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Further to last week's Riches post, the most prominent aspect of Staff's welcome - albeit, still-to-be- fleshed-out-in-practice, shareholder proposal guidance is the expected extent of board involvement in the 14a-8(i)(7) ("ordinary business") and 14a-8(i)(5) ("relevance") proposal vetting process, and associated time commitment and regulatory timing compliance logistics challenges - particularly for those companies targeted with numerous proposals. 

Sullivan & Cromwell aptly summarizes the guidance this way: 

• For the Rule 14a-8(i)(7) “ordinary business” exclusion, the guidance states that the SEC staff will expect no-action requests to include a discussion of the company board’s conclusion that the underlying issue is not sufficiently significant to the company’s business to transcend ordinary business matters and suggests that the staff will give a degree of deference to a conclusion that is “well-informed and well-reasoned.”
• For the Rule 14a-8(i)(5) “economic relevance” exclusion, the guidance expands the availability of the exclusion, clarifies that the burden is on the proponent to show that the proposal is significantly related to the company’s business, states that the SEC staff will expect a similar discussion of the company board’s analysis of the proposal’s significance and also suggests that the staff will give a degree of deference to the board’s conclusion.
• The guidance confirms that shareholders may submit proposals through a representative but states that the SEC staff will now expect the proponent to identify its representative by name and confirm the representative’s authority to act at a specified shareholder meeting and on a specified proposal.
• The guidance clarifies that shareholders and issuers may use graphics in their proposals, so long as the graphics otherwise comply with Rule 14a-8. The size of the graphics appears to be unlimited so long as the issuer’s graphics and proponent’s graphics are given equal prominence.

And here is the firm's view on  the contemplated board input encompassed in the 14a-8(i)(7) and 14a-8(i)(5) guidance [emphasis added]:

 This level of board involvement in the Rule 14a-8 no-action process is new and may present some challenges for companies this season. For example, until no-action practices develop in this area, it is unclear the extent to which a well-informed and well-reasoned process will require the board to become familiar with the staff’s historical practices in this area and how they apply to the company’s particular situation or whether the process would benefit from multiple meetings. For companies that receive multiple shareholder proposals to which the ordinary course of business exclusion may be applicable, the staff’s new position may well present challenges in terms of timing, although delegating shareholder proposals to a committee may facilitate compliance with the new guidance and the company’s ability to stay within the Rule 14a-8 timing requirements.

Ropes & Gray also suggests delegation to a board committee on 14a-8(i)(7) (and presumably also 14a-8(i)(5)) proposals where the guidance calls for inclusion in the company's no-action request of a board analysis [emphasis added]:

We do not believe that this board analysis must be included in all no-action requests. It does not, for example, affect the objection that a proposal “micromanages” the company. For matters that the staff has in the past concluded are significant policy issues, however, the guidance appears to allow companies to argue, based on the board’s conclusion as fiduciaries, that the policy issue is not significant to their company. We believe that this analysis could be undertaken and presented by a properly constituted committee of the board.

 Sullivan & Cromwell also suggests management update its internal timeline to accommodate the requisite board/committee review in appropriate situations.