Keith Higgins Suggests Modest Shareholder Proposal Reforms

By Randi Morrison posted 10-05-2017 08:47 AM

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In this new post: "Finding Common Ground on Shareholder Proposals," Ropes & Gray Securities & Governance Practice Chair and former SEC Corp Fin Director Keith Higgins suggests a series of modest shareholder proposal reforms that reflect his robust, unique experiences, seasoned perspective, and thoughtful approach.

Suggestions for SEC consideration include:

- Increasing resubmission thresholds - perhaps comparable to the SEC's 1997 proposal, i.e., 6%/15%/30% - from the current 3%/6%/10%

- Increasing the initial eligibility ownership requirement to three years from the current one-year requirement

- For proposal by proxy scenarios, requiring those acting on shareholders' behalf to submit a current, specific authorization to act

- Allowing companies to redact factual inaccuracies from shareholder proposals and supporting statements that are otherwise required to be included in the proxy statement, subject perhaps to independent director approval of the redaction and the company's proxy statement disclosure about the fact that a portion was redacted

- Modifying the 5% "relevance" exclusion (14a-8(c)(5)) for proposals relating to operations - whose current, subjective "and is not otherwise significantly related to the registrant's business" qualification effectively eliminates the availability of the exclusion - so that it is based on an objective bright-line threshold of 5% (or other reasonable percentage) of total assets

Access numerous additional, relevant resources on our Shareholder Proposals topical page.

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