According to Bloomberg Law data, Shareholder proposal no-action letter requests are up from their levels in 2016. Q1 of 2017 saw 226 letter requests submitted to the Securities and Exchange Commission (SEC), up nearly 10% from Q1 of 2016. This rise continues an upward trend from the last proxy season, with proxy access bylaws the shareholder proposal topic most popularly submitted for no-action relief, with 49 letters. Behind that came human rights/social Issues (42 letters), environmental issues (29), risk management (28) and Executive Compensation (13). The SEC ruled that 74% of all letters related to environmental issues would need to be included in the company’s proxy materials.
Breaking the no-action letter requests down by sector, Bloomberg determined the financial sector to have the most requests at 40. Behind finance, the customer discretionary industry had 39 letters, healthcare 38, utilities 22 and the industrial sector sent 19. Among the top four sectors, proxy access bylaws were the second most common proposal topic, and the most common for industrial companies. Nine of the 40 no-action requests dealt with executive compensation, while seven regarded proxy access bylaws. 15 of the 39 consumer discretionary letters concerned human rights and social issues.
Proxy access has been a hot-button topic throughout the business world, with company leadership in various industries hoping to use proxies to stymie the efforts of activist investors to hijack company leadership. As activists are often heavily concerned with environmental issues, it’s no surprise many of the requests concerned omitting such issues from reports.
As proxy access bylaws continue to dominate disclosure rules debates, leaders will need help anticipating which way the SEC will go. Financial printing and communications firms employ experts in shareholder communications, EDGAR and SEC filings and XBRL (including do-it-yourself XBRL). These specialized service providers can create attractive stylized and interactive proxies to keep investors focused on major issues from IPOs to mergers & acquisitions.
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