[Federal Register Volume 85, Number 214 (Wednesday, November 4, 2020)]
[Rules and Regulations]
[Pages 70240-70295]
[FR Doc No: 2020-21580]

Vol. 85

Wednesday,

No. 214

November 4, 2020

Part II

 Securities and Exchange Commission

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17 CFR Part 240

Procedural Requirements and Resubmission Thresholds Under Exchange Act
Rule 14a-8; Final Rule

Federal Register / Vol. 85 , No. 214 / Wednesday, November 4, 2020 /
Rules and Regulations

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 240

[Release No. 34-89964; File No. S7-23-19]
RIN 3235-AM49

Procedural Requirements and Resubmission Thresholds Under
Exchange Act Rule 14a-8

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: We are adopting amendments to certain procedural requirements
and the provision relating to resubmitted proposals under the
shareholder-proposal rule in order to modernize and enhance the
efficiency and integrity of the shareholder-proposal process for the
benefit of all shareholders. The amendments to the procedural rules:
Amend the current ownership requirements to incorporate a tiered
approach that provides three options for demonstrating a sufficient
ownership stake in a company--through a combination of amount of
securities owned and length of time held--to be eligible to submit a
proposal; require certain documentation to be provided when a proposal
is submitted on behalf of a shareholder-proponent; require shareholder-
proponents to identify specific dates and times they can meet with the
company in person or via teleconference to engage with the company with
respect to the proposal; and provide that a person may submit no more
than one proposal, directly or indirectly, for the same shareholders'
meeting. The amendments to the resubmission thresholds revise the
levels of shareholder support a proposal must receive to be eligible
for resubmission at the same company's future shareholders' meetings
from 3, 6, and 10 percent to 5, 15, and 25 percent, respectively.

DATES: The final rules are effective January 4, 2021, except for
amendatory instruction 2.b adding Sec.  240.14a-8(b)(3), which is
effective January 4, 2021 through January 1, 2023. See Section III for
further information on transitioning to the final rules.

FOR FURTHER INFORMATION CONTACT: Matt McNair, Senior Special Counsel in
the Office of Chief Counsel, at<PHONE_NUMBER>, Division of Corporation
Finance, U.S. Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549.

SUPPLEMENTARY INFORMATION: We are adopting amendments to 17 CFR
240.14a-8 (``Rule 14a-8'') under the Securities Exchange Act of 1934
[15 U.S.C. 78a et seq.] (``Exchange Act'').

Table of Contents

I. Introduction
    A. Background
II. Final Amendments
    A. Ownership Requirements
    1. Proposed Rule Amendments
    2. Comments on the Proposed Rule Amendments
    3. Final Rule Amendments
    B. Proposals Submitted on Behalf of Shareholders
    1. Proposed Rule Amendment
    2. Comments on the Proposed Rule Amendment
    3. Final Rule Amendment
    C. The Role of the Shareholder-Proposal Process in Shareholder
Engagement
    1. Proposed Rule Amendment
    2. Comments on the Proposed Rule Amendment
    3. Final Rule Amendment
    D. One-Proposal Limit
    1. Proposed Rule Amendment
    2. Comments on the Proposed Rule Amendment
    3. Final Rule Amendment
    E. Resubmission Thresholds
    1. Proposed Rule Amendment
    2. Comments on the Proposed Rule Amendment
    3. Final Rule Amendment
    F. Momentum Requirement
    1. Proposed Rule Amendment
    2. Comments on the Proposed Rule Amendment
    3. Final Rule Amendment
    G. Other Matters
    1. Response to Constitutional Objections
    2. Proposals Submitted to Open-End Investment Companies
    3. Commission and Staff Role in the Rule 14a-8 Process
III. Transition Matters
IV. Other Matters
V. Economic Analysis
    A. Introduction
    B. Economic Baseline
    1. Companies
    2. Non-Proponent Shareholders
    3. Proponents of Shareholder Proposals
    C. Estimated Reduction in the Number of Shareholder Proposals
    D. Analysis of Costs and Benefits and Effects on Efficiency,
Competition, and Capital Formation of the Final Rule Amendments
    1. Companies
    2. Non-Proponent Shareholders
    3. Proponents of Shareholder Proposals
    E. Other Potential Effects of the Amendments
    1. Effects of the Rule Amendments on Excludable Proposals by
Type of Proposal, Proponent, and Company
    2. Economic Effects of Final Rule Amendments on the Quality of
Shareholder Proposals
    3. Comments Regarding Voting Support and Economic Effects of the
Rule Amendments
    F. Reasonable Alternatives
    1. Alternative Amendments to Rule 14a-8(b) and Rule 14a-8(c)
    2. Alternative Amendments to Rule 14a-8(i)(12)
VI. Paperwork Reduction Act
    A. Background
    B. Summary of Comment Letters and Revisions to PRA Estimates
    C. Summary of the Amendments' Impact on Collections of
Information
    D. Incremental and Aggregate Burden and Cost Estimates for the
Final Amendments
VII. Final Regulatory Flexibility Act Analysis
    A. Need for, and Objectives of, the Final Amendments
    B. Significant Issues Raised by Public Comments
    C. Small Entities Subject to the Final Amendments
    D. Projected Reporting, Recordkeeping, and Other Compliance
Requirements
    E. Agency Action to Minimize Effect on Small Entities
VIII. Statutory Authority

I. Introduction

A. Background

    Rule 14a-8 requires companies that are subject to the federal proxy
rules to include shareholder proposals in companies' proxy statements
to shareholders, subject to certain procedural and substantive
requirements.\1\ By giving any shareholder-proponent the ability to
have a proposal included in the company's proxy statement to all
shareholders, Rule 14a-8 enables eligible shareholder-proponents to
easily present their proposals to all other shareholders, and to have
proxies solicited for their proposals, at little or no expense to
themselves.
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    \1\ Unless otherwise noted, references to ``shareholder
proposal,'' ``shareholder proposals,'' ``proposal,'' or
``proposals'' refer to submissions made in reliance on Rule 14a-8.
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    This form of engagement among shareholder-proponents, other
shareholders, and companies has benefits for shareholder-proponents as
well as companies and their shareholders. However, the costs of
processing, analyzing, and voting on the proponent's proposal largely
are borne by the company and its shareholders. Accordingly, the
mechanism for shareholder-proponents to require inclusion of their
proposals in companies' proxy materials is not without limits. Rule
14a-8 permits a company to exclude a shareholder proposal from its
proxy statement if the proposal fails to meet any of several specified
procedural or substantive requirements, or if the shareholder-proponent
does not satisfy certain eligibility or procedural requirements. All of
these requirements are generally designed to ensure that the ability
under Rule 14a-8 for a shareholder to have a

