upon

whether [the company’s] particular policies, practices and procedures compare favorably with

the guidelines of the proposal.” 31 The staff also has considered whether the company has

addressed a proposal’s underlying concerns and whether the essential objectives of a proposal

have been met. When considering whether a proposal has been substantially implemented,

companies, shareholder-proponents, and the staff sometimes divide a proposal into its elements

and evaluate which of them have been implemented. However, a proposal may be viewed as

substantially implemented even if a company has not implemented all of the proposal’s

elements. 32

We continue to believe that it is appropriate under Rule 14a-8(i)(10) to apply a

“substantial” implementation standard, rather than the “full” implementation standard that was in

place prior to 1983. We recognize, however, that there are many potential interpretations of

what a substantial implementation standard may require, on a spectrum from minimal

See Texaco, Inc. (Mar. 28, 1991).

See, e.g., WD-40 Co. (Sept. 27, 2016) (concurring under Rule 14a-8(i)(10) in the company’s exclusion of a

proposal requesting that the company adopt a proxy access bylaw provision and identifying certain “essential

elements for substantial implementation” because the company represented that “the board has adopted a proxy

access bylaw that addresses the proposal’s essential objective,” even though a number of the company’s provisions

differed from the proposal’s terms); NVR, Inc. (Feb. 12, 2016, recons. granted Mar. 25, 2016) (concurring, on

reconsideration, under Rule 14a-8(i)(10) in the exclusion of a proposal seeking four specific revisions to the

company’s existing proxy access bylaw provision where the company amended the provision to reduce the

minimum ownership threshold from 5 percent to 3 percent and increased the permissible recall period for loaned

shares from three to five business days, but did not eliminate the 20-person limit on the number of shareholders that

may aggregate their shareholdings to form a nominating group or eliminate the requirement for nominating

shareholders to represent that they will continue to own the shares required to meet the minimum ownership

threshold for at least one year following the meeting).

implementation to all but full implementation. In view of the staff’s experience with the

substantial implementation exclusion, we are concerned that the current rule may be difficult to

apply in a consistent and predictable manner. 33 Moreover, we believe that the language of the

current rule is insufficiently focused on the specific actions requested by a proposal—i.e., its

elements—and, thus, it may not serve the original purpose of the exclusion to avoid the

consideration of proposals on which a company already has “favorably acted.” 34

Additionally, some observers have expressed concerns about variation and potential

unpredictability in the operative principles guiding the staff’s interpretation of the substantial

implementation exclusion. 35 For example, with respect to shareholder proposals requesting a

report, some have observed that the staff may find a proposal substantially implemented based

on “voluminous but unresponsive reporting” that does not answer the core questions raised by

the proposal. 36 Some shareholders also have expressed concerns about the difficulty of

“threading the needle” when seeking to draft a proposal that does not “micro-manage” the

Compare Apple Inc. (Nov. 19, 2018) (concurring under Rule 14a-8(i)(10) in the exclusion of a proposal

requesting that the company establish a board committee on international policy to oversee policies regarding

matters specified in the proposal, where the company argued that its existing board committees include

responsibility for the specified matters) and Verizon Communications Inc. (Feb. 19, 2019) (concurring under Rule

14a-8(i)(10) in the exclusion of a proposal requesting that the company establish a board committee on public policy

and social responsibility to oversee policies regarding matters specified in the proposal, where the company argued

that its existing board committees include responsibility for the specified matters) with Exxon Mobil Corp. (Apr. 2,

2019) (not concurring in the exclusion of a proposal requesting that the company establish a board committee on

climate change, where the company argued that the board’s public issues and contributions committee substantially

implemented the proposal under Rule 14a-8(i)(10) because its responsibilities included oversight of climate change

issues).

1976 Proposing Release, supra note 24, at 29985.

See, e.g., Letter to John Coates, Acting Director, Division of Corporation Finance, U.S. Securities and Exchange

Commission, from Sanford Lewis, Director, Shareholder Rights Group, dated February 4, 2021, available at

https://www.corpgov.net/2021/02/reform-no-action-process/ (“February 4, 2021 Letter”); Letter to Allison Lee,

Acting Chair, U.S. Securities and Exchange Commission, from Sanford Lewis, Director, Shareholder Rights Group,

Mindy Lubber, Ceres, Lisa Woll, The Forum for Sustainable and Responsible Investment, and Josh Zinner,

Interfaith Center on Corporate Responsibility, dated January 26, 2021, available at

https://www.iccr.org/sites/default/files/resources_attachments/chair_lee_letter_0.pdf (“January 26, 2021 Letter”).

See, e.g., February 4, 2021 Letter, supra note 35.

company under Rule 14a-8(i)(7) 37 but still provides sufficient specificity and direction to avoid

exclusion as “substantially implemented” under Rule 14a-8(i)(10) when a company had not

implemented its essential elements. 38

Proposed Amendment

In view of these considerations, we are proposing an amendment to Rule 14a-8(i)(10) that

would maintain a “substantial” implementation standard and provide a clearer framework for its

application. The proposed rule would state that a proposal may be excluded as substantially

implemented “[i]f the company has already implemented the essential elements of the proposal.”

Whether a proposal has been substantially implemented necessarily involves a factual

determination to be made on a case-by-case basis. We believe that an analysis that focuses on

the specific elements of a proposal would provide a reliable indication of whether the actions

taken to implement a proposal are sufficiently responsive to the proposal such that it has been

substantially implemented.

Determining whether a proposal could be excluded under the proposed amendment

would still require a degree of substantive analysis—a determination of which elements of the

proposal are the “essential elements” and an analysis of whether those elements have been

addressed. In determining the essential elements of a proposal, we anticipate that the degree of

specificity of the proposal and of its stated primary objectives 39 would guide the analysis. The

See 1998 Adopting Release, supra note 10.

See Sanford Lewis, Shareholder Rights Group, SEC Resets the Shareholder Proposal Process, HARVARD LAW

SCHOOL FORUM ON CORPORATE GOVERNANCE (Dec. 23, 2021), https://corpgov.law.harvard.edu/2021/12/23/secresets-the-shareholder-proposal-process/; January 26, 2021 Letter, supra note 35. See also Staff Legal Bulletin No.

14L, Section B.3 (Nov. 3, 2021).

Proponents sometimes attempt to identify the primary objectives, elements, or features of a proposal. We expect

that the more objectives, elements, or features a proponent identifies, the less essential the staff would view each of

them.

proposed amendment would permit a shareholder proposal to be excluded as substantially

implemented only if the company has implemented all of its essential elements.

Under the proposed amendment, a proposal need not be rendered entirely moot, or be

fully implemented in exactly the way a proponent desires, in order to be excluded. A company

may be permitted to exclude a proposal it has not implemented precisely as requested if the

differences between the proposal and the company’s actions are not essential to the proposal.

Where a proposal contains more than one element, every element of the proposal need not be

implemented, although each essential element would need to be implemented. In instances

where a proposal contains only one essential element, that essential element would need to be

implemented in order to exclude the shareholder proposal under the proposed amendment.

For example, the staff historically has concurred in the exclusion, under Rule

14a-8(i)(10), of proposals seeking the adoption of a proxy access provision that allows an

unlimited number of shareholders who collectively have owned 3 percent of the company’s

outstanding common stock for 3 years to nominate up to 25 percent of the company’s directors,

where the company had adopted a proxy access bylaw allowing a shareholder or group of up to

20 shareholders owning 3 percent of its common stock continuously for 3 years to nominate up

to 20 percent of the board. 40 Under the proposed amendment, because the ability of an unlimited

number of shareholders to aggregate their shareholdings to form a nominating group generally

would be an essential element of the proposal, exclusion would not be appropriate.

As another example, where a proposal calls for a company to issue a report about a

particular topic, a company’s existing reports or disclosures about that topic may not implement

the essential elements of the proposal, especially if the plain language of the proposal explains

See, e.g., Oracle Corp. (Aug. 11, 2016).

how the company’s existing reports or disclosures are insufficient. Additionally, where a

proposal requests a report from the company’s board of directors (such as disclosure regarding

the board’s assessment of a topic, or the board’s process in approaching a topic), the staff may

determine that the company has not implemented an essential element of the proposal if the

report comes from management rather than the board, if the proposal demonstrates a clear

emphasis on reporting directly from the board.

We believe that the proposed amendment would facilitate shareholder suffrage, provide a

more objective and specific framework for the substantial implementation exclusion, assist the

staff in more efficiently reviewing and responding to no-action requests, and benefit shareholders

and companies by promoting more consistent and predictable determinations. By providing

greater certainty and transparency with respect to the standard to be applied under the rule, the

proposed amendment would aid shareholder-proponents, in drafting their proposals, and

companies, in determining whether a proposal may be excludable under the rule.

Request for Comment

Should we amend the standard for exclusion under Rule 14a-8(i)(10), as proposed, to

provide that a proposal may be excluded if “the company has already implemented the

essential elements of the proposal”?

Would the proposed amendment benefit shareholder-proponents and companies by

promoting more consistent and predictable determinations regarding application of the

substantial implementation exclusion? What potential costs should we consider?

Under the proposed amendment, the analytical framework would focus on a proposal’s

essential elements. The determination of which elements of a proposal are essential

under that framework would be guided by the degree of specificity of the proposal and of

its stated primary objectives. Is this an appropriate standard to identify a proposal’s

essential elements? Are there other potential approaches we should consider?

Rule 14a-8(i)(11) – Duplication

Background

Rule 14a-8(i)(11), the duplication exclusion, provides that a shareholder proposal may be

excluded if it “substantially duplicates another proposal previously submitted to the company by

another proponent that will be included in the company’s proxy materials for the same

meeting.” 41 During the 2021, 2020, and 2019 proxy seasons, the staff received 12, 9, and 16 noaction requests, respectively, asserting the duplication exclusion. Of these, the staff concurred in

the exclusion of 3, 4, and 7 of the requests, respectively, on the basis of the duplication

exclusion.

As the Commission explained when it formally adopted the duplication exclusion in

1976, “[t]he purpose of the provision is to eliminate the possibility of shareholders having to

consider two or more substantially identical proposals submitted to an issuer by proponents

acting independently of each other.” 42 Aside from minor stylistic revisions to the provision in

1998, 43 the Commission has not updated the provision since its adoption.

Historically, in evaluating whether proposals are substantially duplicative under Rule

14a-8(i)(11), the staff has considered whether the proposals share the same “principal thrust” or

“principal focus.” 44 Proposals that differ as to terms and/or scope may nevertheless be deemed

17 CFR 240.14a-8(i)(11).

See 1976 Adopting Release, supra note 19. Prior to the Commission’s formal adoption of the duplication

exclusion in 1976, the exclusion “existed . . . on an informal basis.” Id.

See 1998 Adopting Release, supra note 10.

See, e.g., Pacific Gas & Electric Co. (Feb. 1, 1993) (staff response letter noting that exclusion under Rule

14a-8(i)(11) was not appropriate because the second proposal’s “principal thrust” differed from the first proposal’s

“principal focus”).

substantially duplicative if the principal thrust or focus is the same. The staff’s experience with

Rule 14a-8(i)(11) through the no-action letter process has demonstrated that this analytical

framework can be difficult to apply in a consistent and predictable manner because, as with the

“substantial implementation” standard under current Rule 14a-8(i)(10), there are numerous

potential approaches to evaluating whether a proposal is “substantially” duplicative as well as to

discerning a proposal’s principal thrust or focus. The current Rule 14a-8(i)(11) framework can

necessitate fact-intensive, case-by-case judgments in determining a proposal’s principal thrust or

focus, and delineating the principal thrust or focus too broadly or too narrowly can lead to underor over-inclusion of shareholder proposals, respectively.

We also note that, because Rule 14a-8(i)(11) permits exclusion only of the later-received

proposal, it operates to the advantage of the first shareholder to submit a proposal that is

substantially duplicative of another proposal submitted for the same meeting. Thus, the rule may

create an incentive to submit a proposal quickly. As a result, the rule enables a shareholder who

is first to submit a proposal for a company’s meeting to preempt the consideration of laterreceived proposals, even though a later proposal (if it had been voted on) may have received

more shareholder support. Accordingly, we are concerned that the current duplication standard

may unduly constrain shareholder suffrage by limiting shareholder-proponents’ ability to engage

with the companies whose securities they own and with other shareholders by presenting for

consideration competing approaches to addressing important issues.

Proposed Amendment

We are proposing an amendment to Rule 14a-8(i)(11) providing that a proposal

“substantially duplicates” another proposal if it “addresses the same subject matter and seeks the

same objective by the same means.”

For example, consider the following two proposals: (1) a proposal requesting that the

company publish in newspapers a detailed statement of each of its direct or indirect political

contributions or attempts to influence legislation; and (2) a proposal requesting a report to

shareholders on the company’s process for identifying and prioritizing legislative and regulatory

public policy advocacy activities. In considering the application of the duplication exclusion to

these proposals, the staff previously had concurred that the proposals were substantially

duplicative when analyzing the principal thrust or focus of the proposals. 45 Under the proposed

amendment, however, these proposals would not be deemed substantially duplicative because,

although they both address the subject matter of the company’s political and lobbying

expenditures, they seek different objectives by different means.

