Key takeaways

• On October 22, the SEC issued much-anticipated guidance for the upcoming 2016 proxy season on the scope and application of Rule 14a-8(i)(9) which permits a company to exclude a shareholder proposal that directly conflicts with the company’s own proposals.
• Under the guidance,  the SEC Staff will grant no-action relief to a company in respect of Rule 14a-8(i)(9) only if “a reasonable shareholder could not logically vote in favor of both proposals, i.e., a vote for one proposal is tantamount to a vote against the other proposal.”  Historically, the Staff’s analysis had focused, among other things, on whether including the shareholder proposal could present “alternative and conflicting decisions for the shareholders” or could create the potential for “inconsistent and ambiguous results.”
• As a result, it will be challenging for companies to exclude a shareholder proxy access proposal under Rule 14a-8(i)(9) even if management intends to include its own competing proposal.