proposal included alongside management's in the company's proxy
materials--and thus to draw on resources and to command the time and
attention of the company and other shareholders--is not inappropriately
used. Over the years, the Commission has amended the shareholder-
proposal rule as necessary to protect against such use and protect the
integrity of the process.\2\ The most recent significant amendments
were adopted over 35 years ago in 1983.
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    \2\ The Commission has expressed concern over the years that
Rule 14a-8 is susceptible to misuse. In 1948, the Commission adopted
three new bases for exclusion to ``relieve the management of
harassment in cases where [shareholder] proposals are submitted for
the purpose of achieving personal ends rather than for the common
good of the issuer and its security holders.'' See Notice of
Proposal to Amend Proxy Rules, Release No. 34-4114 (July 6, 1948)
[13 FR 3973 (July 14, 1948)], at 3974. In 1953, the Commission
amended the shareholder-proposal rule to allow companies to omit the
name and address of the shareholder-proponent to ``discourage the
use of this rule by persons who are motivated by a desire for
publicity rather than the interests of the company and its security
holders.'' See Notice of Proposed Amendments to Proxy Rules, Release
No. 34-4950 (Oct. 9, 1953) [18 FR 6646 (Oct. 20, 1953)], at 6647. In
amending the resubmission basis for exclusion in 1983, the
Commission noted that commenters ``felt that it was an appropriate
response to counter the abuse of the security holder proposal
process by certain proponents who make minor changes in proposals
each year so that they can keep raising the same issue despite the
fact that other shareholders have indicated by their votes that they
are not interested in that issue.'' See Amendments to Rule 14a-8
Under the Securities Exchange Act of 1934 Relating to Proposals by
Security Holders, Release No. 34-20091 (Aug. 16, 1983) [48 FR 38218
(Aug. 23, 1983)], at 38221 (``1983 Adopting Release''). In
addressing the personal-grievance basis for exclusion in 1982, the
Commission noted that ``[t]here has been an increase in the number
of proposals used to harass issuers into giving the proponent some
particular benefit or to accomplish objectives particular to the
proponent.'' See Proposed Amendments to Rule 14a-8, Release No. 34-
19135 (Oct. 14, 1982) [47 FR 47420 (Oct. 26, 1982)], at 47427
(``1982 Proposing Release'').
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    On November 5, 2019, we proposed amendments to the procedural
requirements and resubmission thresholds under Rule 14a-8 as part of
our ongoing focus on modernizing and improving the proxy voting
process.\3\ We noted at that time concerns with certain aspects of the
shareholder-proposal rule, which had not been reviewed by the
Commission in more than 20 years.\4\ We also noted that shareholders'
ability to communicate with issuers and other shareholders through
various channels has evolved significantly in response to technological
advancements and developing market practices. As a result of these
developments, shareholders now have more tools at their disposal to
engage with a company's board and management in a manner that may be
more efficient and less costly for all parties than the Rule 14a-8
process.
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    \3\ See Procedural Requirements and Resubmission Thresholds
under Exchange Act Rule 14a-8, Release No. 34-87458 (Nov. 5, 2019)
[84 FR 66458 (Dec. 4, 2019)] (``Proposing Release'').
    \4\ See Amendments To Rules On Shareholder Proposals, Release
No. 34-40018 (May 21, 1998) [63 FR 29106 (May 28, 1998)] (``1998
Adopting Release'').
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    In light of the above, we proposed amendments to the shareholder-
proposal rule to: (1) Amend the criteria that a shareholder must
satisfy to be eligible to have a proposal included in a company's proxy
statement; (2) modify the rule limiting the number of proposals that
may be submitted for a particular company's shareholders' meeting (the
``one-proposal rule'') to establish that a single person may not submit
multiple proposals at the same shareholders' meeting, whether the
person submits a proposal as a shareholder or as a representative of a
shareholder; and (3) revise the levels of shareholder support a
proposal must receive to be eligible for resubmission at the same
company's future shareholders' meetings.\5\
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    \5\ See Proposing Release, supra note 3.
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    We received many comment letters in response to the Proposing
Release.\6\ After taking into consideration these public comments, as
well as the feedback received as part of the Commission's 2018
Roundtable on the Proxy Process (the ``Proxy Process Roundtable''),\7\
we are adopting the amendments substantially as proposed with the
exception of the Momentum Requirement (defined below), which we are not
adopting. The amendments are intended to modernize and enhance the
efficiency and integrity of the shareholder-proposal process for the
benefit of all shareholders, including to help ensure that a
shareholder-proponent has demonstrated a meaningful ``economic stake or
investment interest'' in a company before the shareholder may draw on
company resources to require the inclusion of a proposal in the
company's proxy statement, and before the shareholder may use the
company's proxy statement to command the attention of other
shareholders to consider and vote on the proposal.\8\
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    \6\ See generally letters submitted in connection with the
Proposing Release, available at https://www.sec.gov/comments/s7-23-19/s72319.htm. Unless otherwise specified, all references in this
release to comment letters are to those relating to the Proposing
Release.
    \7\ On November 15, 2018, Commission staff held a roundtable on
the proxy process, which included a panel discussion on Rule 14a-8
and the shareholder-proposal process. The shareholder-proposal
panelists expressed their views on the application of Rule 14a-8 and
shared their experiences with shareholder proposals and the related
benefits and costs involved for companies and shareholders. In
connection with the Proxy Process Roundtable, the staff invited
members of the public to provide their views on the proxy process
via written comments, which are available at https://www.sec.gov/comments/4-725/4-725.htm.
    \8\ See 1983 Adopting Release, supra note 2.
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II. Final Amendments

A. Ownership Requirements

1. Proposed Rule Amendments
i. Ownership Thresholds
    Rule 14a-8(b) requires a shareholder that wishes to have a proposal
included in a company's proxy materials to have continuously held at
least $2,000 in market value, or 1 percent, of a company's securities
entitled to vote on the proposal for at least one year as of the date
the shareholder submits the proposal.
    In the Proposing Release, we proposed to modify the current one-
year minimum holding period associated with the $2,000 ownership
threshold to require continuous ownership for at least three years and
to add two alternative ownership thresholds. As proposed, a shareholder
would be eligible to submit a proposal if the shareholder had
continuously held at least:
     $2,000 of the company's securities entitled to vote on the
proposal for at least three years;
     $15,000 of the company's securities entitled to vote on
the proposal for at least two years; or
     $25,000 of the company's securities entitled to vote on
the proposal for at least one year.
    Under the proposed amendment, a shareholder could satisfy any one
of these thresholds to be eligible to submit a proposal.
ii. Percentage Test
    We also proposed to eliminate the one-percent test in the rule
because this test has not historically been utilized. In addition, we
understand that the vast majority of shareholders who use Rule 14a-8 do
not hold one percent or more of a company's shares.\9\
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    \9\ See Proposing Release at 66464 n.58.
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iii. Aggregation
    We also proposed to amend the rule to prohibit shareholders from
aggregating their securities with other shareholders for the purpose of
meeting the applicable minimum ownership thresholds to submit a Rule
14a-8 proposal. Under the proposal, shareholders would continue to be
permitted to co-file or co-sponsor shareholder proposals as a group if
each shareholder-proponent in the group met

one of the proposed eligibility requirements.
iv. Lead-Filer Designation
    The Proposing Release also addressed whether co-filers, or co-
sponsors, should be required to identify a lead filer and specify
whether such lead filer is authorized to negotiate with the company and
withdraw the proposal on behalf of the other co-filers. Although we did
not propose to require this practice in our rules, we requested comment
on whether we should revise the rules to require co-filers to identify
a lead filer and authorize the lead filer to negotiate the withdrawal
of the proposal on behalf of the other co-filers.
2. Comments on the Proposed Rule Amendments
i. Ownership Thresholds
    The proposal generated a wide range of responses among commenters.
Commenters that supported the revised ownership thresholds generally
indicated that a tiered approach would help address concerns related to
the shareholder-proposal process while maintaining an avenue of
communication for shareholders of various investment sizes.\10\ Several
commenters also indicated that satisfaction of the proposed thresholds
would help demonstrate that a shareholder-proponent has a meaningful
ownership interest in the company that will receive the proposal.\11\
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    \10\ See, e.g., letters from Center for Capital Markets
Competitiveness dated January 31, 2020; Senator Kevin Cramer dated
July 28, 2020; Energy Infrastructure Council dated February 3, 2020;
Exxon Mobil Corporation dated February 3, 2020; International
Bancshares Corporation dated January 23, 2020; Investment Company
Institute dated February 3, 2020; National Association of
Manufacturers dated February 3, 2020.
    \11\ See letters from Center for Capital Markets Competitiveness
dated January 31, 2020; Fidelity Management & Research LLC dated
February 3, 2020; International Bancshares Corporation dated January
23, 2020.
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    Many commenters questioned the need and/or rationale for the
proposed amendment to the ownership requirements.\12\ For example,
several commenters disagreed with the discussion in the Proposing
Release \13\ positing that an investor's holding period is a meaningful
indicator of a shareholder's interest in a company, or that a longer
holding period may make it more likely that a proposal will reflect a
greater interest in the company and its shareholders rather than
promote a personal interest or publicize a general cause.\14\ Other
commenters questioned whether the proposed thresholds were commensurate
with the rate of inflation or appreciation in the capital markets.\15\
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    \12\ See, e.g., letters from CalSTRS dated February 3, 2020;
Council of Institutional Investors dated January 30, 2020; First
Affirmative Financial Network, LLC dated January 24, 2020; RK Invest
Law, PBC dated February 3, 2020; UAW Retiree Medical Benefits Trust
dated January 30, 2020.
    \13\ See Proposing Release at 66463.
    \14\ See, e.g., letters from Council of Institutional Investors
dated January 30, 2020; First Affirmative Financial Network, LLC
dated January 24, 2020; RK Invest Law, PBC dated February 3, 2020.
    \15\ See, e.g., letters from CalPERS dated February 3, 2020; UAW
Retiree Medical Benefits Trust dated January 30, 2020.
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    Many commenters that opposed the proposed ownership thresholds
expressed concern about their potential effect on the ability of
shareholders with smaller investments to submit proposals.\16\ Several
commenters also expressed the view that shareholders with smaller
investments play an important role in the shareholder-proposal process
and may submit proposals that other shareholders support.\17\ In
addition, some expressed concern about these investors' ability to
satisfy the proposed ownership thresholds without compromising
portfolio diversification.\18\
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    \16\ See, e.g., letters from Benedictine Sisters of Chicago
dated January 23, 2020; Senator Sherrod Brown dated August 21, 2020;
John Chevedden dated January 31, 2020; Christian Brothers Investment
Services, Inc. dated January 21, 2020; Connecticut State Treasurer
dated January 31, 2020; Council of Institutional Investors et al.
dated July 29, 2020; Senator Tammy Duckworth dated January 30, 2020;
James McRitchie dated November 5, 2019; James McRitchie dated July
21, 2020; Shareholder Rights Group dated June 10, 2020.
    \17\ See, e.g., letters from John Chevedden dated July 13, 2020;
John Chevedden dated July 20, 2020; Christian Brothers Investment
Services, Inc. dated January 21, 2020; Council of Institutional
Investors et al. dated July 29, 2020; Senator Tammy Duckworth dated
January 30, 2020; Form Letter Type A; Illinois State Treasurer dated
January 16, 2020; James McRitchie dated July 21, 2020.
    \18\ See, e.g., Council of Institutional Investors dated January
30, 2020; NorthStar Asset Management, Inc. dated February 3, 2020;
Shareholder Commons dated January 31, 2020; Shareholder Rights Group
dated February 3, 2020; US SIF dated January 31, 2020. See also
Recommendation of the SEC Investor Advisory Committee (IAC) Relating
to SEC Guidance and Rule Proposals on Proxy Advisors and Shareholder
Proposals dated January 24, 2020 (``Recommendation of the IAC'').
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    Some commenters expressed the view that, while shareholders that
are unable to submit proposals are able to pursue alternative avenues
of engagement with management and other shareholders, these
alternatives are not as effective as shareholder proposals.\19\ For
example, these commenters suggested that there are inherent weaknesses
with using social media as a method of engagement,\20\ or that
alternative engagement methods do not allow shareholders to solicit the
views of the entire shareholder base.\21\
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    \19\ See, e.g., letters from Lucian A. Bebchuk dated February 3,
2020; Council of Institutional Investors dated January 30, 2020;
Council of Institutional Investors et al. dated July 29, 2020; James
McRitchie dated February 2, 2020; New York State Comptroller dated
February 3, 2020; NorthStar Asset Management, Inc. dated February 3,
2020.
    \20\ See, e.g., letters from Council of Institutional Investors
dated January 30, 2020; James McRitchie dated February 2, 2020; New
York State Comptroller dated February 3, 2020.
    \21\ See, e.g., letters from Council of Institutional Investors
dated January 30, 2020; James McRitchie dated February 2, 2020.
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    A number of commenters suggested adjustments or alternative
approaches to the proposed ownership requirements. Some commenters that
were supportive of the proposed tiered approach recommended raising the
initial $2,000 threshold for inflation and/or periodically adjusting
each of the proposed ownership thresholds for inflation going
forward.\22\ Several commenters that opposed the proposed ownership
requirements indicated that they would not object to adjusting the
existing $2,000 threshold for inflation.\23\ Other commenters expressed
support for a single threshold at an amount higher than $2,000.\24\ One
commenter suggested adopting thresholds of $5,000, $10,000, and
$15,000, depending on the holding period.\25\ Another commenter
suggested tying eligibility to the size of an investor's total
investment portfolio by applying the existing thresholds to investors
with a total investment portfolio of less than $1 million and the
proposed thresholds to those with a total investment portfolio in
excess of $1 million.\26\ Another commenter found merit to a tiered
approach, but suggested an alternative in which shareholders meeting a
three-year holding period would be permitted to submit a proposal
regardless of investment amount.\27\
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    \22\ See letters from Business Roundtable dated February 3,
2020; Exxon Mobil Corporation dated February 3, 2020; FedEx
Corporation dated February 3, 2020; Nasdaq, Inc. dated February 3,
2020; Society for Corporate Governance dated February 3, 2020.
    \23\ See letters from CalPERS dated February 3, 2020; CFA
Institute dated February 3, 2020; Council of Institutional Investors
dated January 30, 2020; First Affirmative Financial Network, LLC
dated January 24, 2020; James McRitchie dated February 2, 2020;
Shareholder Rights Group dated February 3, 2020.
    \24\ See letters from CT Hagberg LLC dated February 3, 2020
(suggesting a single threshold of $5,000); Jing Zhao dated February
3, 2020 (suggesting a single threshold of $2,500).
    \25\ See letter from Van Brenner dated November 21, 2019.
    \26\ See letter from John Taylor dated November 14, 2019.
    \27\ See letter from Josh Feldblyum dated November 30, 2019.
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    Several commenters offered views that were specific to the proposed
holding periods. One commenter urged us to ``consider changing the
duration of the ownership requirement so as to