We believe the proposed amendment would provide a clearer standard for exclusion that

would assist the staff in more efficiently reviewing and responding to no-action requests and

would benefit shareholder-proponents and companies by promoting more predictable and

consistent determinations regarding the exclusion of proposals. By providing greater certainty

and transparency with respect to the standards to be applied under the rule, the proposed

amendment would aid shareholder-proponents, in drafting their proposals, and companies, in

determining whether a proposal may be excludable under the rule. Moreover, the proposed

amendment would promote more consistent outcomes when comparing a given proposal against

proposals submitted for the same shareholder meeting for purposes of Rule 14a-8(i)(11). 46

As discussed above, we recognize that Rule 14a-8(i)(11) operates to the advantage of the

first shareholder to submit a proposal. By providing for exclusion only where a proposal

See Pfizer Inc. (Feb. 17, 2012).

As discussed in Section II.C below, we are proposing a similar amendment to Rule 14a-8(i)(12) in consideration

of the similar objectives of these exclusions.

“addresses the same subject matter and seeks the same objective by the same means,” the

proposed amendment would reduce incentives for proponents to submit a proposal quickly,

reduce incentives for proponents to attempt to preempt other proposals those proponents do not

agree with, and facilitate the consideration at the same shareholder meeting of multiple

shareholder proposals that present different means to address a particular issue. In other words,

the proposed amendment would enable the consideration by a company’s shareholders of laterreceived proposals that may be similar to and/or address the same subject matter as an earlierreceived proposal but which seek different objectives or offer different means of addressing the

same matter.

At the same time, we are aware of the possibility that the proposed amendment could

result in the inclusion in a company’s proxy materials of multiple shareholder proposals dealing

with the same or similar issue. This outcome could cause shareholder confusion and may lead to

conflicting or inconsistent results and implementation challenges for companies if shareholders

approve multiple similar, although not duplicative, proposals. Although we believe that the

benefits of the proposed amendment would justify these potential impacts, we seek comment on

the possible implications for companies and shareholders.

Request for Comment

Should we amend the standard for exclusion under Rule 14a-8(i)(11), as proposed, to

specify that a proposal “substantially duplicates” another proposal if it “addresses the

same subject matter and seeks the same objective by the same means”?

Would the proposed amendment benefit shareholder-proponents and companies by

promoting more consistent and predictable determinations regarding application of the

duplication exclusion? What potential costs should we consider?

Would the proposed amendment result in shareholder confusion or the inclusion and

adoption of multiple contradictory proposals dealing with the same or similar issue? If

so, what would be the implications for shareholders and companies? How would

companies deal with any resulting implementation challenges? Are there potential

measures we could consider to mitigate these impacts? For example, should we adopt a

numerical limit on the number of shareholder proposals that address the same subject

matter to be included in the proxy statement? If so, what numerical limit would be

appropriate, how should such a limit be imposed, and what would be the anticipated costs

of such an approach?

We anticipate that the proposed amendment would reduce the first-in-time advantage for

the first shareholder to submit a proposal on a given topic. What is the impact of the

first-in-time advantage on the ability of different shareholders to submit proposals

addressing the same topic?

Aside from a first-in-time standard, are there alternative objective standards that should

be applied to determine which proposal(s) to exclude when a company has received

proposals that are substantially duplicative under Rule 14a-8(i)(11), such as the number

of shares owned or the number of co-proponents?

Rule 14a-8(i)(12) – Resubmissions

Background

Rule 14a-8(i)(12), the resubmission exclusion, provides that a shareholder proposal may

be excluded from a company’s proxy materials if it “addresses substantially the same subject

matter as a proposal, or proposals, previously included in the company’s proxy materials within

the preceding five calendar years” if the matter was voted on at least once in the last three years

and received support below specified vote thresholds on the most recent vote. 47 During the

2021, 2020, and 2019 proxy seasons, the staff received 2, 3, and 1 no-action requests,

respectively, asserting the resubmission exclusion. 48 Of these, the staff concurred in the

exclusion of 1, 0, and 1 of the requests, respectively, on the basis of the resubmission exclusion.

Since 1948, the Commission has not required a company to include a shareholder

proposal in its proxy statement if “substantially the same proposal” previously had been

submitted for a shareholder vote and did not receive a specified minimum percentage of votes

upon its most recent submission.49 The Commission explained that the purpose of the provision

was “to relieve the management of the necessity of including proposals which have been

previously submitted to security holders without evoking any substantial security holder interest

therein.” 50 For many years following adoption of the provision, the staff interpreted the phrase

“substantially the same proposal” to mean one that is virtually identical (in form as well as

substance) to a proposal previously included in the issuer’s proxy materials. 51

Some commentators had asserted that the provision failed to accomplish its stated

purpose because proponents were able to evade exclusion of their proposals by simply recasting

the form of the proposal, expanding its coverage, or by otherwise changing its language in a

manner that precluded one from saying that the proposal is virtually identical to a prior

17 CFR 240.14a-8(i)(12).

From October 15, 2021 through May 10, 2022, the staff received 11 no-action requests asserting the resubmission

exclusion, which represents an increase in requests compared to the 2020 and 2021 proxy seasons. This increase is

likely due to the higher resubmission thresholds under Rule 14a-8(i)(12) adopted in the 2020 Adopting Release,

supra note 11, as discussed below.

See Adoption of Amendments to Proxy Rules, Release No. 34-4185 (Nov. 5, 1948) [13 FR 6678 (Nov. 13,

1948)].

See Notice of Proposal to Amend Proxy Rules, Release No. 34-4114 (July 6, 1948) [13 FR 3973 (July 14, 1948)].

See 1982 Proposing Release, supra note 28.

proposal. 52 In view of these concerns, in 1976 the Commission proposed to revise the standard

for exclusion of a proposal under the provision from “substantially the same proposal” to

“substantially the same subject matter.” 53 Some commenters had urged the Commission not to

adopt the proposed amendment, arguing that: (1) abuses of the existing provision had been rare

and did not justify the type of radical revision proposed; (2) the new standard would be almost

impossible to administer because of the subjective determinations that it would require; and (3) it

would unduly constrain shareholder suffrage because of its possible “umbrella” effect (i.e., it

could be used to omit proposals that had only a vague relation to the subject matter of a prior

proposal that received little shareholder support). 54 After considering public comment, the

Commission determined not to adopt the proposed revision, noting that “the potential drawbacks

of the new provision appear to outweigh the prospective benefits.” 55

In 1982, the Commission again proposed the same revision considered in 1976 56 and, in

1983, adopted the proposed revision, noting that “this change is necessary to signal a clean break

from the strict interpretive position applied to the existing provision.” 57 As amended, the

provision permitted the exclusion of proposals dealing with “substantially the same subject

matter” as proposals submitted in prior years that received support below specified vote

thresholds.

Id.; see also 1976 Proposing Release, supra note 24.

See 1976 Proposing Release, supra note 24.

See id.; 1976 Adopting Release, supra note 19.

See 1976 Adopting Release, supra note 19.

See 1982 Proposing Release, supra note 28.

See 1983 Adopting Release, supra note 17, at 38221.

Commenters supporting the 1983 amendment viewed it as an appropriate response to

counter the abuse of the shareholder proposal process by “certain proponents who make minor

changes in proposals each year so that they can keep raising the same issue despite the fact that

other shareholders have indicated by their votes that they are not interested in that issue.” 58

Commenters who opposed the change argued that the revision was too broad and that it could be

used to exclude proposals that had only a vague relation to an earlier proposal. Noting these

concerns, the Commission explained that, while “interpretation of the new provision will

continue to involve difficult subjective judgments, . . . those judgments will be based upon a

consideration of the substantive concerns raised by a proposal rather than the specific language

or actions proposed to deal with those concerns” such that “an improperly broad interpretation of

the . . . rule will be avoided.” 59

The “substantially the same subject matter” test has been in place since 1983. However,

the Commission has revisited the minimum vote thresholds necessary for resubmission under the

provision from time to time 60 and increased the resubmission thresholds in 2020 (the “2020

amendments”). 61 Prior to the 2020 amendments, Rule 14a-8(i)(12) required a proposal to

receive at least: (i) 3 percent of the vote if previously voted on once; (ii) 6 percent of the vote if

previously voted on twice; or (iii) 10 percent of the vote if previously voted on three or more

times. The 2020 amendments increased the levels of support a shareholder proposal must

receive to be eligible for resubmission at the same company’s future shareholders’ meetings

See id.

See Adoption of Amendments to Proxy Rules, Release No. 34-4979 (Jan. 6, 1954) [19 FR 246 (Jan. 14, 1954)];

1983 Adopting Release, supra note 17; Proposals of Security Holders, Release No. 34-22625 (Nov. 14, 1985) [50

FR 48180 (Nov. 22, 1985)]; 1998 Adopting Release, supra note 10.

See 2020 Adopting Release, supra note 11 (the “2020 amendments”).

from 3, 6, and 10 percent to 5, 15, and 25 percent, respectively. We continue to assess the

impact of these amendments.

While the Commission did not otherwise propose changes to the wording of the rule in

connection with the 2020 amendments, it did request comment on whether it should change the

Rule 14a-8(i)(12) standard or its application, such as reverting to the pre-1983 “substantially the

same proposal” standard. The six commenters who responded to the request for comment were

largely supportive of narrowing the standard for exclusion if the Commission raised the

resubmission thresholds. 62 For example, one commenter suggested that, if the 2020 amendments

raised the resubmission thresholds, the Commission should consider whether to “narrow the

definition of ‘Resubmissions’” because “the higher resubmission thresholds could expand the

ability of a shareholder to preempt future proposals by submitting (intentionally or not) an

unpopular idea that ‘addresses substantially the same subject matter’ as an idea that many

shareholders support.” 63 Similarly, another commenter noted that a revised standard focusing

not on the “‘substantive concerns’” of similar proposals but rather on the “‘specific language or

actions proposed to deal with those concerns’” would be helpful in order to “allow different

approaches to the same or a similar issue to be voiced and provided as options for shareholders

to support.” 64 The Commission did not adopt any changes to the applicable standard in response

to these comments on the proposing release for the 2020 amendments.

When considering whether proposals deal with “substantially the same subject matter,”

the staff has followed the standard the Commission articulated in 1983: whether the proposals

See letters from Council of Institutional Investors dated January 30, 2020; James McRitchie dated February 2,

2020; Local Authority Pension Fund Forum dated February 3, 2020; New York City Comptroller dated February 3,

2020; New York State Comptroller dated February 3, 2020; Stewart Investors dated January 30, 2020.

See letter from Council of Institutional Investors dated January 30, 2020.

See letter from Local Authority Pension Fund Forum dated February 3, 2020.

share the same “substantive concerns” rather than the “specific language or actions proposed to

deal with those concerns.” This determination of a proposal’s “substantive concerns” can

necessitate fact-intensive, case-by-case judgments in applying Rule 14a-8(i)(12) through the

no-action letter process. In this regard, as with the “substantial duplication” test under Rule

14a-8(i)(11), delineating the “substantive concerns” of a proposal either too broadly or too

narrowly may result in the under- or over-inclusion of proposals, respectively. Additionally, the

staff has observed that proposals that address the same subject matter but call for different

actions may receive significantly different shareholder votes, which could suggest that

shareholders view such proposals as raising different issues.

We are concerned that the “substantially the same subject matter” test under Rule

14a-8(i)(12) may not accomplish its stated purpose because focusing on whether proposals share

the same “substantive concerns” rather than “the specific language or actions proposed to deal

with those concerns” may not, as the Commission initially had believed, avoid an “improperly

broad interpretation” of the provision. In this regard, we share the concerns previously expressed

by commentators that the “substantially the same subject matter” standard unduly constrains

shareholder suffrage because of its potential “umbrella” effect—i.e., that it could be used to

exclude proposals that have only a vague relation, or are not sufficiently similar, to earlier

proposals that failed to receive the necessary shareholder support. As a result, the current

standard could discourage experimentation with new ideas, as it limits proponents’ ability to

modify their proposals to address a similar subject matter in subsequent years to build broader

shareholder support, and also restricts other shareholders from presenting different or newer

approaches to addressing the same issue.

Proposed Amendment

To address these concerns, we are proposing to revise the standard of what constitutes a

resubmission under Rule 14a-8(i)(12) from a proposal that “addresses substantially the same

subject matter” as a prior proposal to a proposal that “substantially duplicates” a prior proposal—

the same standard that applies under current Rule 14a-8(i)(11), the duplication exclusion. The

proposed amendments also would provide that, for purposes of Rule 14a-8(i)(12), a proposal

“substantially duplicates” another proposal if it “addresses the same subject matter and seeks the

same objective by the same means.”

Under the proposed approach, in order to be excludable under the resubmission

exclusion, a proposal must not only address the same subject matter as a prior proposal but also

must seek the same objective by the same means. In other words, the standard for exclusion

would focus on the specific objectives and means sought by a proposal with respect to a given

subject matter (i.e., the specific actions proposed to deal with a proposal’s “substantive

concerns”). We anticipate that this approach may provide a more accurate indication of whether

shareholders have already provided their views on a particular issue and the proposed means to

address it.

