On the heels of widely-acknowledged confusion about the conclusions drawn by Staff in some recent no-action letters that relied upon the new shareholder proposal guidance in SLB 14I, Akin Gump's: "SEC's Mixed Guidance on Apple Environmental and Human Rights Shareholder Proposals Provides Clarification on CSR Proposals" offers this user-friendly flow chart to assist companies in applying the new guidance - specifically as respects determining whether a proposal will be excludable under Rule 14a-8(i)(7)'s ordinary business exception:In hindsight, using the above framework reconciles the otherwise potentially seemingly inconsistent positions reflected in Staff's letters on two CSR proposals (one on greenhouse gas emissions and another on human rights) submitted to Apple (reported on here: "New Shareholder Proposal Guidance in Action"). Going forward, the firm suggests companies use the framework as a tool to inform their no-action requests.
The firm offers this guidance:
"[I]n order to exclude a CSR-related shareholder proposal under the "ordinary business" exception, companies must demonstrate either that the issue is not "sufficiently significant" in light of their operations and/or that the proposal seeks to micromanage their day-to-day operations. As illustrated by the Human Rights proposal discussed above, the company's analysis should likely evaluate both prongs in order to provide the SEC with more than one option for determining that the proposal may be excluded."
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This post first appeared in last week's Society Alert! Access numerous additional resources on our Shareholder Proposals page.
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