As discussed in this post from Stinson Leonard Street's Steve Quinlivan, last week, Apple submitted a Rule 14a-8 no-action request and associated requested waiver of the 80-day filing requirement based on the SEC Staff's new shareholder proposal guidance (SLB No. 14I) - specifically, the application of Rule 14a-8(i)(7) (ordinary business) and associated board determination for exclusion of a proposal recommending a board-established Human Rights Committee:
Apple Seeks to Exclude Shareholder Proposal Based on Board Process in SLB 14I In the closely watched area of shareholder proposals, Apple is
seeking to exclude a shareholder proposal regarding the establishment of a Human Rights Committee because it involves the company’s ordinary business operations under Rule 14a-8(i)(7). Apple is relying on newly issued Staff Legal Bulleting 14I. Apple states SLB 14I provides that whether a policy issue is of sufficient significance to a particular company to warrant exclusion of a proposal that touches upon that issue may involve a “difficult judgment call” which the company’s board of directors “is generally in a better position to determine,” at least in the first instance. A well-informed board, according to Apple analyzing the SEC’s views, exercising its fiduciary duty to oversee management and the strategic direction of the company, “is well situated to analyze, determine and explain whether a particular issue is sufficiently significant because the matter transcends ordinary business and would be appropriate for a shareholder vote.”
Exactly what a board or a committee need to do to avail itself of SLB 14I has been a hotly debated area. Apple appears to be taking the “been there, done that approach.” According to Apple:
“The Board recognized that it had already considered the issues raised by the Proposal when setting the strategic direction of the Company and performing its duties as a Board. Additionally, the Board determined that senior executives’ focus on reviewing, improving, and implementing policies designed to promote human rights make these matters an integral part of the ordinary business operations of the Company, and the issues presented in the Proposal as a whole fit squarely within the Company’s ordinary business mission to safeguard and uphold human rights wherever it does business. The Board also considered the Company’s existing policies, practices, and disclosures and concluded that the Proposal, even if submitted to shareholders and approved, would not call for the Company to consider facts, issues or policies that the Company does not regularly consider in the course of its day-to-day operations, and therefore does not transcend the Company’s ordinary business The Board considered the fact that it, along with management, is regularly and actively involved in the consideration, oversight and re-assessment of the Company’s human rights policies.”
See our prior report: Corp Fin Staff Clarifies Certain Aspects of Shareholder Proposal Guidance, and numerous additional resources here.