To take an example, the staff previously had viewed the following proposals as

addressing the same subject matter for purposes of the resubmission exclusion: (1) a proposal

requesting that the board adopt a policy prohibiting the vesting of equity-based awards for senior

executives due to a voluntary resignation to enter government service (a “government service

golden parachute”); and (2) a proposal requesting that the board prepare a report to shareholders

regarding the vesting of such government service golden parachutes that identifies eligible senior

executives and the estimated dollar value of each senior executive’s government service golden

parachute. 65 Under the proposed amendment to Rule 14a-8(i)(12), although these proposals

concern the same subject matter (namely, government service golden parachutes for senior

executives), exclusion would not be warranted because they do not seek the same objectives by

the same means.

We note that, under the proposed revision to Rule 14a-8(i)(12), the previous proposal(s)

and the current proposal need not be identical to warrant exclusion. In this regard, we do not

propose to revert to the pre-1983 standard of “substantially the same proposal” for the same

reason that prompted the Commission to abandon this standard in 1983—namely, the concern

that proponents could alter a few words from a previously submitted proposal to evade exclusion

of their proposals. 66 However, we seek public comment on whether it would be appropriate to

return to the “substantially the same proposal” pre-1983 standard.

We believe that the proposed amendments would alleviate the potential “umbrella” effect

of the resubmission exclusion by enabling proponents to make adjustments to their proposals to

build broader support and also allow other proponents to put forth their own proposals offering

different ways to address the same issue. Consequently, the proposed amendments would align

more closely with the purpose of the exclusion, which is to avoid the continued consideration of

“proposals that have generated little interest when previously presented to the security

holders,” 67 by recognizing that proposals that address the same subject matter, or share the same

substantive concerns, do not necessarily garner equivalent levels of shareholder interest and

support. In this way, we anticipate that the proposed revisions would strike a more appropriate

See The Goldman Sachs Group, Inc. (Jan. 10, 2017).

See 1983 Adopting Release, supra note 17.

See 1982 Proposing Release, supra note 28, at 47429.

balance between effecting the purpose of the exclusion and preserving the ability of shareholders

to engage with a company and other shareholders through the shareholder proposal process.

Although we recognize that the resubmission exclusion, as proposed to be amended,

would continue to require a degree of fact-intensive judgment, we believe it would provide a

clearer standard for exclusion, assist the staff in more efficiently reviewing and responding to

no-action requests, and benefit shareholders and companies by promoting more consistent and

predictable determinations regarding the exclusion of proposals. By providing greater certainty

and transparency with respect to the standards to be applied under the rule, the proposed

amendment would aid shareholder-proponents, in drafting their proposals, and companies, in

determining whether a proposal may be excludable under the rule. Moreover, the proposed

amendments would promote more consistent outcomes when comparing a given proposal against

proposals submitted for the same shareholder meeting, for purposes of Rule 14a-8(i)(11), and

against proposals considered at prior meetings, for purposes of Rule 14a-8(i)(12), in

consideration of the similar objectives of these exclusions.

Request for Comment

Should we amend the resubmission exclusion, as proposed, to provide that a

resubmission is a proposal that “substantially duplicates” a prior proposal, the same

standard as under the duplication exclusion in Rule 14a-8(i)(11)? Should we amend the

rule, as proposed, to specify that a proposal “substantially duplicates” another proposal if

it “addresses the same subject matter and seeks the same objective by the same means”?

Should we instead maintain the current standard? Should we consider a different

standard, such as the Commission’s pre-1983 “substantially the same proposal” standard?

Are there other approaches we should consider?

10.

Would the proposed amendment benefit shareholder-proponents and companies by

promoting more consistent and predictable determinations regarding application of the

resubmission exclusion? What potential costs should we consider?

11.

The proposed amendment seeks to strike a balance between the purpose of the

resubmission exclusion to limit the consideration of proposals that do not garner

significant shareholder support and the ability of shareholder-proponents to engage with a

company and other shareholders through the shareholder proposal process, including by

mitigating the potential “umbrella” effect of the resubmission exclusion. Are there other

considerations we should take into account?

12.

The proposed amendment would apply the same standard for exclusion when comparing

a given proposal against proposals submitted for the same shareholder meeting, for

purposes of the duplication exclusion in Rule 14a-8(i)(11), and against proposals

considered at prior meetings, for purposes of the resubmission exclusion in Rule 14a8(i)(12). Is this approach appropriate?

III.

ECONOMIC ANALYSIS

As discussed above, we are proposing modifications to three of the substantive bases for

the exclusion of shareholder proposals under Rule 14a-8. We are mindful of the costs and

benefits of these proposed amendments. The discussion below addresses the potential economic

effects of the proposed amendments, including the likely benefits and costs, as well as the effects

on efficiency, competition, and capital formation. 68 We analyze the expected economic effects

Section 3(f) of the Exchange Act [17 U.S.C. 78c(f)] and Section 2(c) of the Investment Company Act [15 U.S.C.

80a-2(c)] require the Commission, when engaging in rulemaking where it is required to consider or determine

whether an action is necessary or appropriate in (or, with respect to the Investment Company Act, consistent with)

the public interest, to consider, in addition to the protection of investors, whether the action will promote efficiency,

competition, and capital formation. Further, Section 23(a)(2) of the Exchange Act [17 U.S.C. 78w(a)(2)] requires

of the proposed amendments relative to the current baseline, which consists of both the current

regulatory framework and the current practices relating to shareholder proposal submissions.

Overall, we expect the proposed amendments to benefit companies and shareholder-proponents

by providing standards that are easier to apply and result in determinations that are more

predictable and consistent. To the extent that companies and shareholder-proponents modify

their behavior in response to the proposed amendments, additional economic effects could

include changes in the volume and characteristics of shareholder proposals submitted and

included in companies’ proxy statements.

Where possible, we have attempted to quantify the benefits, costs, and effects on

efficiency, competition, and capital formation expected to result from the proposed amendments.

In many cases, however, we are unable to quantify the economic effects because we lack

information necessary to provide reasonable estimates. For example, we do not have data that

would allow us to assess the extent to which companies and shareholder-proponents may change

their behavior in response to the proposed amendments. We further note that even in cases

where we have some data regarding certain economic effects, the quantification of these effects

is particularly challenging due to the number of assumptions that we would need to make to

estimate the benefits and costs of the proposed amendments. Where we are unable to quantify

the economic effects of the proposed amendments, we provide a qualitative assessment of the

potential effects and encourage commenters to provide data and information that would help

quantify the benefits, costs, and potential impacts of the proposed amendments on efficiency,

competition, and capital formation.

the Commission, when making rules under the Exchange Act, to consider the impact that the rules would have on

competition, and prohibits the Commission from adopting any rule that would impose a burden on competition not

necessary or appropriate in furtherance of the purposes of the Exchange Act.

Affected Parties

The proposed amendments would affect all companies subject to the federal proxy rules

that receive shareholder proposals, the proponents of these proposals, and non-proponent

shareholders of these companies. 69 Companies that have a class of equity securities registered

under Section 12 of the Exchange Act are subject to the federal proxy rules, including Rule

14a-8. 70 In addition, all management companies are subject to the federal proxy rules. 71 Finally,

there are certain companies that voluntarily file proxy materials that could be affected to the

extent that they receive shareholder proposals.

As of December 31, 2021, we estimate that there were 5,862 companies that had a class

of securities registered under Section 12 of the Exchange Act (including 97 Business

Development Companies (“BDCs”)). 72 This estimate represents an upper bound of the number

of potentially affected companies because some of these companies may not file proxy materials

or receive a shareholder proposal in a given year. Out of the 5,862 potentially affected

companies mentioned above, 4,588 (78 percent) filed proxy materials with the Commission

The proposed amendments could also have indirect effects on providers of administrative and advisory services

related to proxy solicitation and shareholder voting.

Foreign private issuers are exempt from the federal proxy rules under Exchange Act Rule 3a12-3(b). See supra

note 1.

17 CFR 270.20a-1 (“Rule 20a-1”) under the Investment Company Act [15 U.S.C. 80a-20(a)] requires

management companies to comply with regulations adopted pursuant to Section 14(a) of the Exchange Act that

would be applicable to a proxy solicitation if it were made in respect of a security registered pursuant to Section 12

of the Exchange Act. “Management company” means any investment company other than a face-amount certificate

company or a unit investment trust. See 15 U.S.C. 80a-4.

We estimate the number of companies with a class of securities registered under Section 12 of the Exchange Act

by reviewing all filers, by unique Central Index Key (CIK), of Forms 10-K and amendments filed during calendar

year 2021.

during calendar year 2021. 73 In addition, as of December 31, 2021, there were 33 companies

that voluntarily filed proxy materials. 74

As of December 31, 2021, there were 2,034 management companies 75 that were subject

to the federal proxy rules, of which 625 (31 percent) reported to have submitted matters for their

security holders’ vote during the reporting period. 76 However, we estimate that 944 unique

entities associated with management companies 77 filed proxy materials with the Commission

during calendar year 2021 on 569 unique forms. 78

The proxy materials we consider in our analysis are materials filed via EDGAR under submission types DEF 14A,

DEF 14C, DEFA14A, DEFC14A, DEFM14A, DEFM14C, DEFR14A, DEFR14C, DFAN14A, PRE 14A, PRE 14C,

PREC14A, PREM14A, PREM14C, PRER14A, and PRER14C.

We identify companies that voluntarily file proxy materials as companies reporting pursuant to Section 15(d) of

the Exchange Act but not registered under Section 12(b) or Section 12(g) of the Exchange Act and foreign private

issuers that filed any proxy materials during calendar year 2021 with the Commission. See supra note 73 for details

on the proxy materials we consider for this analysis.

We estimate the number of unique management companies by reviewing all Forms N-CEN of companies active

through December 2021 received by the Commission as of March 15, 2022. These 2,034 management companies

were associated with the following funds: (i) 11,780 open-end funds, out of which 2,398 were Exchange Traded

Funds (“ETFs”) registered as open-end funds or open-end funds that had an ETF share class; (ii) 651 closed-end

funds; and (iii) 14 variable annuity separate accounts registered as management investment companies. Open-end

funds are series of trusts registered on Form N-1A. Closed-end funds are trusts registered on Form N-2. Variable

annuity separate accounts registered as management companies are trusts registered on Form N-3.

We estimate the number of unique management companies that submitted matters for their security holders’ vote

by reviewing Item B.10 in all Forms N-CEN of management companies active through December 2021 received by

the Commission as of March 15, 2022. These 625 management companies were associated with the following

funds: (i) 2,481 open-end funds, out of which 278 were ETFs registered as open-end funds or open-end funds that

had an ETF share class; (ii) 436 closed-end funds; and (iii) no variable annuity separate accounts.

We estimate the number of unique entities associated with management companies by reviewing unique CIKs

associated with materials filed via EDGAR under submission types DEF 14A, DEF 14C, DEFA14A, DEFC14A,

DEFM14A, DEFM14C, DEFR14A, DEFR14C, DFAN14A, N-14, PRE 14A, PRE 14C, PREC14A, PREM14A,

PREM14C, PRER14A, and PRER14C. Form N-14 can be a registration statement and/or proxy statement. We

manually review all Forms N-14 filed during calendar year 2021 with the Commission and we exclude from our

estimates Forms N-14 that are exclusively registration statements. Because management companies could comprise

funds and proxy materials could be filed with the Commission at the management company, fund family, a

combination of funds or fund families, or individual fund level, the number of entities associated with management

companies that filed proxy materials during calendar year 2021 exceeds that number of management companies that

submitted matters for their security holders’ vote. See supra note 76.

We estimate the number of unique proxy filings by reviewing the unique accession numbers of proxy materials

filed by entities associated with management companies. Because multiple entities of management companies, as

identified by unique CIK, could appear on the same proxy form, the number of proxy forms is lower than the

number of unique entities estimated above. See supra note 77.

Proponents of shareholder proposals also could be affected by the proposed rule

amendments. We estimate that there were approximately 176 proponents—66 individual

proponents and 110 institutional proponents—that submitted a shareholder proposal to be

included in a company’s proxy statement as a lead proponent during calendar year 2021. 79

Because many proponents may not submit a shareholder proposal every year, our estimate based

solely on 2021 submissions could be undercounting the number of proponents that could be

affected by the proposed amendments. For example, there were approximately 586 unique lead

proponents—272 individual proponents and 314 institutional proponents—that submitted a

shareholder proposal to be included in a company’s proxy statement for annual and special

meetings from 2017 through 2021. 80 Non-proponent shareholders of companies also could be

indirectly affected by the proposed rule amendments. According to a recent study based on the

2019 Survey of Consumer Finances, approximately 68 million households owned publicly traded

stock directly or indirectly (through other investment instruments). 81 Moreover, based on an

academic study using U.S. retail shareholder voting data from Broadridge covering nearly all

regular and special meetings during the three years 2015 to 2017, there were approximately 46

Data is retrieved from the FactSet SharkRepellent Proxy Proposal dataset, infra note 96. This data allows for the

unique identification of a sole lead proponent of each proposal, but not the unique identification of all co-proponents

across proposals. We estimate based on information provided in FactSet’s “proposal notes,” that approximately 11

percent of proposals in 2021 were submitted by multiple proponents and among the proposals that were submitted

by multiple proponents, the average (median) number of proponents was 2.7 (3). As a result, our estimated number

of proponents should be interpreted as a lower bound on the total number of unique shareholder-proponents.

See id.