better reflect the significant changes to holding periods during the
years since the one-year requirement was established.'' \28\ Another
commenter expressed the view that the current one-year holding period
is appropriate in light of the average holding periods of individual
and institutional investors.\29\ Another commenter recommended adopting
a three-year holding period for all shareholder-proponents because, in
the commenter's view, such a holding period ``would demonstrate a
serious commitment to a company's long-term success and should
discourage proposals focused on short-term changes.'' \30\ Other
commenters suggested that the holding period should be aligned with the
Internal Revenue Code, which treats an asset as a long-term capital
asset if held for more than one year and is thus taxed at capital gain
rather than ordinary tax rates.\31\ Other commenters expressed the view
that a shareholder's holding period may not accurately capture the
nature of an investor's investment stake as the length of time held may
not necessarily be indicative of the shareholder's future investment
intent.\32\ One of these commenters suggested that the Commission
instead explore a requirement that a shareholder-proponent ``attest
that the holder will maintain ownership of at least $2,000 of shares .
. . for at least one year after the annual meeting,'' or a requirement
that companies disclose a shareholder-proponent's name and holdings
``so that shareholders could make their own determinations if they
believe a stake is too small.'' \33\ Another commenter supported the
proposed three-year holding requirement at the $2,000 threshold, but
stated that further study was necessary to understand the implications
of the $25,000 ownership requirement.\34\
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    \28\ See letter from CalPERS dated February 3, 2020 (stating
that ``the average stock holding period spanned several years'' when
the Commission first adopted an ownership requirement, whereas today
``the average stock holding period in the U.S. is under nine
months'') (citing Ted Maloney & Robert Almeida, Jr., Lengthening the
Investment Time Horizon (MFS Investment Management 2019), available
at https://www.mfs.com/content/dam/mfs-enterprise/mfscom/insights/2019/November/mfse_time_wp/mfse_time_wp.pdf).
    \29\ See letter from AFL-CIO dated February 3, 2020.
    \30\ See letter from The Vanguard Group, Inc. dated February 3,
2020.
    \31\ See letters from Jantz Management LLC dated January 21,
2020; James McRitchie dated December 28, 2019; James McRitchie dated
December 29, 2019; James McRitchie dated January 21, 2020; James
McRitchie dated July 21, 2020; Tom Shaffner dated December 17, 2019.
    \32\ See letters from Council of Institutional Investors dated
January 30, 2020; Pension Investment Association of Canada dated
January 23, 2020.
    \33\ See letter from Council of Institutional Investors dated
January 30, 2020.
    \34\ See letter from Washington State Investment Board dated
January 22, 2020.
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    One commenter sought clarification as to whether share lending
would be deemed to interrupt the period of continuous ownership.\35\
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    \35\ See letter from Baillie Gifford & Co. dated February 3,
2020.
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ii. Percentage Test
    Several commenters supported \36\ and two opposed \37\ eliminating
the one-percent ownership test. In addition, one commenter opposed the
adoption of an ownership requirement based solely on a percentage of
shares owned,\38\ while another supported such a requirement.\39\
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    \36\ See letters from CFA Institute dated February 3, 2020;
Council of Institutional Investors dated January 30, 2020; Manhattan
Institute for Policy Research dated February 3, 2020; James
McRitchie dated February 2, 2020; National Association of
Manufacturers dated February 3, 2020; John Taylor dated November 14,
2019.
    \37\ See letters from Local Authority Pension Fund Forum dated
February 3, 2020; Jena Martin dated February 3, 2020.
    \38\ See letter from John Taylor dated November 14, 2019.
    \39\ See letter from Don E. Sprague dated November 15, 2019.
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iii. Aggregation
    Several commenters supported the proposed amendment related to
shareholders' ability to aggregate their holdings,\40\ while others
opposed it.\41\ One commenter stated that the proposed amendment would
be premature without first studying the effects of any newly adopted
ownership thresholds.\42\ This commenter also suggested that a
prohibition on aggregation would be inconsistent with the Commission's
beneficial ownership rules as well as certain other state law
provisions.\43\ The commenters that supported the proposed amendment
stated that allowing aggregation would undermine the principle
underlying the ownership requirements.\44\ Many commenters that opposed
the proposed amendment stated that such a limitation would have a more
pronounced effect on shareholders with smaller investments.\45\ One of
these commenters stated that aggregation among shareholders is an
indication of their long-term investment interest.\46\ Another of these
commenters suggested that a group of shareholders that collectively
satisfies an ownership requirement is not functionally different than a
single shareholder that satisfies the requirement.\47\ This commenter
also stated the view that a proposal submitted by a group of
shareholders aggregating their holdings may be ``more worthy of
consideration'' than a proposal submitted by a single shareholder
because it ``involves coordination of support [among] multiple
shareholders.'' \48\ Another commenter said that up to five

