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By Yin Wilczek
March 6 — While many companies are pondering how to proceed with their shareholder-submitted proxy access resolutions, General Electric Co. March 3 obtained no-action relief on an access proposal.
In a letter, Securities and Exchange Commission staff told GE that there is “some basis” for it to exclude an access proposal submitted by Kevin Mahar under 1934 Securities Exchange Act Rule 14a-8(i)(10).
“We note your representation that the board has adopted a proxy access bylaw that addresses the proposal’s essential objective,” said the letter, signed by Corp. Fin. Chief Counsel David Fredrickson. “Accordingly, we will not recommend enforcement action to the Commission if GE omits the proposal from its proxy materials in reliance on rule 14a-8(i)(10).”
The provision allows companies to omit shareholder proposals if they have “substantially implemented” the proposal.
The SEC in mid-January suspended no-action relief under Rule 14a-8(i)(9), leaving more than 50 companies in the lurch who had applied for relief under the provision with respect to their shareholder proxy access and other proposals.
The suspension pending staff review was announced after investors raised concerns that some companies were using the provision to avoid putting shareholder access resolutions to a vote in lieu of management resolutions with more stringent eligibility thresholds.
GE's board Feb. 6 adopted amendments to its bylaws that the company told the SEC were consistent with Mahar's proposal. GE's new bylaw allows a shareholder or a group of up to 20 shareholders who own 3 percent or more of stock for at least three years to nominate and include in the company's proxy materials directors constituting up to 20 percent of the board.
GE previously asked the staff if it could exclude the proposal under Rule 14a-8(b) based on Mahar's eligibility to submit the proposal. Corp. Fin. told the company in December that it did not agree the proposal could be challenged on eligibility grounds.
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The staff response is available at http://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2015/kevinmaharrecon030315-14a8.pdf.
The staff's Dec. 24 response is available at http://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2014/kevinmahar122414-14a8.pdf.
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