See Neil Bhutta et al., Changes in U.S. Family Finances from 2016 to 2019: Evidence from the Survey of

Consumer Finances, 106 FED. RES. BULL. 1, 18-19 (2020), available at

https://www.federalreserve.gov/publications/files/scf20.pdf (reporting that 52.6 percent of the 128.6 million families

represented owned stock in publicly-traded companies). Indirect holdings of publicly-traded stock are those in

pooled investment funds, retirement accounts, and other managed assets. The same study estimates that

approximately 19 million households (15 percent) held publicly traded stock directly in 2019. This is a triennial

survey, and the latest data available as of this time is from the 2019 survey.

million retail accounts that directly held shares of U.S. public companies. 82 Our analysis of

institutional investor data also shows that there were 6,968 unique institutional investors during

2021. 83

Baseline

The baseline against which the costs, benefits, and the impact on efficiency, competition,

and capital formation of the proposed amendments are measured consists of the current

regulatory framework, including the current staff no-action positions with respect to Rule 14a-8

and the current practices of companies and shareholders related to shareholder proposals.

Regulatory Framework

State laws, company bylaws and other governing documents, and the federal securities

laws jointly govern the shareholder proposal process. Rule 14a-8 sets forth procedural and

substantive bases upon which a company may exclude a shareholder proposal from its proxy

statement. 84 Under Rule 14a-8(i)(10), the substantial implementation exclusion, companies may

exclude a shareholder proposal that “the company has already substantially implemented.” 85

Under Rule 14a-8(i)(11), the duplication exclusion, companies may exclude a shareholder

proposal that “substantially duplicates another proposal previously submitted to the company by

See Alon Brav et al., Retail shareholder participation in the proxy process: Monitoring, engagement, and voting,

144 J. OF FIN. ECON. 492, 497 (2022). The number of retail accounts is an approximation of the number of retail

investors because each retail investor can hold multiple accounts and multiple retail investors can hold a single

account. Further, this data only covers a subset of all retail accounts.

Data is retrieved from the Thomson/Refinitiv Institutional (13F) Holdings dataset. Unique institutional investors

are composed of filers with a unique Manager Number that filed a Form 13F at least for one quarter during calendar

year 2021 with the Commission. The estimated number of institutional investors is a lower bound of the actual

number of institutional investors because only institutional investment managers that exercise discretion over $100

million or more in Section 13(f) securities on the last trading day of any month of any calendar year must file Form

13F with the Commission. See 17 CFR 240.13f-1.

See supra note 2.

See supra note 16.

another proponent that will be included in the company’s proxy materials for the same

meeting.” 86 Under Rule 14a-8(i)(12), the resubmission exclusion, companies may exclude a

shareholder proposal that “addresses substantially the same subject matter as a proposal, or

proposals, previously included in the company’s proxy materials within the preceding five

calendar years” if the matter was voted on at least once in the last three years and did not receive:

(i) 5 percent of the vote if previously voted on once; (ii) 15 percent of the vote if previously

voted on twice; or (iii) 25 percent of the vote if previously voted on three or more times. 87

When a company intends to exclude a shareholder proposal from its proxy materials, it

must advise the Commission staff of its intention to do so and will generally submit a no-action

request seeking the staff’s concurrence that it would not recommend enforcement action to the

Commission if the company excludes the proposal under one or more of the bases for exclusion

in Rule 14a-8. 88 Generally, if the staff grants a no-action request, a company will not include the

shareholder proposal in its proxy statement. 89 In some instances, a company may negotiate with

a proposal’s proponent for the withdrawal of the proposal during or after the no-action process.

See supra note 18.

See supra note 20. Rule 14a-8(i)(12) was amended in 2020 and these resubmission thresholds only apply to

proposals submitted for meetings beginning in 2022. See 2020 Adopting Release, supra note 11. Prior to the 2020

amendments, Rule 14a-8(i)(12) required a proposal to receive at least: (i) 3 percent of the vote if previously voted on

once; (ii) 6 percent of the vote if previously voted on twice; or (iii) 10 percent of the vote if previously voted on

three or more times. See id.

See 17 CFR 240.14a-8(j)(1). A shareholder proposal may be omitted without submitting a no-action request. In

particular, a company may give notice to the Commission that it will exclude the proposal without submitting a noaction request, perhaps if it intends to seek a determination by a court. However, this practice is rare and virtually

all proposal exclusion notifications come in the form of no-action requests.

Rarely, a shareholder proposal may be included in a company’s proxy and voted on despite Commission staff

having granted a company’s no-action request regarding exclusion of the proposal. This was the case for four

proposals (approximately 0.1 percent) submitted for annual meetings held from 2017 through 2021. See infra note

97.

In any event, the staff’s no-action position is not legally binding and the matter ultimately may

be resolved by a federal district court. 90

As new and developing issues arise with respect to companies and shareholders,

shareholder proposals may demonstrate different trends, and the staff’s review under the

substantive bases for exclusion of Rule 14a-8 may adjust in response to such trends. As a result,

companies and shareholders may find it difficult to apply past staff no-action positions to predict

whether a proposal should be included in a company’s proxy statement. For example, several

commenters have expressed concerns around the variation and potential unpredictability of staff

positions regarding the substantial implementation exclusion. 91 More broadly, stock price

movements following the issuance of staff no-action letter responses suggest that staff responses

resolve some uncertainty about whether a proposal will be included in a company’s proxy

statement. 92 Yet, even after the staff’s position is disclosed, uncertainty could remain as to

whether a court would agree with the staff’s interpretation of an exclusion under Rule 14a-8. 93

Uncertainty regarding the applicability of any individual basis for exclusion to any particular

See generally Thomas Lee Hazen, Treatise on the Law of Securities Regulation, § 10:27 (7th ed. 2016). See also

supra note 88.

See supra note 35.

See, e.g., John G. Matsusaka et al., Can Shareholder Proposals Hurt Shareholders? Evidence from Securities and

Exchange Commission No-Action-Letter Decisions. 64 J. OF L. AND ECON. 107 (2021) (finding a statistically

significant mean cumulative abnormal return, the difference between the actual return and the expected return,

ranging between 0.11 percent and 0.58 percent following an issuance of a staff no-action letter concurring in a

company’s exclusion of a shareholder proposal under Rule 14a-8). Because proposal details and a company’s

request to exclude it are publicly available on the Commission’s website in advance of the staff no-action response,

we would not expect to see any price reactions if staff no-action responses were fully predictable.

In some past instances, courts have disagreed with the staff’s interpretation of bases for exclusion under Rule

14a-8. See, e.g., Trinity Wall Street v. Wal-Mart Stores, Inc., 792 F.3d 323 (3d Cir. 2015).

proposal may contribute to companies’ common practice of asserting multiple bases for

exclusion in their no-action requests under Rule 14a-8. 94

Practices Related to Proposal Submissions

In this section, we describe practices around shareholder proposal submissions to

understand the baseline against which we compare the effects of the proposed amendments,

informing the analysis of the potential effects of the proposed amendments to Rule 14a-8 in later

sections. We note that the current practices around shareholder proposals are likely to differ

from prior years because the 2020 amendments to Rule 14a-8, which relate to certain procedural

requirements and the resubmission exclusion under Rule 14a-8(i)(12), became effective for

proposals submitted for annual or special meetings to be held on or after January 1, 2022. 95 We

expect the 2020 amendments to affect the number of proposals submitted and included in

companies’ proxy statements in 2022 and the subsequent seasons relative to prior years. In

addition, as the characteristics of shareholder proposals vary across years, so do the outcomes of

the staff’s no-action positions based on the limited subset of proposals that the staff reviews

through the no-action letter process. Further, Commission and staff interpretations of the

procedural and substantive bases for exclusion under Rule 14a-8 have varied over time, as

discussed above in Sections II.A.1, II.B.1, and II.C.1. As a result, the percentage of proposals

submitted but not included in companies’ proxy statements can vary considerably from one

Using data from the 2021, 2020 and 2019 proxy seasons, we estimate that in approximately half (one third) of noaction requests asserting the substantial implementation or duplication (resubmission) basis for exclusion,

companies asserted at least one other basis under Rule 14a-8.

The 2020 amendments to Rule 14a-8, which apply to shareholder proposals submitted for annual and special

meetings held on or after January 1, 2022, included changes to the ownership requirements to be eligible to submit

a proposal, increases in the resubmission voting thresholds, and certain other procedural requirement changes. See

2020 Adopting Release, supra note 11. These amendments also included a transition period that allows shareholders

meeting specified conditions to rely on prior ownership thresholds to demonstrate eligibility to submit a proposal for

an annual or special meeting to be held prior to January 1, 2023. See id. at 70263.

proxy season to the next, limiting our ability to draw conclusions regarding the current practices

related to shareholder proposal exclusions based on data from an individual proxy season.

Our data 96 on shareholder proposals contains proposals that were either (i) included in

companies’ proxy statements and voted on by shareholders; (ii) omitted from companies’ proxy

statements through the staff no-action process; or (iii) submitted by the proponents but

withdrawn prior to a vote, where the information about the proposal is publicly available. 97

Throughout the analysis, we disaggregate statistics by company size, proponent types, and

proposal topics to understand how the practices related to shareholder proposals have varied

across these categories.

We find that 392 shareholder proposals were submitted to be included in companies’

proxy statements for meetings held from January 1, 2022 through May 20, 2022, a decrease of

approximately 10 percent relative to proposals submitted for meetings held in the same period in

2021. 98 Of these 392 submissions, the majority of proposals (80 percent) were included in

Unless stated otherwise, all data in this section is retrieved from the FactSet SharkRepellent Proxy Proposal

dataset (accessed on June 4, 2022). Dataset coverage includes over 4,000 U.S.-incorporated public companies and

some foreign-incorporated companies. FactSet extracts and processes proxy data from regulatory filings and press

releases, as well as through web-monitoring and in rare instances, direct engagement with companies and

shareholder-proponents. We exclude from our analysis shareholder proposals that are not subject to Rule 14a-8,

such as proposals related to proxy contests and other proposals appearing in dissident shareholders’ proxy material,

proposals that were raised from the floor of the annual or special meetings and were not submitted to appear in the

companies’ proxy statements, and proposals submitted for a vote at meetings of foreign companies that are not

subject to federal proxy rules.

Our data is comprehensive with respect to shareholder proposals that appear in companies’ proxy statements and

those for which the company submitted a no-action request to Commission staff. However, proposal submissions

counts in our analysis represent a lower bound on all shareholder proposal submissions because this data may not

include all shareholder proposals that were withdrawn by proponents. In particular, if a submitted but withdrawn

proposal did not appear in a proxy statement, a press release, or a company’s no-action request, it may not be

included in the data we use for the analysis in this section.

Using data from previous proxy seasons, we estimate that proposals submitted for meetings held from January 1,

2022 through May 20, 2022 will account for approximately 60 percent of all proposals that will be submitted during

the 2022 proxy season. We also note that some effects of the 2020 amendments on the number of proposals

submitted and included in companies’ proxy statements may not yet be realized. See supra note 95.

companies’ proxy statements and voted on, while 11 percent were omitted following a no-action

letter issued by the Commission staff and 9 percent were withdrawn by the proponent prior to the

applicable meeting. 99 The majority (85 percent) of proposals were submitted for annual and

special meetings of S&P 500 companies. Further, the majority of proposals submitted were

related to governance issues (53 percent), followed by those on social (33 percent) and

environmental (13 percent) issues. 100 We also estimate that 42 percent of proposals were

submitted by individual proponents while 49 percent were submitted by institutional

proponents. 101 Lastly, the average shareholder support for voted proposals during this period

was 30 percent of the total number of votes cast and the median shareholder support was 32

percent, with approximately 10 percent of proposals receiving majority support.

Changes to the resubmission voting thresholds decreased the fraction of proposals voted

on in 2021 that were eligible to be resubmitted for meetings held in 2022. We find that overall,

76 percent of voted proposals that did not receive majority support were eligible for a

resubmission in 2022, a decrease from 89 percent of proposals that were eligible in the prior

year. Governance and social proposals were more likely to be eligible for resubmission (77

See supra note 97, which discusses the potential underestimation of the volume of withdrawn proposals in our

analysis. In this analysis, we classify a shareholder proposal that was included in a company’s proxy statement but

was not voted on in the annual or special meeting as a withdrawn proposal.

We grouped proposals into governance, social, and environmental categories based on FactSet’s proposal

subcategory definitions. The governance group is mostly comprised of shareholder proposals related to shareholder

rights and takeover defenses, board structure and independence, and executive compensation. Social proposals

include, among others, proposals related to political contributions and lobbying disclosure, labor and health issues,

human rights, and board diversity. Environmental proposals include, among others, proposals related to

sustainability, greenhouse gas emissions, climate change, community/environmental impact, and renewable energy.