shareholders should be allowed to aggregate their holdings.\49\
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    \40\ See letters from Business Roundtable dated February 3,
2020; Center for Capital Markets Competitiveness dated January 31,
2020; Exxon Mobil Corporation dated February 3, 2020; International
Bancshares Corporation dated January 23, 2020; Manhattan Institute
for Policy Research dated February 3, 2020; National Association of
Manufacturers dated February 3, 2020.
    \41\ See, e.g., letters from Amazon Employees for Climate
Justice dated February 3, 2020; American Baptist Home Mission
Societies dated January 31, 2020; Baillie Gifford & Co. dated
February 3, 2020; Boston Trust Walden et al. dated January 27, 2020;
Christian Brothers Investment Services, Inc. dated January 21, 2020;
Church Investor Group dated January 29, 2020; CT Hagberg LLC dated
February 3, 2020; First Affirmative Financial Network, LLC dated
January 24, 2020; Franciscan Sisters of Allegany, NY dated January
29, 2020; International Corporate Governance Network dated December
4, 2019; North American Securities Administrators Association, Inc.
dated February 3, 2020; Oneida Trust Enrollment Committee dated
February 3, 2020; Tom Shaffner dated December 17, 2019; Singing
Field Foundation dated January 31, 2020; Sisters of St. Ursula dated
January 23, 2020; Sisters of the Order of St. Dominic dated January
24, 2020; State Board of Administration of Florida dated February 3,
2020.
    \42\ See letter from Professor James D. Cox et al. dated
February 2, 2020.
    \43\ Id. Another commenter also expressed the view that the
proposed rule would be inconsistent with ``other SEC rules that
allow (and sometimes require) aggregation of shares held by
different shareholders'' in the context of different regulatory
objectives such as when shareholders collectively owning more than
five percent of a class of equity securities of a registrant act as
a ``group'' for purposes of the disclosure requirements of Section
13(d) of the Exchange Act. See letter from Council of Institutional
Investors et al. dated July 29, 2020.
    \44\ See letters from Business Roundtable dated February 3,
2020; Center for Capital Markets Competitiveness dated January 31,
2020; Exxon Mobil Corporation dated February 3, 2020; International
Bancshares Corporation dated January 23, 2020; Manhattan Institute
for Policy Research dated February 3, 2020; National Association of
Manufacturers dated February 3, 2020.
    \45\ See, e.g., letters from Amazon Employees for Climate
Justice dated February 3, 2020; American Baptist Home Mission
Societies dated January 31, 2020; Baillie Gifford & Co. dated
February 3, 2020; Boston Trust Walden et al. dated January 27, 2020;
Christian Brothers Investment Services, Inc. dated January 21, 2020;
Church Investor Group dated January 29, 2020; CT Hagberg LLC dated
February 3, 2020; First Affirmative Financial Network, LLC dated
January 24, 2020; Franciscan Sisters of Allegany, NY dated January
29, 2020; International Corporate Governance Network dated December
4, 2019; North American Securities Administrators Association, Inc.
dated February 3, 2020; Oneida Trust Enrollment Committee dated
February 3, 2020; Tom Shaffner dated December 17, 2019; Singing
Field Foundation dated January 31, 2020; Sisters of St. Ursula dated
January 23, 2020; Sisters of the Order of St. Dominic dated January
24, 2020.
    \46\ See letter from First Affirmative Financial Network, LLC
dated January 24, 2020.
    \47\ See letter from Tom Shaffner dated December 17, 2019.
    \48\ Id.
    \49\ See letter from State Board of Administration of Florida
dated February 3, 2020.
---------------------------------------------------------------------------

iv. Lead-Filer Designation
    Several commenters supported a rule requiring the designation of a
lead filer where co-filers submit a proposal.\50\ Of these commenters,
several supported a requirement that co-filers delegate to the lead
filer the ability to negotiate with respect to, and withdraw, the
proposal to reduce administrative burdens on companies.\51\
---------------------------------------------------------------------------

    \50\ See letters from Business Roundtable dated February 3,
2020; Center for Capital Markets Competitiveness dated January 31,
2020; Council of Institutional Investors dated January 30, 2020;
Exxon Mobil Corporation dated February 3, 2020; General Motors
Company dated February 25, 2020; James McRitchie dated February 2,
2020; National Association of Manufacturers dated February 3, 2020;
Society for Corporate Governance dated February 3, 2020; State Board
of Administration of Florida dated February 3, 2020.
    \51\ See letters from Business Roundtable dated February 3,
2020; Center for Capital Markets Competitiveness dated January 31,
2020; Exxon Mobil Corporation dated February 3, 2020; National
Association of Manufacturers dated February 3, 2020; Society for
Corporate Governance dated February 3, 2020.
---------------------------------------------------------------------------

    Other commenters opposed the idea of requiring the designation of a
lead filer.\52\ Two of these commenters explained that such a
requirement is unnecessary as co-filers already tend to designate a
lead filer.\53\ One of the commenters indicated that such a requirement
could lead to more shareholder proposal submissions and suggested that,
if such a requirement were adopted, companies should be required to
disclose the lead filer and all co-filers in their proxy statements to
foster engagement and provide investors with additional information
related to their vote.\54\
---------------------------------------------------------------------------

    \52\ See letters from Local Authority Pension Fund Forum dated
February 3, 2020; New York State Comptroller dated February 3, 2020;
John Taylor dated November 14, 2019.
    \53\ See letters from Local Authority Pension Fund Forum dated
February 3, 2020; New York State Comptroller dated February 3, 2020.
    \54\ See letter from New York State Comptroller dated February
3, 2020.
---------------------------------------------------------------------------

3. Final Rule Amendments
i. Ownership Thresholds
    After considering the comments received, we are adopting the
amendments as proposed. Under new Rule 14a-8(b), a shareholder will be
eligible to submit a Rule 14a-8 proposal if the shareholder
demonstrates continuous ownership of at least:
     $2,000 of the company's securities entitled to vote on the
proposal for at least three years;
     $15,000 of the company's securities entitled to vote on
the proposal for at least two years; or
     $25,000 of the company's securities entitled to vote on
the proposal for at least one year.\55\
---------------------------------------------------------------------------

    \55\ Due to market fluctuations, the value of a shareholder's
investment in a company may vary throughout the applicable holding
period before the shareholder submits the proposal. In order to
determine whether the shareholder satisfies the relevant ownership
threshold, the shareholder should look at whether, on any date
within the 60 calendar days before the date the shareholder submits
the proposal, the shareholder's investment is valued at the relevant
threshold or greater. See 1983 Adopting Release, supra note 2. For
these purposes, companies and shareholders should determine the
market value by multiplying the number of securities the shareholder
continuously held for the relevant period by the highest selling
price during the 60 calendar days before the shareholder submitted
the proposal. For purposes of this calculation, it is important to
note that a security's highest selling price is not necessarily the
same as its highest closing price.
---------------------------------------------------------------------------

    The Commission has previously indicated that the required dollar
amount and holding period should be calibrated such that a shareholder
has some meaningful ``economic stake or investment interest'' in a
company--and therefore is more likely to put forth proposals reflecting
an interest in the company and its shareholders than to use the proxy
process to promote a personal interest or general cause--before the
shareholder may draw on company and shareholder resources to require
the inclusion of a proposal in the company's proxy statement, and
before the shareholder may use the company's proxy statement to command
the time and attention of other shareholders to consider and vote on
the proposal.\56\ We believe this longstanding statement of the
Commission's perspective continues to appropriately capture the various
interests that should be considered when calibrating the eligibility of
shareholder-proponents to access the proxy statement at little or no
cost to themselves.
---------------------------------------------------------------------------

    \56\ See 1983 Adopting Release, supra note 2.
---------------------------------------------------------------------------

    As we explained in the Proposing Release, we believe that holding
$2,000 worth of a company's stock for a single year, a threshold that
was last substantively reviewed and updated by the Commission in
1998,\57\ does not appropriately ensure that the shareholder has a
sufficiently meaningful stake in a company today. As the table below
demonstrates, the $2,000 threshold, adjusted for inflation, is
equivalent to $3,183 in 2020 dollars.\58\ Moreover, using the
cumulative growth of the Russell 3000 Index as a proxy for the average
increase in companies' market values, a $2,000 investment in that index
in 1998 would be worth approximately $9,489 today.\59\ Furthermore, we
estimate that the market capitalization of the largest 100 issuers in
the S&P 500 Index (the companies that on a per-issuer basis receive a
disproportionate number of shareholder proposals \60\) has grown by 164
percent since 1998, and a $2,000 stake would be worth approximately
$5,280 today.\61\ We believe that the increases in inflation and market
value have contributed, in part, to the need to revisit the $2,000/one-
year ownership threshold and to recalibrate the relationship between
the amount of stock owned and the requisite holding period to reflect a
more appropriate economic stake or investment interest.
---------------------------------------------------------------------------

    \57\ See 1998 Adopting Release.
    \58\ $3,183 = $2,000 x 1.5915 (cumulative rate of inflation
between May 1998 and July 2020, using the CPI inflation calculator,
available at https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=11%2C600.00&year1=201011&year2=201906).
    \59\ $9,489 = $2,000 x 4.744 (cumulative rate of growth of the
Russell 3000 index between May 1998 and July 2020, which is the most
recent date with available data, assuming dividends are reinvested).
Data is retrieved from Compustat Daily Updates--Index Prices.
    \60\ In 2019, out of a total of 371 shareholder proposals voted
on, see Sullivan & Cromwell, 2019 Proxy Season Review, Part I (July
13, 2019), available at https://www.sullcrom.com/files/upload/SC-Publication-2019-Proxy-Season-Review-Part-1-Rule-14a-8-Shareholder-Proposals.pdf (``Sullivan & Cromwell Report''), 187 were voted on at
S&P 100 companies, see David Bell, Silicon Valley and S&P 100: A
Comparison of 2019 Proxy Season Results, Dec. 27, 2019, available at
https://corpgov.law.harvard.edu/2019/12/07/silicon-valley-and-sp-100-a-comparison-of-2019-proxy-season-results/.
    \61\ $5,280 = $2,000 x (1+1.64) (cumulative rate of growth in
the market capitalization of the largest 100 issuers in the S&P 500
Index between May 1998 and May 2019, which is the most recent date
with available data). Data is retrieved from Compustat Annual
Updates--Security Monthly.

