Eligible shareholders may require a company to include a proposal in its proxy materials, subject to eligibility and substantive exclusions.
Eligibility. Continuous ownership of a stated value of securities for a stated period, with tiered thresholds, plus a statement of intent to hold through the meeting and availability to engage with the company.
Procedural requirements. A single proposal per shareholder per meeting, a word limit, and a deadline calculated from the prior year’s proxy release.
Substantive exclusions available to the company, including improper subject matter under state law; violation of law; conflict with the company’s own proposal; relating to ordinary business operations; relating to a specific amount of dividends; substantial implementation; duplication; and resubmission below support thresholds.
Ordinary business is the most litigated exclusion, with an exception for proposals raising significant policy issues — an exception whose scope has moved with successive staff guidance.
Process. The company notifies the staff of its intent to exclude, the proponent may respond, and the staff issues a no-action position.
Practical dynamics. Many proposals are withdrawn following engagement, which is frequently the proponent’s objective. Support levels influence proxy adviser recommendations and subsequent campaigns.