100

101

Throughout our analysis, “individual” proponents are comprised of retail investors. “Institutional” proponents

are comprised of asset managers, unions, pension funds, religious organizations, nonprofit organizations, and other

organizations. The data is missing lead proponents’ identity for 36 (9 percent) of shareholder proposals over this

period which is presumably because companies are not required to disclose the identity of the proponent in proxy

statements. See 17 CFR 240.14a-8(l).

percent of voted proposals that did not receive majority support) than environmental proposals

(61 percent of voted proposals that did not receive majority support). We also find that

proposals submitted by individual investors were more likely to be eligible for resubmission (81

percent) than those submitted by institutions (74 percent). Of the 392 shareholder proposals

submitted to be included in companies’ proxy statements for meetings held from January 1, 2022

through May 20, 2022, 258 (66 percent) were a first submission, 55 (14 percent) were a second

submission, and the remaining 79 (20 percent) were a third or subsequent submission. 102

We also note that from October 15, 2021 through May 10, 2022, 103 the staff received 87

no-action requests asserting the substantial implementation exclusion (37 percent of all no-action

requests over this period) and concurred in the exclusion of 11 percent of these requests on the

basis of the substantial implementation exclusion. In the same period, the staff received 22 noaction requests asserting the duplication exclusion (9 percent of all no-action requests over this

period) and concurred in the exclusion of 18 percent of these requests on the basis of the

We categorize a proposal as a first submission if it has not been voted on in the preceding three calendar years. A

proposal is categorized as a second (third or subsequent) submission if it has been voted on within the preceding

three calendar years and it has been voted on once (two or more times) in the past five calendar years. Conducting

any systematic analysis on proposal resubmissions across multiple years requires employing a methodology for

determining whether multiple proposals deal with “substantially the same subject matter.” For this analysis, we

relied on FactSet’s standardized proposal descriptions and the text of the proposal. In particular, we classified a

proposal as a resubmission if the prior proposal had the same FactSet-assigned description and the text of the prior

proposal was not substantially dissimilar or if the prior proposal had a different FactSet-assigned description but the

text of the prior proposal was almost identical. Textual similarity was computed via a probabilistic string-matching

algorithm. Prior research on shareholder proposals similarly has used shareholder proposal descriptions to identify

proposals as resubmissions. See Brandon Whitehill, Clearing the Bar, Shareholder Proposals and Resubmission

Thresholds, Council of Institutional Investors (Nov. 2018), available at

https://docs.wixstatic.com/ugd/72d47f_092014c240614a1b9454629039d1c649.pdf. It is important to note that our

methodology for classifying a proposal as a resubmission of a previously submitted proposal may not always align

with what the staff or the courts might view as a proposal on “substantially the same subject matter.” While using a

different textual comparison methodology may result in a change in the number and characteristics of proposals

classified as resubmissions in our analysis, we have no reason to believe that it would yield materially different

qualitative conclusions regarding proposal resubmissions over the five-year period we consider.

102

Using data from previous proxy seasons, we estimate that no-action requests received up to May 10, 2022 will

account for approximately 90 percent of all no-action requests the staff will receive for the 2022 proxy season.

103

duplication exclusion. Lastly, the staff received 11 no-action requests asserting the resubmission

exclusion (5 percent of all no-action requests over this period) and concurred in the exclusion of

45 percent of these requests on the basis of the resubmission exclusion.

Because the 2022 proxy season is ongoing and, as a result, the information on current

practices related to shareholder proposals is incomplete, we supplement the analysis above with

information about shareholder proposals submitted for annual and special meetings held from

2017 through 2021. 104 We combine statistics on shareholder proposals submitted over a period

of five years because the number and characteristics of shareholder proposal submissions can

vary from one year to the next. A total of 3,560 proposals were submitted for inclusion in

companies’ proxy materials for annual and special meetings held from 2017 through 2021, an

average of approximately 712 proposals submitted each year (see Table 2 105). Of the

submissions, the majority of proposals (66 percent) were included in companies’ proxy

statements and voted on, while 20 percent were omitted following a no-action letter issued by the

Commission staff, and 14 percent were withdrawn by the proponent prior to the applicable

meeting. 106 Shareholder proposal activity in this five-year period was concentrated among the

S&P 500 companies, with each company in the S&P 500 index receiving on average a single

shareholder proposal each year. 107 The majority of proposals submitted were related to

FactSet data includes seven shareholder proposals submitted for six annual meetings during the 2017-2021 period

that were cancelled. We exclude from our analysis two proposals from two cancelled meetings because identical

proposals were included in proxy statements for rescheduled annual meetings to avoid double-counting the same

proposal. We classify the remaining five proposals as withdrawn because they were not resubmitted for the

companies’ subsequent annual meetings.

104

The percentages in parentheses in each column of the table represent percentages of the total number of proposals

in the first row of each column.

105

106

See supra note 97.

107

We note that the volume of shareholder proposal submission is not uniform across companies. Approximately

half of S&P 500 companies received no shareholder proposals over the five-year period, while five percent received

governance issues (54 percent), followed by those on social (31 percent) and environmental (11

percent) issues. 108 Lastly, slightly less than half of proposals (46 percent) were submitted by

individual proponents, 109 but these proposals were more likely to be omitted and less likely to be

withdrawn than those submitted by institutional proponents. 110

Table 2: Shareholder proposal submissions by status, 2017-2021

Proposal Status

Voted On

Omitted

Withdrawn

Number

2,362

696

502

Total

3,560

Company Size

S&P 500

All Other

1,762 (75%)

600 (25%)

543 (78%)

153 (22%)

378 (75%)

124 (25%)

2,683 (75%)

877 (25%)

Proposal Topic

Governance

Social

Environmental

1,440 (61%)

669 (28%)

208 (9%)

362 (52%)

200 (29%)

73 (10%)

133 (26%)

240 (48%)

105 (21%)

1,935 (54%)

1,109 (31%)

386 (11%)

Proponent Type

Institution

Individual

1,058 (45%)

1,090 (46%)

251 (36%)

435 (63%)

373 (75%)

115 (23%)

1,682 (47%)

1,640 (46%)

Source: FactSet SharkRepellent Proxy Proposals.

more than four proposals on average per year. We also estimate that approximately two percent of shareholder

proposals were submitted to management companies.

See supra note 100 for a description of how we grouped proposals into governance, social, and environmental

categories. There are 130 (four percent) shareholder proposals submitted over the 2017-2021 period that we classify

as neither governance, social, or environmental. These proposals include proposals related to returning capital to

shareholder (in the form of dividends or share repurchases), asset divestitures, fund-specific issues, and other

miscellaneous issues. Because our data includes shareholder proposals that are categorized as neither governance,

social, nor environmental, the percentages in the Proposal Topic rows of Table 2 do not sum up to 100 percent.

108

See supra note 101 for a description of how we categorized proponent types. The data is missing lead

proponents’ identity for 238 (7 percent) of shareholder proposals over the 2017-2021 period. Because proponent

identity is missing for some proposals in our data, the percentages in the Proponent Type rows of Table 2 do not

sum up to 100 percent.

109

We note that the higher withdrawal likelihood for proposals submitted by institutional shareholder-proponents

could be due to these shareholders having more direct channels of communication and engagement and influence

with companies than individual investors. See, e.g., Eugene Soltes et al., What Else do Shareholders Want?

Shareholder Proposals Contested by Firm Management (Harv. Bus. Sch., Working Paper, July 14, 2017),

https://ssrn.com/abstract=2771114 (finding that the amount of shareholder ownership of shares is positively

associated with the probability that a proposal is withdrawn, which is consistent with the idea that large shareholders

“are more influential and are more likely to have dialogue with managers that would facilitate implementation of

their proposal prior to a shareholder vote”) (“Soltes et al. (2017)”).

110

The counts of omitted proposals in Table 2 above represent proposals excluded from

companies’ proxy statements following a no-action letter issued by the Commission staff under

any of the procedural or substantive bases in Rule 14a-8. Only a subset of these omitted

proposals were excluded due to the substantial implementation, duplication, or resubmission

exclusions. Based on data in Table 1 above, companies asserted the substantial implementation,

duplication, and resubmission exclusion in approximately 39 percent, five percent, and one

percent, respectively, of the no-action requests during the 2021, 2020, and 2019 proxy seasons.

The staff concurred in the exclusion in 42 percent, 38 percent, and 33 percent of these no-action

requests on the basis of the substantial implementation, duplication, and resubmission exclusion,

respectively. We also note that there was variation across the 2021, 2020, and 2019 proxy

seasons with respect to companies’ likelihood of asserting the substantial implementation,

duplication, and resubmission exclusions and the staff’s likelihood of concurring in those

exclusions. For example, relative to the prior two seasons, during the 2021 proxy season,

companies were more likely to assert the substantial implementation exclusion, but the staff

concurred in a lower number of these requests. 111

Table 3 summarizes data on voting support across proposal topics and proponent types.

The average (median) shareholder support for voted proposals over the five-year sample period

was 33 (32) percent of the total number of votes cast, with approximately 15 percent of proposals

receiving majority support. Voting support varied across proposal topics and proponent types.

In particular, governance proposals received higher shareholder support on average and were

During the 2021 proxy season, approximately 41 percent of no-action requests asserted the substantial

implementation exclusion, as compared to 38 percent and 37 percent in the 2020 and the 2019 seasons, respectively.

The staff concurred in approximately 33 percent of no-action requests that asserted the substantial implementation

exclusion on the basis of the substantial implementation during the 2021 proxy season, as compared to 50 percent

and 45 percent during the 2020 and the 2019 seasons, respectively.

111

more likely to be supported by the majority of voting shareholders than social and environmental

proposals. In addition, proposals submitted by individual proponents received higher

shareholder support on average and were more likely to be supported by the majority of voting

shareholders than proposals submitted by institutional proponents. 112

Table 3: Shareholder proposal voting support, 2017-2021

All Proposals

Votes cast in favor

Average

Median

33%

32%

Proposals with

majority support

15%

Proposal Topic

Governance

Social

Environmental

36%

27%

31%

34%

27%

29%

18%

14%

Proponent Type

Institution

Individual

31%

35%

29%

35%

14%

16%

Source: FactSet SharkRepellent Proxy Proposals.

Out of the 3,560 shareholder proposals in our data, 2,091 (59 percent) were a first

submission, 578 (16 percent) were a second submission, and the remaining 891 (25 percent)

were a third or subsequent submission (see Table 4 113 below). 114 While companies in the S&P

500 index received 75 percent of all shareholder proposals, they received a higher than

proportional percentage of proposals that were resubmitted, receiving 78 and 91 percent of all

second and third or subsequent submissions, respectively. Proposals related to governance issues

Differences in the types of proposals submitted by individual and institutional shareholder-proponents could be

driving the differences in the voting support across these two groups. For example, we find that individual

shareholder-proponents submitted the majority (70 percent) of voted governance proposals over the five-year period,

while institutional shareholder-proponents submitted the majority (80 percent) of voted social and environmental

proposals.

112

The percentages in parentheses in each column of the table represent percentages of the total number of proposals

in the first row of each column.

113

114

See supra note 102 for a description of our methodology regarding resubmitted proposals.

accounted for 56 percent of initial and second submissions, but a lower percentage (49 percent)

of third or subsequent submissions. Proposals related to environmental and social issues

accounted for a higher than proportional percentage of third or subsequent submissions. First

and second submissions were close to evenly split across individual and institutional proponents,

but third or subsequent submissions were more likely to have been submitted by institutional

proponents.

Table 4: Shareholder proposals by number of submissions, 2017-2021

Submission No.

First

Second

Third or

subsequent

Total

Number

2,091

578

891

3,560

Company Size

S&P 500

All Other

1,423 (68%)

668 (32%)

453 (78%)

125 (22%)

807 (91%) 2,683 (75%)

84 (9%)

877 (25%)

Proposal Topic

Governance

Social

Environmental

1,180 (56%)

606 (29%)

187 (9%)

322 (56%)

187 (32%)

59 (10%)

433 (49%) 1,935 (54%)

316 (35%) 1,109 (31%)

14 (16%)

386 (11%)

Proponent Type

Institution

Individual

987 (47%)

989 (47%)

267 (46%)

270 (47%)

428 (48%) 1,682 (47%)

381 (43%) 1,640 (46%)

Source: FactSet SharkRepellent Proxy Proposals.

We next analyze whether shareholder-proponents choose to resubmit proposals that are

eligible to be resubmitted for subsequent meetings (see Table 5 below). 115 For this analysis, we

115

Under Rule 14a-8(i)(12), a future proposal addressing “substantially the same subject matter” as a voted proposal

is considered a resubmission if it is submitted for a meeting during the three years following the most recent vote.

However, when estimating the likelihood that a proposal is resubmitted, we restrict the analysis above to proposals

resubmitted in the subsequent year to avoid introducing a truncation bias in our analysis because we do not observe

whether more recent proposals are resubmitted in each of the subsequent three years. As a result, estimates in Table

5 may underestimate the percentage of eligible proposals that may eventually be resubmitted.

consider all proposals that were voted on during 2017-2020, 116 but received less than majority

support because passing proposals are more likely to be implemented 117 by companies, resulting

in reduced incentives for shareholder-proponents to resubmit the proposal. 118 There were 1,641

of these shareholder proposals. 119 While the vast majority (90 percent) of voted shareholder

proposals during 2017-2020 were eligible to be resubmitted in the following year, less than half

(48 percent) of eligible proposals were actually resubmitted. We find that shareholder proposals

submitted to companies in the S&P 500 index were more likely to be resubmitted than those

submitted to companies outside of the S&P 500 index. Despite being the most likely to be

eligible for resubmission among the three proposal topics groups, governance proposals were

least likely to be resubmitted. We also find that shareholders’ propensity to resubmit previously

voted proposals was correlated with the voting support the proposal has previously received. In

particular, comparing between shareholder proposals that received above and below 20 percent

voting support and were eligible to be resubmitted in the following year, proposals with prior

support above 20 percent were 25 percent more likely to be resubmitted than proposals with

prior support below 20 percent. Lastly, because shareholder-proponents were relatively unlikely

to resubmit proposals that received voting support below the specified vote thresholds in Rule

We restrict our sample to proposals submitted for 2017-2020 meetings and analyze whether they were

resubmitted in the following year using data from 2018-2021 meetings for two reasons. First, because resubmission

thresholds were amended in 2020, we have to apply different thresholds to determine proposal eligibility for

proposals submitted to meetings before and after 2022. See supra note 87. Second, because the 2022 proxy season

is ongoing, we have limited data on proposals voted on during 2021 and resubmitted for 2022 meetings. We include

a separate analysis of eligibility and resubmission likelihood for 2021 shareholder proposals in Section III.B.2.b

below.