                                                             Ownership Threshold Comparison
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Change in largest 100 issuers in S&P
    Threshold established in 1998      1998 Threshold adjusted for inflation      Change in Russell 3000 Index                    500 Index
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          $2,000                                 $3,183                                 $9,489                                $5,280
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In making this assessment and recalibration, we recognize that the
amount of stock owned is not the only way to demonstrate an interest in
a company, particularly for smaller investors. In many cases, the
length of time owning the company's securities may be a more meaningful
indicator that a shareholder has a sufficient interest that warrants
use of the company's proxy statement. A shareholder's demonstrated
long-term investment interest in a company may make it more likely that
the shareholder's proposal will reflect a greater interest in the
company and its shareholders, rather than an intention to use the
company and the proxy process to promote a personal interest or
publicize a general cause. We believe having a longer holding period is
particularly important if the dollar value of the ownership interest is
minimal, including in terms of a company's market capitalization, and
may help address concerns related to misuse of the shareholder-proposal
process, while ensuring that smaller investors have access to the proxy
statements of companies in which they have a demonstrated continuing
interest.
    We also recognize that shareholders' ability to communicate with
issuers and other shareholders has evolved in response to technological
advancements and developing market practices since our rules were last
amended. As a result, shareholders now have more tools at their
disposal to engage with a company's board and/or management, as well as
their fellow shareholders, in a manner that may be more efficient and
less costly for all parties than the Rule 14a-8 process. Thus,
shareholders that do not meet the relevant one-, two-, or three-year
holding period (and related $25,000, $15,000, or $2,000 continuous
ownership threshold), and for some limited period of time would not be
eligible to require a company to include a proposal in its proxy
statement, can nevertheless raise important issues with companies and
other shareholders through alternative avenues with greater ease than
in the past.
    In establishing the amended thresholds, we also have considered the
costs to the company and its shareholders associated with management's
consideration of a proposal and/or its inclusion in the company's proxy
statement, as well as the direct costs to other shareholders. In the
Proposing Release, we cited several cost estimates for companies
provided by market participants ranging from $50,000 to $150,000 per
proposal associated with this process and estimated that the proposed
amendments to the ownership thresholds could result in aggregate annual
cost savings of up to $69.8 million per year for all Russell 3000
companies.\62\ In response to the Proposing Release, several commenters
provided us with estimates of the costs associated with a company's
receipt of a shareholder proposal ranging from approximately $20,000 to
$150,000.\63\ The costs to non-proponent shareholders of considering
shareholder proposals are difficult to quantify but in aggregate are
estimated to be significant, including in comparison to the costs borne
by shareholder-proponents.\64\ Because Rule 14a-8 enables individual
shareholders to shift to the company and other shareholders the
significant cost of processing, analyzing, and voting their proposals,
we believe the Commission's longstanding perspective that ownership
thresholds should be calibrated so that a shareholder-proponent's
economic stake or investment interest in the company is more likely to
demonstrate an alignment of interest with the company's other
shareholders continues to be appropriate.
---------------------------------------------------------------------------

    \62\ See Proposing Release at 66502.
    \63\ See letters from Business Roundtable dated February 3, 2020
(noting that ``[a]lthough many member companies reported that it was
difficult to quantify the costs of shareholder proposals, several
reported costs ranging from $50,000 to $100,000 or more per
proposal. In addition, a number of companies noted that their costs
for first-time proposals are generally higher than those incurred
for resubmitted proposals''); CalPERS dated February 3, 2020
(``Fortunately, the most substantial shareholder proposal work
product is included in the no-action correspondence on the SEC's
website and does not reflect a value anywhere near $150,000 per
submission. During no-action fights, many proposals are disposed of
fairly quickly and easily by referencing the appropriate exclusion.
Companies actually pay less than $20,000 in marginal costs for the
work product displayed on the SEC website.''); Center for Capital
Markets Competitiveness dated January 31, 2020 (noting that ``[t]he
Commission cited commenters who estimated that the average cost of
responding to a proposal for inclusion in the company's proxy
statement can cost anywhere from $87,000 to $150,000 per proposal.
Our members report that this is a fair estimate for a typical
proposal, though some outliers (such as ones involving multiple
rounds of correspondence with a proponent and the Commission) may
exceed the high end of the range.''); John Coates and Barbara Roper
dated January 30, 2020 (noting that the Commission's paperwork
burden analysis uses ``a much lower figure, based on direct company
information: `A July 2009 survey of Business Roundtable companies,
in which 67 companies responded . . . indicated that the average
burden for a company associated with printing and mailing a single
shareholder proposal is 20 hours with associated costs of $18,982.'
While this much lower estimate may not comprehensively reflect all
costs, it is a relevant datum for estimating cost savings, and is at
least in tension with the SEC's assertion that $50,000 is a `lower
bound' on costs.''); Exxon Mobil Corporation dated February 3, 2020
(estimating the direct cost of each shareholder proposal included in
its proxy statement ``to be at least $100,000''); General Motors
Company dated February 25, 2020 (stating that a cost estimate of
$87,000 to $150,000 is ``directionally accurate''); Society for
Corporate Governance dated February 3, 2020 (providing the results
of a survey of its members in which one respondent reported a cost
of $109,792 (including the cost of seeking no-action relief) with
respect to a proposal received in 2018 that was ultimately
withdrawn, and a cost of $133,587 with respect to a proposal in 2019
that was ultimately included in the company's proxy statement). For
additional discussion of these cost estimates, see infra note 332
and accompanying text.
    \64\ See infra Section V.D.2.
---------------------------------------------------------------------------

    Taking into account the above factors, the new thresholds will
require a more appropriate demonstrated ``economic stake or investment
interest'' in a company before the shareholder may draw on company and
shareholder resources to require the inclusion of a proposal in the
company's proxy statement, and before the shareholder-proponent may use
the company's proxy statement to command the time and attention of
other shareholders to analyze and vote on the proposal.\65\ Each of
these factors is described in greater detail below.
---------------------------------------------------------------------------

    \65\ One commenter sought clarification regarding the effect of
share lending. See letter from Baillie Gifford & Co. dated February
3, 2020. The rule will not prohibit share lending or otherwise
require investors to maintain a net-long position. We note that the
rule has not historically imposed such a requirement, and we are not
aware of any concerns with respect to these practices by
shareholder-proponents at this time.
---------------------------------------------------------------------------

    While the current $2,000 threshold will remain the same to preserve
the ability of long-term shareholders owning a relatively small amount
of shares to continue to utilize Rule 14a-8, these investors will be
required to hold the securities for at least three years to be eligible
to submit a proposal. In light of the smaller investment amount
required under this ownership tier, we believe that a longer holding
period is warranted to demonstrate a sufficient investment interest in
a company before being able to draw on company and shareholder
resources for the purpose of including a proposal in the company's
proxy statement. Investors who currently are eligible to submit
proposals under the current $2,000 threshold/one-year minimum holding
period, but currently do not satisfy the new requirements, will
continue to be eligible to submit proposals through the expiration of
the transition period that extends for all annual or special meetings
held prior to January 1, 2023, provided they continue to hold at least
$2,000 of a company's securities.
    To help put these thresholds in context, the following table shows
them as a percentage of market value as of April 2020 for the S&P 500
Index

constituents and May 2020 for the Russell 3000 Index constituents: \66\
---------------------------------------------------------------------------

    \66\ Data for the S&P 500 constituents is retrieved from CRSP
and data for the Russell 3000 constituents is retrieved from Market
Capitalization Ranges, FTSE Russell Market, https://www.ftserussell.com/research-insights/russell-reconstitution/market-capitalization-ranges (last visited Jun. 17, 2020). The largest
registrant in the Russel 3000 index is the same as in the S&P 500
Index.

