Statement On Staff Legal Bulletin 14M, SEC Commissioner Caroline A. Crenshaw, Feb. 12, 2025

Today, under the direction of the Acting Chairman, Staff Legal Bulletin 14L is now rescinded by the issuance of Staff Legal Bulletin 14M (“SLB 14M”). SLB 14M moves the goalposts smack dab in the middle of this year’s shareholder proposal process. Doing so at this hour creates undue costs and uncertainty for investors and corporations alike. This type of political policy shifting mid-season serves to undercut capital formation, not facilitate it.

SLB 14M implements different rules of the road for the process of excluding shareholder proposals from issuers’ proxy statements.[1] Such proposals include topics relating to poison pills, compensation, emerging issues such as AI, political and lobbying expenditures, and environmental or other issues that shareholders have identified as materially impacting the firm’s financial value.[2] The fact that the change is taking place at this time is significant. As anyone familiar with the shareholder proposal process knows, excluding a proposal from the proxy statement all but guarantees it will never make it to a shareholder vote.

The rescission comes as no surprise given that the shareholder proposal process has become the target of politicized messaging and a preferred punching bag of those who wish to diminish corporate democracy. This is the case even though there are already numerous other mechanisms in place to limit the availability of the proxy ballot to shareholders.[3] Though the shareholder proposal process is designed merely to facilitate a dialogue with investors, today’s actions drowns out investor voices and facilitates corporate monologues instead.[4]

Even though the rescission may not be a surprise, the timing of this action is arbitrary and inequitable. Shareholders have already crafted and submitted their proposals for this season. Corporations and shareholders will incur costs to supplement or alter no-action requests and responses. Further, SEC staff have already issued no-action letter responses related to proposals for this proxy season. Even for those stakeholders and observers who prefer a different approach to this process, the end result is quite possibly disparate treatment not just for shareholders, but for issuers as well. We are so focused on undoing the prior Commission’s agenda that we sow chaos now. By choosing this path, we forsake all consistency, and perhaps even the legitimacy, of the independent, historically staff-governed process to the detriment of all parties.

While costly and confusing, corporations will still have a chance to revise their no-action requests to exclude proposals. Shareholders, of course, will have no such opportunity. The 14a-8 no-action process is fact-intensive, and exactly how a proposal is crafted is often determinative of its exclusion or inclusion. It is now too late for most shareholders to design proposals in line with SLB 14M.

Instead of taking a measured approach that would ensure market stability and a meaningful consideration of cost and benefit, this leadership has rushed out staff guidance for the sake of political expediency, and at significant cost to shareholders, corporations, and SEC staff resources.