116

117

See 2020 Adopting Release, supra note 11, at 70286 n. 451.

Using shareholder proposals voted on during 2017-2020 annual and special meetings, we find that only 13

percent of proposals garnering majority support were resubmitted in the following year.

118

We estimate that 2,869 shareholder proposals were submitted for annual and special meetings held from 2017

through 2020, 1,897 (66 percent of submitted proposals) were voted on, and 256 (13 percent of voted proposals)

received majority support.

119

14a-8(i)(12), companies attempted to exclude proposals asserting the resubmission exclusion in

only a few instances over this period (see Table 1 above). 120

Table 5: Proposals eligible for resubmission and resubmitted, 2017-2020

Number

% Eligible

% Resubmitted

if eligible

Total

1,641

90%

48%

Company Size

S&P 500

All Other

1,286

355

90%

92%

52%

31%

Proposal Topic

Governance

Social

Environmental

936

518

155

94%

86%

88%

43%

58%

47%

Proponent Type

Institution

Individual

790

732

89%

92%

48%

46%

Source: FactSet SharkRepellent Proxy Proposals.

Potential Costs and Benefits

Below we discuss the potential economic effects of the proposed amendments. Section

III.C.1 discusses economic considerations relevant to shareholder proposals generally, while the

remaining three sections discuss the economic effects related to the proposed amendments to

Rule 14a-8(i)(10), Rule 14a-8(i)(11), and Rule 14a-8(i)(12), respectively.

General Economic Considerations Relevant to Shareholder Proposals

In this section, we describe the general economic considerations related to the

shareholder proposal process. The value of including a shareholder proposal in a company’s

We estimate that of all of the proposals that were voted on during the 2017-2020 period and resubmitted in the

following year, only 4 percent were excludable because their prior voting support was below the voting thresholds

specified in Rule 14a-8(i)(12).

120

proxy statement for shareholder consideration and vote at a meeting depends fundamentally on

the tradeoff between the potential for improving a company’s future performance and the costs

associated with the submission and consideration of a shareholder proposal borne by the

company and its non-proponent shareholders. 121 A shareholder proposal could improve a

company’s performance because it could motivate a value-enhancing corporate policy change, 122

limit insiders’ entrenchment, 123 and provide management with information about the views of

shareholders. 124 The value of shareholder proposals is limited by the extent to which

shareholders participate in the voting process and the extent to which management implements

proposals with broad shareholder support. In this regard, we note that shareholder proposals

typically are non-binding on the company, even if they are approved by a shareholder vote. Our

economic analysis does not speak to whether any particular shareholder proposal is valueenhancing, whether the proposed amendments would result in the inclusion of value-enhancing

121

There is an extensive academic literature on the value of shareholder activism, including activism through

shareholder proposals. See, e.g., Matthew R. Denes et al., Thirty Years of Shareholder Activism: A Survey of

Empirical Research, 44 J. CORP. FIN. 405 (2017); for a review. See also 2019 Proposing Release, supra note 3, and

2020 Adopting Release, supra note 11, for an extensive discussion of the general economic considerations related to

shareholder proposals and a description of academic literature related to the value of shareholder proposals.

See, e.g., Vicente Cuñat et al., The Vote Is Cast: The Effect of Corporate Governance on Shareholder Value, 67

J. FIN. 1943 (2012); Caroline Flammer, Does Corporate Social Responsibility Lead to Superior Financial

Performance? A Regression Discontinuity Approach, 61 MGMT. SCI. 2549 (2015). Yet, we note that there might be

cross-sectional variation in the valuation effects of shareholder proposals and several recent academic papers have

identified settings in which shareholder proposals have the potential to reduce value. For example, one paper found

that passing shareholder proposals submitted by the most active individual sponsors result in negative abnormal

returns and trigger sales by mutual funds that voted against these proposals. See Nickolay Gantchev & Mariassunta

Giannetti, The costs and benefits of shareholder democracy: Gadflies and low-cost activism, 34 REV. FIN. STUD.

5629 (2021). Another paper found a negative market reaction to shareholder proposals submitted by labor unions in

years that a new labor contract must be negotiated. See John G. Matsusaka et al., Opportunistic Proposals by Union

Shareholders, 32 REV. FIN. STUD. 3215 (2019).

122

See, e.g., Chen Lin et al., Managerial entrenchment and information production, 55 J. FIN. & QUANTITATIVE

ANALYSIS 2500 (2020); Laurent Bach & Daniel Metzger, How Do Shareholder Proposals Create Value? (Working

Paper, Mar. 1, 2017), available at https://ssrn.com/abstract=2247084.

123

See, e.g., J. Robert Brown, Jr., Corporate Governance, Shareholder Proposals, and Engagement Between

Managers and Owners (Univ. of Denv. Sturm Coll. of L., Working Paper No. 17-15, 2017), available at

https://ssrn.com/abstract=2957998.

124

proposals, or whether the proposed amendments would have a disproportionate effect on

proposals that are more or less value-enhancing.

There are significant methodological and empirical challenges to measuring the value of

including a shareholder proposal in a company’s proxy statement and thus any potential benefits

that may result from the inclusion of additional shareholder proposals in the proxy statement.

For example, it is often difficult to isolate the effect of a singular shareholder proposal on a

company’s stock price from the effects of other items that are contemporaneously considered and

voted on at a shareholder meeting or from the effects of direct engagement between shareholders

and management. In addition, stock price changes following a proposal submission or vote may

capture various effects such as signaling effects (e.g., the submission of a proposal may signal

that the targeted company is underperforming or that the initial negotiations between the

proponent and company failed), market expectations regarding the voting outcome, and market

expectations regarding the probability of implementation of a proposal. Nevertheless, academic

literature has attempted to measure the value of shareholder proposals and how this value varies

with proposal topic and proponent type by studying the stock price reaction around

announcements associated with shareholder proposals. 125

At the same time, companies may bear both direct costs and opportunity costs associated

with the submission of a shareholder proposal, and these costs may be passed on to

In the 2019 Proposing Release, the Commission summarized the findings of empirical literature that examines

whether proposals are economically beneficial by studying short-run abnormal stock returns around key events

related to shareholder proposals. See 2019 Proposing Release, supra note 3, at 66495. The main events related to

shareholder proposals studies in academic literature comprise the initial press announcement of submission of a

shareholder proposal, the proxy mailing date, and the date of the shareholder meeting. See 2020 Adopting Release,

supra note 11, at 70285, for a description of limitations associated with using short-term market reactions to measure

the benefits of shareholder proposals.

125

shareholders. 126 Several commenters to the 2020 amendments noted that no-action

correspondence represents the most substantial cost companies incur related to shareholder

proposals. 127 Shareholders other than the shareholder-proponent may also bear costs associated

with their own consideration of a shareholder proposal. 128 Finally, shareholder-proponents bear

costs associated with preparing a shareholder proposal, submitting a proposal to be included in a

company’s proxy statement and, as applicable, engaging with management following proposal

submission. 129

126

In particular, to the extent applicable, companies incur costs to: (i) review the proposal and address issues raised

in the proposal; (ii) engage in discussions with the shareholder-proponent(s); (iii) print and distribute proxy

materials, and tabulate votes on the proposal; (iv) communicate with proxy advisory firms and shareholders (e.g.,

proxy solicitation costs); (v) if they intend to exclude the proposal, file a notice with the Commission; and (vi)

prepare a rebuttal to the submission to the Commission. See 2020 Adopting Release, supra note 11, at 7027270275, for a detailed discussion of the costs to companies. We recognize that there is variation in the costs

associated with responding to shareholder proposals and that some costs that companies incur are mandatory, while

others are discretionary. As a result, the 2020 Adopting Release used a range of estimates, $20,000-$150,000, as a

measure of the direct costs to companies associated with addressing a singular shareholder proposal. See 2020

Adopting Release, supra note 11, at 70274. We also note that the cost of addressing a resubmission may be lower

than the cost of addressing a first-time proposal. See 2019 Proposing Release, supra note 3, at 66496. Lastly, the

costs associated with the submission of a shareholder proposal may include opportunity costs and thus may be larger

than the estimates used in the 2020 Adopting Release. See 2020 Adopting Release, supra note 11, at 70266 n.295.

127

See 2020 Adopting Release, supra note 11, at 70272-70273 n. 332, 339.

See 2020 Adopting Release, supra note 11, at 70276-70277, for a detailed discussion of the costs to nonproponent shareholders. Although these costs may be difficult to quantify, many institutional investors retain proxy

advisory firms to perform a variety of services to reduce the burdens associated with proxy voting decisions,

including voting decisions on shareholder proposals. We have limited data on fees charged by proxy voting

advisory firms but note that one such proxy advisory firm, ISS, reports a fee ranging from $5,000 to above

$1,000,000 per client on Form ADV. However, we note that this fee covers a broad range of services provided by

ISS (e.g., voting services, governance research, ratings provision, etc.) and includes proxy voting advice services

related to board elections and management proposals. See 2020 Adopting Release, supra note 11, at 70277 n.369,

for a detailed discussion of the costs to non-proponent shareholders. In addition to costs associated with obtaining

proxy voting advice for institutional investors, retail shareholders may incur direct costs and both retail and

institutional non-proponent shareholders may incur opportunity costs related to shareholder proposals. However, we

do not have data that would allow us to reliably estimate these costs.

128

Under Rule 14a-8(b)(iii), shareholder-proponents are required to submit a written statement stating their

availability to discuss their proposal with the company. As a result, in addition to the costs associated with proposal

preparation, shareholder-proponents may incur some costs associated with: (i) disclosing the times the proponents

will be available to communicate with management as well as preparing to communicate and communicating with

management and (ii) the opportunity costs associated with setting aside and spending time to communicate with

management instead of engaging in other activities. We do not have data that would allow us to reliably estimate

these costs.

129

Rule 14a-8(i)(10) – Substantial Implementation

As discussed in Section II.A.2, we are proposing to amend Rule 14a-8(i)(10) to state that

a proposal may be excluded as substantially implemented “[i]f the company has already

implemented the essential elements of the proposal.” The proposed amendment’s modification

to the definition of “substantial implementation” to focus on the “essential elements” of a

proposal would set forth a more objective and more specific standard for excluding proposals

than the existing rule language. By providing the staff with a more objective and specific

framework for analyzing the exclusion when reviewing and responding to no-action requests, we

believe that the amended standard should result in no-action positions that are more predictable

and consistent than under the current rule. Increased transparency and reduced uncertainty

around the application of Rule 14a-8(i)(10) would benefit companies by facilitating more

informed decision-making when considering whether to exclude a proposal. 130 In particular,

companies may be better able to weigh the costs and benefits of seeking a no-action letter,

especially in instances in which the staff is unlikely to agree with the application of the exclusion

because a company has implemented some but not all of the essential elements of an earlier

proposal. As we noted above, costs to companies associated with no-action requests can be

significant. 131 In turn, to the extent that companies seek no-action letters less frequently as a

result of the proposed amendment, because they conclude that seeking such letters would not be

successful, they may incur lower costs related to shareholder proposal submissions. The

proposed amendment could have a greater effect on larger companies because a larger company

130

We recognize that some uncertainty regarding the application of the substantial implementation exclusion may

remain because the determination of whether elements of a proposal are essential may vary across proposals.

Table 2 above shows that during the five-year period, 2017-2021, companies in the S&P 500 index received 75

percent of submitted shareholder proposals. See also Soltes et al. (2017), supra note 110 (finding that companies

that submit no-action requests proposals tend to be larger and receive more proposals on average).

131

is more likely to receive a shareholder proposal and is also more likely on average to submit a

no-action request than a smaller company. On the other hand, costs related to shareholder

proposals may be a relatively smaller percentage of the total cost of operations for larger

companies than for smaller companies.

The reduced uncertainty around proposal excludability could also benefit shareholderproponents by facilitating more informed decision-making when considering whether to submit a

proposal. In particular, the ability to better predict the staff’s no-action positions may allow

shareholder-proponents to avoid submitting proposals when the essential elements have already

been implemented by a company and that would be unlikely to be permitted to go to a

shareholder vote. In addition, the increased transparency and reduced uncertainty of the

application of the proposed amendment coupled with companies potentially seeking no-action

letters less frequently may lead shareholder-proponents to benefit from having to spend less time

and fewer resources to reply to companies’ no-action requests.