----------------------------------------------------------------------------------------------------------------
                                        $2,000 threshold as a    $15,000 threshold as a   $25,000 threshold as a
              Registrant                 percentage of market     percentage of market     percentage of market
                                                value                    value                    value
----------------------------------------------------------------------------------------------------------------
Largest Registrant in the S&P 500                    0.0000002                0.0000012                0.0000020
 Index...............................
Smallest Registrant in the S&P 500                      0.0001                   0.0009                   0.0015
 Index...............................
Smallest Registrant in the Russell                      0.0021                    0.016                    0.026
 3000 Index..........................
----------------------------------------------------------------------------------------------------------------

    Although the ownership thresholds are still very low as a
percentage of market value, we believe that maintaining the $2,000
threshold and extending the holding period to three years, and adding
new thresholds with one- and two-year holding periods, provides for a
framework that is more effectively calibrated to the potentially
varying interests of shareholder-proponents, companies, and other
shareholders and, as a result, a shareholder-proponent that meets one
of them will have demonstrated a sufficient ``economic stake or
investment interest'' in a company before being able to draw on company
and other shareholder resources for the purpose of including a proposal
in the company's proxy statement. While we considered the alternative
of simply raising the dollar amount of securities required to be held
for one year, we were cognizant of the effect such an increase may have
on investors with smaller investments, including those with a
demonstrated long-term economic stake or investment interest in the
company. We also considered adopting a single ownership threshold with
a three-year holding period, but we believe that shorter holding
periods are appropriate where a shareholder-proponent's demonstrated
investment interest is greater in amount. Accordingly, we are retaining
a $2,000 ownership threshold while adjusting the related holding period
and adopting alternative thresholds for investors that have held their
shares for shorter periods of time.
    For the reasons discussed above and in the Proposing Release, such
as the costs incurred by other shareholders and companies and the
availability of alternative communication channels, we do not believe
that a one-year holding period is indicative of a sufficient investment
interest where the amount invested is less than $25,000. We also do not
find commenters' analogy to the Internal Revenue Code's treatment of
capital assets compelling in light of the differing objectives of the
Internal Revenue Code and the shareholder-proposal rule.\67\ At the
same time, we also do not find compelling the suggestion of a different
commenter that a three-year holding period for all shareholder-
proponents is necessary to demonstrate a ``serious commitment to a
company's long-term success.'' \68\ We believe that holding periods of
less than three years are sufficient where the economic stake is
greater.
---------------------------------------------------------------------------

    \67\ See letters from Jantz Management LLC dated January 21,
2020; James McRitchie dated December 28, 2019; James McRitchie dated
December 29, 2019; James McRitchie dated January 21, 2020; James
McRitchie dated July 21, 2020; Tom Shaffner dated December 17, 2019.
    \68\ See letter from The Vanguard Group, Inc. dated February 3,
2020.
---------------------------------------------------------------------------

    Two commenters suggested that any adjustments to the one-year
holding period should be informed by the holding periods of investors
generally.\69\ In the Proposing Release, we noted our review of
academic studies and other data on share ownership duration
generally.\70\ In establishing the amended holding periods, and in
response to these commenters, we further reviewed holding period
data.\71\ We note, however, that academic studies and data regarding
holding periods for smaller investors reflect a static assessment of
general eligibility in the context of the current one-year minimum
holding period and, therefore, do not account for changes in investment
amounts and holding periods for the historically limited group of
smaller investors that are interested in submitting proposals that may
result from the amendments.\72\ We believe that where the amount
invested is relatively small, an investor's holding period provides a
meaningful indicator of the shareholder-proponent's investment interest
in the company. As such, where the amount invested is less than $25,000
but greater than $15,000, we believe that a holding period of two years
is appropriate. Where the amount invested is less than $15,000 but
greater than $2,000, we believe that the three-year holding period is
appropriate.\73\
---------------------------------------------------------------------------

    \69\ See supra notes 28 and 29.
    \70\ See Proposing Release at 66490 n.195.
    \71\ See infra note 320 and accompanying text.
    \72\ The ratio of shareholder-proponents whose proposals
appeared in proxy statements during 2018 (i.e., 170) to the number
of direct and indirect investors in companies subject to the proxy
rules (i.e., 65 million) is roughly equal to three shareholder-
proponents per million investors.
    \73\ There may be a relation between duration of ownership and
the propensity of a shareholder to submit a proposal.
---------------------------------------------------------------------------

    Although we agree with the view of certain commenters that the
length of time a shareholder has held a company's securities may not
necessarily determine future investment intent,\74\ we believe that it
provides a meaningful indication as to the nature of the investment.
Thus, we believe that it is appropriate to place greater emphasis on
the length of continuous stock ownership when the economic stake is
less and vice versa. Moreover, in response to a commenter, we
considered whether to adopt an eligibility requirement based on a
shareholder-proponent's statement that it will maintain a minimum
investment in the company's securities for some period of time after
the shareholders' meeting for which a proposal is submitted.\75\
However, we believe that a shareholder-proponent with a limited
economic stake should first demonstrate a meaningful investment
interest in a company before drawing on company and shareholder
resources to require the inclusion of a proposal in the company's proxy
statement, and before using the company's proxy statement to command
the time and attention of other shareholders to consider and vote on
the proposal. In our view, requiring

a company to include a shareholder proposal in its proxy statement
before a proponent has demonstrated a sufficient economic stake or
investment interest would be inconsistent with the purpose of the
ownership requirement and could render the shareholder-proposal process
subject to abuse. Accordingly, we do not believe that such an approach
is appropriate.
---------------------------------------------------------------------------

    \74\ See letters from Council of Institutional Investors dated
January 30, 2020; Pension Investment Association of Canada dated
January 23, 2020.
    \75\ See letter from Council of Institutional Investors dated
January 30, 2020 (``[T]he SEC should explore benefits and costs of a
forward-looking regime, for example requiring the shareholder to
attest that the holder will maintain ownership of at least $2,000 of
shares (as valued at submission date) for at least one year after
the annual meeting.'').
---------------------------------------------------------------------------

    In response to the same commenter, we also considered whether to
eliminate the ownership threshold and adopt a requirement that
companies disclose a shareholder-proponent's name and holdings ``so
that shareholders could make their own determinations if they believe a
stake is too small.'' \76\ Because a determination by shareholders
regarding a proponent's investment stake would occur only after a
proposal had been included in the company's proxy statement and voted
upon, companies and their shareholders could bear the burdens
associated with a proposal submitted by a proponent whose stake is
ultimately determined to be too small by the company's shareholders.
For this reason, we believe that such an approach would be inconsistent
with the purpose of the ownership requirement and could render the
shareholder-proposal process subject to abuse. Accordingly, we are not
adopting such an approach.
---------------------------------------------------------------------------

    \76\ Id.
---------------------------------------------------------------------------

    In establishing the amended thresholds, we also gave careful
consideration to the effects any new thresholds may have on the ability
of shareholders with smaller investments to submit proposals. We
acknowledge, as several commenters asserted, that smaller shareholders
can raise issues that other shareholders support.\77\ The amendments we
are adopting today do not preclude smaller shareholders from
participating in the shareholder-proposal process.\78\ As discussed
above, the rule will continue to be available to shareholders that own
at least $2,000 of a company's securities. We recognize, however, that
the increased holding period will likely have some effect on the timing
of submissions by those shareholders who could have relied on the
current $2,000/one-year ownership threshold if they do not yet meet the
three-year holding period (or the alternative eligibility thresholds).
Specifically, shareholders that crossed the $2,000 ownership threshold
for more than one year but less than three years (and do not satisfy
the $15,000/two-year or $25,000/one-year thresholds) will need to
postpone submitting a shareholder proposal until they have satisfied
the requisite three-year holding requirement (or the alternative
eligibility thresholds). We do not consider this increase in the
holding period to be an undue burden on the ability to participate in
the shareholder-proposal process, especially in light of the
significant costs for other shareholders and the company involved in
this method of shareholder engagement.\79\
---------------------------------------------------------------------------

    \77\ See, e.g., letters from Christian Brothers Investment
Services, Inc. dated January 21, 2020; Council of Institutional
Investors et al. dated July 29, 2020; Senator Tammy Duckworth dated
January 30, 2020; Form Letter Type A; Illinois State Treasurer dated
January 16, 2020; James McRitchie dated July 21, 2020.
    \78\ Cf. letter from Fidelity Management & Research LLC dated
February 3, 2020 (noting that the commenter ``reviewed all
shareholder proposals received by and voted on by Fidelity mutual
funds for the past six years and found that the vast majority of
these proposals would still have satisfied the eligibility criteria
under the new tiered submission thresholds'').
    \79\ See infra Section V.D.
---------------------------------------------------------------------------

    We also note that, while these shareholder-proponents will be
unable to require a company to include a proposal in its proxy
statement until the shareholder has held the securities for the
requisite three-year period, they will not be precluded from raising
matters that are important to them through alternative avenues of
engagement. Today's investors are able to engage with companies and
other investors in a variety of ways, including via email, video
conference calls, one-on-one ``sunny day'' meetings, shareholder
surveys, and e-forums.\80\ Although we recognize these alternative
channels are different than a shareholder proposal, we understand that
companies today are more responsive to shareholder requests to engage
through alternative channels than when our rules were last amended.\81\
Moreover, raising these issues through one-on-one engagement with
management may produce better outcomes than submitting shareholder
proposals.\82\ In addition, we note that shareholders engage directly
with each other through various channels, and, accordingly, an issue
that is sufficiently important to the broader shareholder base could be
brought to the company's attention by other shareholders, including
those that are eligible to submit a shareholder proposal. We also note
that the proxy rules allow shareholders, including those that have held
shares for less than one year, to conduct their own proxy solicitations
in accordance with those rules.
---------------------------------------------------------------------------