We expect that the proposed amendment will result in more consistent determinations

under Rule 14a-8(i)(10) across proposals and over time. Current exclusion determinations can

vary, which may contribute to the variability in the number of shareholder proposals included in

companies’ proxy statements. 132 Consequently, we expect the increased consistency of

exclusion determinations resulting from the proposed amendment to reduce the variability in the

number of shareholder proposals included in companies’ proxy statements.

Whether the proposed amendment has an effect on the number of proposals submitted

and included in companies’ proxy statements in any given proxy season going forward depends

on a number of factors, including whether and how companies and shareholder-proponents

132

See supra Section III.B.2.

change their behavior as a result of the proposed amendment. While we do not have data that

would allow us to assess the extent to which companies and shareholder-proponents may change

their behavior in response to the proposed amendment to Rule 14a-8(i)(10), we qualitatively

describe below how potential changes in behavior may impact the number of proposals

submitted and included in companies’ proxy statements. In particular, companies could modify

their behavior around proposal implementation or shareholder-proponents could modify their

behavior around proposal submission in response to this proposed amendment. For example,

companies might take into account that implementing the essential elements of a prior proposal

could preclude a subsequent proposal with the same essential elements from being considered in

a future meeting, while implementation of some of the elements of a proposal but not all of the

essential elements could result in recurring future votes on a proposal that contains essential

elements that were not implemented. However, we recognize that companies (and shareholderproponents) may continue to encounter some uncertainty when seeking to determine whether the

essential elements of a prior proposal have been implemented. To the extent that companies

become more likely to implement all of the essential elements of a proposal, the number of

proposals included in companies’ proxy materials could decrease.

Conversely, knowing that a proposal containing essential elements that the company had

not already implemented is unlikely to be excludable under the amended standard, shareholderproponents could draft a proposal to focus on these essential elements and in turn, increase the

likelihood of this proposal appearing in a company’s proxy statement. Such changes in

shareholder-proponent behavior could result in an increase shareholder proposals submitted and

included in companies’ proxy statements.

Because we cannot reliably predict whether and the extent to which companies and

shareholder-proponents may change their behavior in response to the proposed amendment to

Rule 14a-8(i)(10), the effect of the proposed amendment on the number of shareholder proposals

and the distribution of shareholder proposal types is unclear. Lastly, for reasons explained above

in Section III.C.1, we cannot reliably predict whether any potential change in the number of

shareholder proposals submitted or included in companies proxy statements will result in net

benefits or costs to companies and shareholders.

Rule 14a-8(i)(11) – Duplication

As discussed in Section II.B.2, we are proposing to amend Rule 14a-8(i)(11) to indicate

that a proposal “substantially duplicates” another proposal that will be included in the company’s

proxy materials for the same meeting if it “addresses the same subject matter and seeks the same

objective by the same means.” We expect that the proposed amendment would provide the staff

a more objective and specific framework for applying the duplication exclusion when reviewing

and responding to no-action requests than the existing rule language, thereby reducing

uncertainties with respect to the application of the exclusion and promoting more predictable and

consistent determinations. 133

We expect the benefits to companies and their non-proponent shareholders would be

qualitatively similar to those described in Section III.C.2 above with respect to Rule 14a-8(i)(10)

because greater predictability and certainty about the application of Rule 14a-8(i)(11) could

facilitate more informed decision-making around the submission of a no-action request. For

example, companies may be better able to weigh the costs and benefits of seeking a no-action

We recognize that some uncertainty regarding the application of the duplication exclusion may remain because

the determination of whether the objectives or means of two or more proposals are the same may vary across

proposal characteristics.

133

letter, especially in instances where the staff is unlikely to agree with the application of the

exclusion because a proposal that the company is seeking to exclude has a different subject

matter or different objectives or means as those in another proposal that is to be included in the

proxy statement, and is thus, not “substantially duplicative.” We note, however, that

quantitatively these benefits could be less pronounced than those described in Section III.B.2

with respect to Rule 14a-8(i)(10) since companies have been less likely to assert Rule 14a8(i)(11) as the basis for exclusion than Rule 14a-8(i)(10). 134 Also, for the same reasons as those

described in Section III.B.2, this proposed amendment may have a differential effect on larger

and smaller companies. The extent to which greater predictability and certainty around

determinations under the proposed amendment to Rule 14a-8(i)(11) could benefit shareholderproponents in drafting proposals would be limited because proponents are unlikely to observe the

content of other proposals that are concurrently submitted for inclusion in the same proxy

statement during their own proposal preparation. 135

Similarly to the discussion of the proposed Rule 14a-8(i)(10) amendments above, we

expect the proposed amendment to Rule 14a-8(i)(11) to reduce the variability in the number of

shareholder proposals included in companies’ proxy statements from one proxy season to the

next, but we cannot reliably predict how the number of shareholder proposals submitted or

included in companies’ proxy statements might change. In particular the number of shareholder

During the 2021, 2020, and 2019 proxy seasons, the staff received 12, 9, and 16 no-action requests, respectively,

asserting the duplication exclusion. Companies asserted the duplication exclusion in approximately five percent of

no-action requests submitted over these three proxy seasons. As of May 10, 2022, the staff has received 22 noaction requests asserting the duplication exclusion, accounting for approximately nine percent of no-action requests

submitted up until that point during the 2022 proxy season.

134

We expect that the likelihood that proponents observe concurrently submitted proposals has been further reduced

with the 2020 amendments to Rule 14a-8(c), which limited the ability of a single representative to submit multiple

shareholder proposals on behalf of multiple shareholders to the same meeting. See 2020 Adopting Release, supra

note 11.

135

proposals could change to the extent that shareholder-proponents could modify their behavior in

response to this proposed amendment. For example, a shareholder-proponent potentially could

draft a proposal to be more particular regarding its objectives or means so as to minimize the

likelihood of those objectives or means being deemed the same objectives or means as those in

another proposal that potentially could be submitted on the same subject matter for the same

shareholder meeting. However, the possibility of such changes in proponent behavior likely

would be mitigated by proponents’ consideration of the micromanagement exclusion under Rule

14a-8(i)(7), among other considerations. 136 While this potential change in proponent behavior

could result in more shareholder proposals included in companies’ proxy statements, we do not

have data that would allow us to assess the likelihood of proponent behavior changes or quantify

the potential increase in the number of proposals.

If the number of shareholder proposals included in companies’ proxy statements

increases, the likelihood of multiple shareholder proposals dealing with the same or similar

subject matter but having different objectives and/or means appearing in the same proxy

statement could increase. This change could lead to shareholder confusion or the need for

shareholders to spend additional time and resources to review and compare the similar, but not

duplicative, proposals. 137 In addition, companies may face implementation challenges and costs

if shareholders approve multiple similar, but not duplicative, proposals. However, if shareholder

consideration of similar, but not duplicative, proposals leads to greater support for and improved

likelihood of implementation of a proposal that aligns more closely with the objectives of

shareholders, then shareholders could benefit.

136

See supra note 14.

137

Institutional investors may choose to rely on proxy advisory firms to analyze similar, but not duplicative,

proposals and determine whether they should vote on these proposals in a similar way. See supra note 128.

Rule 14a-8(i)(12) – Resubmissions

As discussed in Section II.C.2, we are proposing to amend Rule 14a-8(i)(12) to revise the

standard for what constitutes a resubmission from a proposal that “addresses substantially the

same subject matter” as a prior proposal to a proposal that “substantially duplicates” a prior

proposal, defined the same way that phrase is defined in the proposed amendment to Rule

14a-8(i)(11). 138 As with the proposed amendments to Rule 14a-8(i)(10) and Rule 14a-8(i)(11)

described above, we expect that the proposed amendment would provide the staff with a more

objective and specific framework for applying the resubmission exclusion when reviewing and

responding to no-action requests than the existing rule language, thereby reducing uncertainties

with respect to the application of the exclusion and promoting more predictable and consistent

determinations.

We expect the benefits to companies and their non-proponent shareholders to be

qualitatively similar to those described in Section III.C.2 and Section III.C.3 above because

greater predictability and certainty about the application of Rule 14a-8(i)(12) could facilitate

more informed decision-making around the submission of a no-action request. The proposed

amendments could also benefit shareholder-proponents by facilitating more informed decisionmaking when preparing a shareholder proposal for submission. In particular, the ability to better

predict the staff’s no-action positions may allow shareholder-proponents to avoid spending time

and resources on submitting a proposal that substantially duplicates a prior proposal that has

failed to meet the rule’s specified vote thresholds and that likely would be excluded from a

company’s proxy statement. However, we do not expect these benefits to companies and their

138

See supra Section III.C.3.

shareholder-proponents to be large because very few proposals are currently excluded from

companies’ proxy statements on the basis of Rule 14a-8(i)(12). 139

Similarly to the discussion above of the proposed amendments to Rule 14a-8(i)(10) and

Rule 14a-8(i)(11), we cannot reliably predict the extent to which shareholder-proponents might

modify their behavior in response to this proposed amendment, and we cannot quantify how the

number of proposals submitted and included in companies’ proxy statements could change as a

result. However, we note that potential changes in shareholder-proponents’ behavior could

increase the number of proposals submitted and included in companies’ proxy statements.

Currently, shareholder-proponents may refrain from submitting a shareholder proposal dealing

with substantially the same subject matter as an earlier proposal if the earlier proposal failed to

garner sufficient levels of support to satisfy the resubmission thresholds because they may

recognize that such a proposal is likely to be excluded from the company’s proxy statement

under Rule 14a-8(i)(12). 140 This appears to have led to a relatively low number of no-action

requests seeking to rely on the resubmission exclusion. 141 Under the proposed amendment, a

proponent could change the objective or the means of a previously submitted proposal about the

same subject matter so as to allow for it to be considered an initial submission instead of a

resubmission. Shareholder-proponents might be more likely to do this in instances where

circumstances at the company have changed from one year to the next and, due to those

During the 2021, 2020, and 2019 proxy seasons, the staff received 2, 3, and 1 no-action requests, respectively,

asserting the resubmission exclusion. Companies asserted the resubmission exclusion in less than one percent of noaction requests submitted over these three proxy seasons. As of May 10, 2022, the staff has received 11 no-action

requests asserting the resubmission exclusion, accounting for approximately five percent of no-action requests

submitted up until that point during the 2022 proxy season.

139

140

See supra note 120.

141

See supra note 139.

circumstances, where a similar but not duplicative proposal may garner significantly more votes

than a prior proposal. At the same time, by reducing the potential for the “umbrella” effect of the

resubmission exclusion, the proposed amendment could result in the inclusion of multiple

proposals submitted by differing proponents offering different objectives or means to address the

same issue. 142

The proposed amendment to the resubmission exclusion could result in benefits to

shareholder-proponents to the extent that that there is an increase in the number of proposals

included in companies’ proxy statements and shareholder-proponents submit only those

proposals that are net beneficial to them. The increase in the number of submitted proposals

could also result in benefits to companies and their non-proponent shareholders if these

additional proposals lead to value-enhancing changes. To the extent that the proposed

amendment would facilitate proponents experimenting and making adjustments to previously

submitted proposals to build broader support, the amendment could also lead to proposals that

align more closely with the objectives of shareholders to be put to a shareholder vote. Voting

outcome data for these additional proposals could further inform management about shareholder

views, allowing it to consider actions that are of greater importance across larger swaths of the

shareholder base and potentially leading to improved efficiency in the management-shareholder

engagement process. On the other hand, the potential increase in the number of submitted

shareholder proposals could translate to increased costs to companies associated with the

consideration of proposals, engagement with shareholder-proponents, or proposal inclusion in

the proxy statement and increased costs to non-proponent shareholders associated with their own

142

See supra note 54 and the accompanying text.

consideration of shareholder proposals. 143 Further, the potential increase in the number of

submitted proposals could result in additional costs to companies and their non-proponent

shareholders if these additional proposals lead to changes that reduce companies’ future

performance.

Lastly, because voting outcomes and shareholder-proponents’ propensity to resubmit

previously voted-on proposals varies across proposal topics and proponent types, this

amendment may impact certain proposal categories and certain proponent types more than

others. In particular, subject to specific facts and circumstances, the proposed amendment may

have a greater effect on environmental proposals and proposals submitted by institutional

proponents because these types of proposals are less likely to be eligible for resubmission

following the 2020 amendments to the voting thresholds in Rule 14a-8(i)(12) than governance

and social proposals and proposals submitted by individual proponents, respectively. 144

Anticipated Effects on Efficiency, Competition, and Capital Formation

By making exclusion determinations more certain and predictable and enabling

companies and shareholder-proponents to make more informed decisions around the submission

of a no-action request and submission of a proposal, respectively, we expect the proposed

amendments to improve efficiency. Specifically, the proposed amendments could allow

companies to avoid inefficiently using time and resources to attempt to exclude a shareholder

proposal from proxy statements in instances in which the proposed amendments would not

permit exclusion. Similarly, the proposed amendments could allow shareholder-proponents to

143

See supra note 126.

See supra notes 100 and 101 for a description of how we grouped proposals into governance, social, and

environmental categories, and proponent types.

144

avoid inefficiently using time and resources to prepare a proposal submission that likely will be

excluded from a company’s proxy statement.

The proposed amendments could lead to additional effects on efficiency and capital

formation as a result of the potential changes in companies’ and shareholder-proponents’

behavior leading to a change in the number and characteristics of proposals included in

companies’ proxy statements. For example, the proposed amendments could further improve

efficiency and increase capital formation if additional included shareholder proposals result in

value-enhancing policy changes or provide additional information to management about

shareholder views. 145 On the other hand, companies may bear costs associated with considering

and addressing additional proposals, leading to a potential reduction in efficiency and capital

formation. 146

Because the potential costs and benefits of the proposed amendments may be greater for

certain companies, the proposed amendments could result in competitive effects. For example,

the proposed amendment could have a greater effect on U.S. public companies relative to those

that are not subject to the federal proxy rules, namely foreign companies and U.S. private

companies. Further, the proposed amendments could have a greater effect on larger public

companies relative to smaller public companies because larger public companies are more likely

to receive shareholder proposals. These competition effects could, for instance, arise through the

capital formation channel described above. However, because the proposed amendments could

result in greater benefits but also greater costs to certain companies, we cannot reliably predict

145

See supra notes 122-124 and the accompanying text.

146

See supra note 126.

whether and how the competitive position of these companies may change as a result of the

proposed amendments.

Reasonable Alternatives

Rule 14a-8(i)(10) – Substantial Implementation

We considered a number of alternative approaches to amending Rule 14a-8(i)(10). First,

we considered proposing a change to the rule that would require a proposal to be fully

implemented in exactly the way a proponent describes it in the proposal for it to be excludable

from a company’s proxy statement. The benefit of this approach is that it would be a standard

that is more predictable in application because it would not require a determination of which

elements of the proposal are essential. We expect that this alternative could lead to greater

consistency and predictability of determinations under Rule 14a-8(i)(10). Further, because a full

implementation standard would be more straightforward for companies and proponents to

understand and apply, it may be more likely to result in a lower number of no-action requests

than under the proposed amendments. However, this alternative could result in more shareholder

proposals appearing in a company’s proxy statement relative to the proposed amendment even if

the differences between a shareholder-proponent’s preferred policies and the policies that the

company has already implemented are only minimal. The full implementation alternative would

be likely to result in relatively greater costs associated with companies’ addressing and nonproponent shareholders’ consideration of these additional proposals.

We also considered various other formulations of what would be considered

“substantially implemented,” such as if the company has already:

1) Effected substantially all of what the proposal requests;

2) Addressed substantially all of the underlying concerns of the proposal; or

3) Implemented the essential objectives of the proposal.

All three of these alternatives may require a more fact-intensive analysis (e.g., delineating “what

the proposal requests” or its “underlying concerns” or “essential objectives” and determining

whether the company has “substantially” addressed them) compared to the proposed amendment.

Further, in the second and third alternatives, the analysis may not be sufficiently focused on the

specific elements of the proposal, which may not serve the purpose of the exclusion to avoid the

consideration of proposals on which a company has already “favorably acted.” We expect that

all three alternative standards would be difficult to apply in a consistent and predictable manner.

As a result, companies and shareholders would potentially experience greater uncertainty with

respect to the application of the substantial implementation exclusion under such alternatives

relative to the proposed amendment.

Rule 14a-8(i)(11) – Duplication

As an additional change to the proposed amendment to Rule 14a-8(i)(11), we considered

changing the existing first-in-time standard to instead provide for the exclusion of the duplicative

proposal that has fewer co-proponents. As with the first-in-time standard, this alternative would

provide an objective criterion for exclusion of a proposal. By focusing on the number of coproponents, this alternative would place an emphasis on the potential breadth of shareholder

support a proposal might receive. However, we find little evidence in the data that the number of

co-proponents is positively associated with the level of support for a proposal. 147 Further, this

alternative approach would not provide a methodology for determining which proposal should be

excluded in cases in which duplicative proposals have the same number of co-filers. We also

Using shareholder proposals that were voted on in meetings held in 2017-2021 and controlling for proposal topic,

we find a positive but not statistically significant correlation between the numbers of co-proponents and the voting

support a proposal received.

147

considered changing the existing first-in-time standard to instead provide for the exclusion of the

duplicative proposal that has fewer number of shares held by a proponent or co-proponents.

However, a proponent’s ownership or the aggregate ownership of co-proponents may not be

correlated with the eventual level of shareholder support a proposal may receive. 148 Lastly, we

expect that the potential benefits associated with changing the first-in-time standard to one of the

alternatives described above, beyond those of the proposed amendment, would be minimal

because the proposed amendment alone may reduce the incentives for proponents to submit a

proposal quickly or reduce the incentives for proponents to attempt to preempt other proposals

those proponents do not agree with and in turn, address the concerns associated with the first-intime standard of the duplication exclusion.

Rule 14a-8(i)(12) – Resubmissions

As an alternative to the proposed amendment to Rule 14a-8(i)(12), we considered

returning to the pre-1983 standard defining a resubmission as “substantially the same proposal”

and interpreting that to mean a proposal that is virtually identical (in form as well as substance)

to a proposal previously included in the company’s proxy materials. This alternative may be

easier to apply relative to the proposed amendments because it would not involve a

determination about the objectives and means of a proposal. We would expect that such an

alternative could to lead to a greater consistency and predictability of determinations under Rule

14a-8(i)(12) and potentially result in fewer no-action requests. However, as discussed in Section

II.C, reverting to the pre-1983 standard would re-introduce the concern previously acknowledged

by the Commission that a shareholder-proponent could make some minor changes to a

previously submitted proposal so as to not have the proposal excluded. In turn, this alternative

148

See 2019 Proposing Release, supra note 3, at 66488 n. 188.

could result in the inclusion of proposals in companies’ proxy statements that have little potential

for obtaining broader or majority support in the near term, which could result in greater costs for

companies and their shareholders.

Request for Comment

We request comment on all aspects of our economic analysis, including the potential

costs and benefits of the proposed amendments and alternatives thereto, and whether the

amendments, if adopted, would promote efficiency, competition, and capital formation.

Commenters are requested to provide empirical data, estimation methodologies, and other factual

support for their views, in particular, on costs and benefits estimates. In addition, we request

comments on our selection of data sources, empirical methodology, and the assumptions we have

made throughout the analysis. In addition, we request comment on the following:

Are there any entities that would be affected by the proposed amendments that are not

discussed in the economic analysis? In which ways are those entities affected by the

proposed amendments? Please provide an estimate of the number of any additional

affected entities.

Are there any costs or benefits of the proposed amendments that are not discussed in the

economic analysis? If so, please describe the types of costs and benefits and provide a

dollar estimate of these costs and benefits.

We have provided a qualitative analysis of the costs and benefits of the proposed

amendments. What would be the quantitative impact of the proposed amendments?

Please provide data about or dollar estimates of the costs and benefits as they relate to

proponents, companies, and non-proponent shareholders.

What would be the effects of the proposed amendments, including any effects on

efficiency, competition, and capital formation? Would the proposed amendments be

beneficial or detrimental to proponents, companies, and the companies’ non-proponent

shareholders, and why in each case?

Could the proposed amendments to Rule 14a-8(i)(10), Rule 14a-8(i)(11), or Rule 14a8(i)(12) allow companies to make more informed decisions around inclusion or exclusion

of proposals and the submission of no-action requests? Would companies submit fewer

no-action requests to the Commission’s staff as a result of the proposed amendments?

Could there be a cost savings to companies associated with companies no longer

attempting to exclude proposals that are unlikely to be excludable under Rule 14a8(i)(10), Rule 14a-8(i)(11), or Rule 14a-8(i)(12)?

Could the proposed amendments to Rule 14a-8(i)(10), Rule 14a-8(i)(11), or Rule 14a8(i)(12) allow shareholder-proponents to make more informed decisions around

submitting proposals? Would shareholder-proponents submit different proposals in terms

of subject matter and/or quantity as a result? Could the proposed amendments benefit

shareholder-proponents by allowing them to avoid submitting proposals that are likely to

be excludable under Rule 14a-8(i)(10), Rule 14a-8(i)(11), or Rule 14a-8(i)(12)?

How might companies and shareholder-proponents change their behavior in response to

the proposed amendments to Rule 14a-8(i)(10), Rule 14a-8(i)(11), or Rule 14a-8(i)(12)?

How might these changes in behavior affect the number and characteristics of proposals

submitted and included in companies’ proxy statements? How might these changes in

behavior impact the distribution of proposal topics submitted and included in companies’

proxy statements? Would these changes result in benefits or costs to companies,

proponents, and non-proponent shareholders?

We described in Section III.E above a number of alternative approaches or additional

changes to the proposed amendments that we considered. Are there any costs or benefits

to these alternatives that are not discussed in the economic analysis? If so, please

describe the types of costs and benefits and provide a dollar estimate of these costs and

benefits.

Are there additional alternatives to the proposed amendments that we should consider? If

so, please describe the types of costs and benefits of these additional alternatives and

provide a dollar estimate of these costs and benefits.

IV.

PAPERWORK REDUCTION ACT

Summary of the Collection of Information

Certain provisions of our rules and schedules that would be affected by the proposed

amendments contain “collection of information” requirements within the meaning of the

Paperwork Reduction Act of 1995 (“PRA”). 149 We are submitting the proposed amendments to

the Office of Management and Budget (“OMB”) for review in accordance with the PRA. 150 The

hours and costs associated with preparing, filing, and sending the schedules, including preparing

documentation required by the shareholder-proposal process, constitute paperwork burdens

imposed by the collection of information. An agency may not conduct or sponsor, and a person

is not required to comply with, a collection of information requirement unless it displays a

currently valid OMB control number. Compliance with the information collection is mandatory.

149

44 U.S.C. 3501 et seq.

150

44 U.S.C. 3507(d) and 5 CFR 1320.11.

Responses to the information collection are not kept confidential, and there is no mandatory

retention period for the information disclosed. The title for the affected collection of information

is:

“Regulation 14A (Commission Rules 14a-1 through 14a-21 and Schedule 14A)” (OMB

Control No. 3235-0059).

We adopted the existing regulations and schedule pursuant to the Exchange Act. The

regulations and schedule set forth the disclosure and other requirements for proxy statements

filed by issuers and other soliciting parties. A detailed description of the proposed amendments,

including the need for the information and its proposed use, as well as a description of the likely

respondents, can be found in Section II above, and a discussion of the expected economic effects

of the proposed amendments can be found in Section III above.

Summary of the Proposed Amendments’ Effects on the Collection of

Information

As discussed in Section II above, the proposed amendments are intended to provide a

clearer framework for the application of three of the substantive bases for the exclusion of

shareholder proposals under Rule 14a-8. The proposed amendments to Rule 14a-8(i)(10),

14a-8(i)(11), and 14a-8(i)(12) would provide greater certainty and transparency to shareholders

and companies as they evaluate whether these bases would apply to particular proposals.

Incremental and Aggregate Burden and Cost Estimates for the Proposed

Amendments

The paperwork burden estimate for Regulation 14A includes the burdens imposed by our

rules that may be incurred by all parties involved in the proxy process leading up to and

associated with the filing of a Schedule 14A. The current number of estimated responses for the

collection of information for Regulation 14A is 6,369 annual responses, reflecting 777,590

internal burden hours and a professional cost burden of $103,678,712. 151 The total burden

estimate for Regulation 14A reflects, among other things, the collection-of-information burden

associated with Rule 14a-8, which includes both the time that a shareholder-proponent spends to

prepare its proposals for inclusion in a company’s proxy statement, as well as the time that the

company spends to prepare its proxy statement to include and respond to such proposals. We

recognize that the burdens on a particular proponent or company would likely vary based on a

number of factors, including the propensity of a particular shareholder-proponent to submit

proposals, or the number of shareholder proposals received by a particular company, which may

be related to its line of business or industry or other factors.

The proposed amendments to Rule 14a-8 would revise the text of Rule 14a-8 to provide

clearer standards for exclusion, and promote more consistent and predictable determinations

regarding the exclusion of proposals under the rule. The proposed amendments are not expected

to affect the number of annual responses under the Regulation 14A information collection, as the

obligation to prepare and file proxy statements would remain irrespective of the proposed

amendments. The proposed amendments could either increase the burden associated with

particular filings (for example, by leading to the inclusion of more shareholder proposals in

companies’ proxy statements) or reduce the burden (for example, by providing a clearer basis for

exclusion of a shareholder proposal). While the effects of the proposed amendments on the

burden hours and professional costs are difficult to predict, as they would depend on a number of

interrelated and potentially offsetting factors, we expect that the overall burdens associated with

151

These numbers reflect the Commission’s current OMB PRA filing inventory. The OMB PRA filing inventory

represents a three-year average. Averages may not align with the actual number of filings in any given year.

Regulation 14A would not change significantly. Thus we are estimating no change in paperwork

burden in connection with the proposed amendments, although we solicit comment on this and

other aspects of our PRA analysis below.

Request for Comment

Pursuant to 44 U.S.C. 3506(c)(2)(B), we request comment in order to:

•

Evaluate whether the proposed collections of information are necessary for the proper

performance of the functions of the Commission, including whether the information

would have practical utility;

•

Evaluate the accuracy and assumptions and estimates of the burden of the proposed

collection of information;

•

Determine whether there are ways to enhance the quality, utility, and clarity of the

information to be collected;

•

Evaluate whether there are ways to minimize the burden of the collection of

information on those who respond, including through the use of automated collection

techniques or other forms of information technology; and

•

Evaluate whether the proposed amendments would have any effects on any other

collection of information not previously identified in this section

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