    \80\ See Matteo Tonello & Matteo Gatti, Board-Shareholder
Engagement Practices, Harvard L. Sch. F. on Corp. Governance (Dec.
30, 2019), available at https://corpgov.law.harvard.edu/2019/12/30/board-shareholder-engagement-practices/; Cleary Gottlieb Steen &
Hamilton LLP, Shareholder Engagement Trends and Considerations (Jan.
10, 2020), available at https://www.clearygottlieb.com/news-and-insights/publication-listing/shareholder-engagement-trends-and-considerations; Donna Fuscaldo, Say Gives Retail Investors A Voice
And Tesla Listens, FORBES (Feb. 19, 2019), https://www.forbes.com/sites/donnafuscaldo/2019/02/19/say-gives-retail-investors-a-voice-and-tesla-listens/. See also letter from Business Roundtable dated
February 3, 2020.
    \81\ See, e.g., letter from Business Roundtable dated February
3, 2020.
    \82\ See T.Rowe Price, Sustainable Investing (April 2020),
available at https://www.troweprice.com/content/dam/trowecorp/Pdfs/ESG_2019_AnnualReport-Global_30_April_2020_Final.pdf (``Our
experience after many years of assessing ESG issues as part of our
investment process is that direct, one-on-one engagement with
companies produces better outcomes than shareholder resolutions.'').
---------------------------------------------------------------------------

    For the reasons discussed above, we believe that the amended
thresholds appropriately capture the various interests that should be
considered when calibrating the eligibility of shareholder-proponents
to access a company's proxy statement at little or no cost to the
shareholder-proponent. As such, we are not incorporating the
suggestions of certain commenters, such as adjusting the thresholds to
$5,000, $10,000, or $15,000; \83\ eliminating a minimum dollar
investment for shareholders meeting a three-year holding period; \84\
establishing thresholds that are contingent on the size of an
investor's total investment portfolio; \85\ or subjecting the
thresholds to future inflation adjustments.\86\ Although we recognize
that a minimum amount of stock owned is not the only way to demonstrate
a current and continued investment interest in a company, we do not
believe that eliminating a minimum dollar investment for shareholders
meeting a three-year holding period would be consistent with the
concept of demonstrating a meaningful economic stake or investment
interest in a company prior to submitting a shareholder proposal. In
addition, although we appreciate that the thresholds will represent
different proportional investments relative to each shareholder's total
investment portfolio--e.g., they will represent a larger proportional
investment where portfolio size is smaller and vice versa--we believe
thresholds that vary based on the size of an investor's total
investment

portfolio would be difficult to administer. For example, such a
requirement could necessitate a shareholder's submission and a
company's verification of voluminous amounts of documentation for the
purpose of demonstrating and ascertaining the size of the shareholder's
total investment portfolio in order to ascertain the applicable
ownership threshold. Thus, we are not adopting thresholds that vary
based on the size of a proponent's total investment portfolio. We also
are not adopting a provision that would require periodic future
inflation adjustments. We believe that such a mechanism is unnecessary
at this time in light of the tiered approach being adopted.
---------------------------------------------------------------------------

    \83\ See letter from Van Brenner dated November 21, 2019.
    \84\ See letter from Josh Feldblyum dated November 30, 2019.
    \85\ See letter from John Taylor dated November 14, 2019.
    \86\ See letters from Business Roundtable dated February 3,
2020; Exxon Mobil Corporation dated February 3, 2020; FedEx
Corporation dated February 3, 2020; Nasdaq, Inc. dated February 3,
2020; Society for Corporate Governance dated February 3, 2020.
---------------------------------------------------------------------------

    Although some commenters raised concerns about the effects the new
thresholds could have on portfolio diversification, they did not
provide data about costs or the likelihood of occurrence. They also did
not provide data addressing the percentage of smaller investors that
maintain a diversified portfolio or the diversification of holdings of
the relatively smaller subset of such investors that submit shareholder
proposals. While we acknowledge that, in theory, some shareholders may
not be able to satisfy the three-year ownership requirement without
affecting portfolio diversification decisions to some degree, we
believe the appropriate allocation of capital, taking into account
various factors, including portfolio diversification and the importance
of submitting a proposal for inclusion in a company's proxy statement,
is something for the investor to determine. We also note that the three
different ownership thresholds in the final rules will afford
shareholders some flexibility in determining how to allocate capital
while considering whether qualifying to submit a proposal in a shorter
timeframe is in the shareholder-proponent's interest. In those
situations where a shareholder decides not to alter portfolio
diversification, we note that an issue that is sufficiently important
to the broader shareholder base may be brought to the company's
attention by other shareholders, including those that are eligible to
submit a shareholder proposal.
ii. Percentage Test
    As proposed, the amended rule will not include a component based on
a percentage of shares owned. We believe that each of the revised
thresholds represents a meaningful economic stake or investment
interest such that a separate percentage-based threshold is
unnecessary. We also believe that shareholders would be unlikely to
rely on such a threshold in light of the new thresholds and that the
amendment will avoid administrative complexities that could result from
a percentage-based test. We also note that commenters who addressed it
generally supported eliminating the current percentage ownership
test.\87\ Accordingly, we are not adopting a percentage-based
component.
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    \87\ See letters from CFA Institute dated February 3, 2020;
Council of Institutional Investors dated January 30, 2020; Manhattan
Institute for Policy Research dated February 3, 2020; James
McRitchie dated February 2, 2020; National Association of
Manufacturers dated February 3, 2020; John Taylor dated November 14,
2019.
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iii. Aggregation
    As proposed, aggregation of holdings for purposes of meeting the
ownership requirements will not be permitted. Instead, each shareholder
must satisfy one of the three ownership thresholds to be eligible to
submit or co-file a proposal.\88\ Although the Commission allowed
shareholders to aggregate their holdings when it first adopted
ownership thresholds in 1983, it did not provide reasons for doing so.
Consistent with the views of several commenters, we believe that
allowing shareholders to aggregate their securities to meet the new
thresholds would undermine the goal of ensuring that each shareholder
who wishes to use a company's proxy statement to advance a proposal has
a sufficient economic stake or investment interest in the company.\89\
We recognize this limitation could affect the ability of shareholders
with smaller investments to submit shareholder proposals, but as
explained above, we believe each shareholder-proponent should have a
meaningful ownership stake in a company before being permitted to draw
on company resources to include a proposal in the company's proxy
statement as well as draw on the time, attention, and other resources
of non-proponent shareholders.\90\
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    \88\ Shareholders whose shares are held in joint tenancy may
submit proposals individually or jointly. However, the one-proposal
limit will apply collectively to all persons having an interest in
the same shares. See Adoption of Amendments Relating to Proposals by
Security Holders, Release No. 34-12999 (Nov. 22, 1976) [41 FR 52994
(Dec. 3, 1976)] (``1976 Adopting Release'').
    \89\ See letters from Business Roundtable dated February 3,
2020; Center for Capital Markets Competitiveness dated January 31,
2020; Exxon Mobil Corporation dated February 3, 2020; International
Bancshares Corporation dated January 23, 2020; Manhattan Institute
for Policy Research dated February 3, 2020; National Association of
Manufacturers dated February 3, 2020.
    \90\ In articulating the need for an ownership requirement in
prior releases, the Commission has explained that shareholders who
submit proposals should have a specified ``economic stake'' or
``investment interest'' in the company. See 1983 Adopting Release,
supra note 2. See also Amendments to Rules on Shareholder Proposals,
Release No. 34-39093 (Sep. 18, 1997) [62 FR 50682 (Sep. 26, 1997)]
(noting that ``[o]ne purpose of the requirement is to curtail abuse
of the rule by requiring that those who put the company and other
shareholders to the expense of including a proposal in proxy
materials have had a continuous investment interest in the
company.''). In parts of this release, we use ``ownership stake'' in
lieu of ``economic stake'' because we believe an ownership stake
represents a type of economic stake.
---------------------------------------------------------------------------

    Moreover, we do not agree with the commenter who suggested that a
group of shareholders that collectively, but not individually,
satisfies an ownership requirement is functionally the same as a single
shareholder that satisfies the requirement.\91\ Although the total
dollar amount may be the same under either scenario, we do not believe
that group ownership (where each member of the group does not
individually satisfy one of the ownership requirements) represents an
equivalent economic stake or investment interest as a single
shareholder who satisfies the ownership requirements. Accordingly, we
do not believe a group comprising shareholders, where each member of
the group does not individually satisfy one of the ownership
requirements, will have demonstrated a sufficient ownership interest to
be eligible to submit a proposal. For similar reasons, we do not agree
with commenters who suggested that aggregated holdings are indicative
of a long-term investment interest,\92\ or that a proposal submitted by
a group of shareholders aggregating their holdings is ``more worthy of
consideration'' than a proposal submitted by a single shareholder.\93\
In our view, the more relevant consideration for these purposes is not
the number of shareholder-proponents, but rather, whether each such
proponent has a meaningful economic stake in the company. Accordingly,
aggregation will not be permitted under the final amendments.\94\
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    \91\ See letter from Tom Shaffner dated December 17, 2019.
    \92\ See letter from First Affirmative Financial Network, LLC
dated January 24, 2020.
    \93\ See letter from Tom Shaffner dated December 17, 2019.
    \94\ We do not agree with the commenter who suggested that the
amendment is premature and that we should first study the effects of
the new ownership thresholds. See letter from Professor James D. Cox
et al. dated February 2, 2020. As stated above, we do not believe
that group ownership (where the group comprises shareholders none of
whom individually meets one of the ownership requirements)
represents a sufficient economic or investment interest to require
inclusion of a proposal in a company's proxy statement. This view
applies regardless of how frequently shareholders might elect to
aggregate and, therefore, we do not believe it is necessary to first
study the effects of the new ownership thresholds prior to adopting
the amendment. We also do not agree with this and another
commenter's suggestion that the amendment is at odds with other
aspects of corporate and/or securities laws under which aggregation
of holdings is permitted or required. We note that the primary
examples cited by the commenter were the subject of a 5% ownership
requirement, whereas the ownership requirements under the amended
thresholds are considerably lower--i.e., $2,000, $15,000, and
$25,000. In light of the relatively low ownership requirements under
the amendment, we do not believe the ability to aggregate is
necessary or appropriate. As previously stated, aggregate holdings
at these ownership levels would not represent a sufficient economic
or investment interest and could undermine the purpose of the
ownership requirement. In addition, we do not agree with the
commenter's suggestion that the amendment is inconsistent with the
beneficial ownership provisions under the federal securities laws,
which, among other things, require any ``group'' of beneficial
holders owning more than five percent of a security registered under
Section 12 of the Exchange Act to file a Schedule 13D or Schedule
13G. We note that the objectives of the beneficial ownership
reporting requirements fundamentally differ from those of the
shareholder-proposal rule.

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iv. Lead-Filer Designation
    Although shareholders will not be able to aggregate their holdings
under the amendment, they will continue to be permitted to co-file
proposals as a group if each shareholder-proponent in the group meets
an eligibility requirement.\95\ However, we are not adopting rules
requiring co-filers to identify a lead filer or specify whether the
lead filer is authorized to negotiate a withdrawal on behalf of the co-
filers. As several commenters observed, such a requirement does not
appear necessary at this time as co-filers already tend to designate a
lead filer.\96\ Nevertheless, we continue to believe that, as a best
practice, co-filers should clearly state in their initial submittal
letter to the company that they are co-filing the proposal with other
proponents and identify the lead filer, specifying whether such lead
filer is authorized to negotiate with the company and withdraw the
proposal on behalf of the other co-filers.\97\
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    \95\ Under Section 13(d) and Section 13(g), a ``group'' is
formed when two or more persons act together for the purpose of
acquiring, holding, voting, or disposing of the securities. Congress
created the ``group'' concept to prevent persons who seek to pool
their voting or other interests in the securities of an issuer from
evading the Section 13(d) or 13(g) obligations because no one person
owns more than five percent of the securities. To the extent co-
filers are acting together (or in concert with others) for the
purpose of voting in favor of their proposals they should consider
whether such activity constitutes a ``group'' for purposes of
Section 13(d) and Section 13(g).
    \96\ See letters from Local Authority Pension Fund Forum dated
February 3, 2020; New York State Comptroller dated February 3, 2020.
    \97\ We remind co-filers that ambiguities in the nature of
coordination on a proposal's submission could prompt companies to
seek exclusion under Rule 14a-8(i)(11). Specifically, if two or more
shareholder-proponents submit substantially duplicative proposals
but fail to clearly indicate that they intend to co-file or co-
sponsor the proposal, the later-received proposal may be susceptible
to exclusion under Rule 14a-8(i)(11).
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B. Proposals Submitted on Behalf of Shareholders

1. Proposed Rule Amendment
    We proposed to add a new eligibility requirement to Rule 14a-8 that
would require shareholders that use a representative to submit a
proposal for inclusion in a company's proxy statement to provide
documentation that:
     Identifies the company to which the proposal is directed;
     Identifies the annual or special meeting for which the
proposal is submitted;
     Identifies the shareholder-proponent and the designated
representative;
     Includes the shareholder's statement authorizing the
designated representative to submit the proposal and/or otherwise act
on the shareholder's behalf;
     Identifies the specific proposal to be submitted;
     Includes the shareholder's statement supporting the
proposal; and
     Is signed and dated by the shareholder.
2. Comments on the Proposed Rule Amendment
    The proposed amendment generated a wide range of responses. Some
commenters expressed the view that the proposed requirements were
appropriate,\98\ while others opposed them.\99\ Several commenters
stated that the proposed representations would help clarify the
relationship between the shareholder-proponent and the representative
with minimal burden to shareholders.\100\ Other commenters recommended
adding additional informational requirements regarding a shareholder-
proponent's motives for submitting a proposal.\101\ One of these
commenters suggested revisions to the rule text that would require: (i)
The proposal text to be embedded in the authorization letter, (ii) the
shareholder-proponent to sign the authorization letter no later than
the date the proposal is submitted, and (iii) the authorization letter
to specify that the representative is authorized to revise the proposal
and/or supporting statement.\102\ Several commenters stated that
representatives should not be permitted to submit proposals on behalf
of shareholders, although two of these commenters seemed supportive of
the proposed requirements in the absence of such a prohibition.\103\
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    \98\ See letters from British Columbia Investment Management
Corporation dated February 3, 2020; Business Roundtable dated
February 3, 2020; Center for Capital Markets Competitiveness dated
January 31, 2020; CFA Institute dated February 3, 2020; Corporate
Governance Coalition for Investor Value dated February 3, 2020;
Exxon Mobil Corporation dated February 3, 2020; General Motors
Company dated February 25, 2020; Nareit dated February 3, 2020;
Nasdaq, Inc. dated February 3, 2020; National Association of
Manufacturers dated February 3, 2020; School Sisters of Notre Dame
Cooperative Investment Fund received January 24, 2020; Tom Shaffner
dated December 17, 2019; Sisters of the Order of St. Dominic dated
January 24, 2020; Southwestern Energy Company dated February 3,
2020.
    \99\ See letters from AFL-CIO dated February 3, 2020; Boston
Trust Walden et al. dated January 27, 2020; CalPERS dated February
3, 2020; Council of Institutional Investors dated January 30, 2020;
Figure 8 Investment Strategies dated January 31, 2020; Illinois
State Treasurer dated January 16, 2020; International Brotherhood of
Teamsters dated February 3, 2020; Local Authority Pension Fund Forum
dated February 3, 2020; James McRitchie dated February 2, 2020; Paul
M. Neuhauser dated February 3, 2020; New York City Comptroller dated
February 3, 2020; North Berkeley Wealth Management dated January 31,
2020; Shareholder Rights Group dated March 18, 2020; State Board of
Administration of Florida dated February 3, 2020; John Taylor dated
November 14, 2019; Trillium Asset Management dated February 3, 2020;
Worker Owner Council of the Northwest dated February 3, 2020.
    \100\ See letters from Business Roundtable dated February 3,
2020; CFA Institute dated February 3, 2020; Nasdaq, Inc. dated
February 3, 2020.
    \101\ See letters from Center for Capital Markets
Competitiveness dated January 31, 2020; Corporate Governance
Coalition for Investor Value dated February 3, 2020; Nareit dated
February 3, 2020; Southwestern Energy Company dated February 3,
2020.
    \102\ See letter from Southwestern Energy Company dated February
3, 2020.
    \103\ See letters from CT Hagberg LLC dated February 3, 2020;
Exxon Mobil Corporation dated February 3, 2020; Nasdaq, Inc. dated
February 3, 2020.
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    Of commenters that were opposed to the proposed amendment, several
expressed the view that the proposed informational requirements could
interfere with the principles of agency under state law and/or a
representative's ability to carry out its fiduciary duties.\104\ For
example, some commenters expressed concern that the proposed amendment
would intrude on the agency relationship by requiring the shareholder-
proponent to pre-authorize the form and content of a shareholder
proposal prior to its submission,\105\ or by requiring written
authorization that

is not required under state law.\106\ Some commenters also stated that
an amendment requiring this information is unnecessary because the
information is often already provided.\107\ Commenters also raised
concerns about the effects the proposed requirements could have on
entities, such as asset managers, that must act through agents.\108\
---------------------------------------------------------------------------

    \104\ See, e.g., letters from AFL-CIO dated February 3, 2020; As
You Sow dated February 3, 2020; CalPERS dated February 3, 2020;
Council of Institutional Investors dated January 30, 2020; Figure 8
Investment Strategies dated January 31, 2020; Interfaith Center on
Corporate Responsibility dated January 27, 2020; International
Brotherhood of Teamsters dated February 3, 2020; Worker Owner
Council of the Northwest dated February 3, 2020.
    \105\ See, e.g., letters from AFL-CIO dated February 3, 2020;
Boston Trust Walden et al. dated January 27, 2020; Shareholder
Rights Group dated March 18, 2020.
    \106\ See, e.g., letter from AFL-CIO dated February 3, 2020.
    \107\ See, e.g., letters from AFL-CIO dated February 3, 2020;
CalPERS dated February 3, 2020; James McRitchie dated February 2,
2020.
    \108\ See, e.g., letters from AFL-CIO dated February 3, 2020;
International Brotherhood of Teamsters dated February 3, 2020;
International Corporate Governance Network dated December 4, 2019;
Paul M. Neuhauser dated February 3, 2020; New York City Comptroller
dated February 3, 2020.
---------------------------------------------------------------------------

    In response to a request for comment, two commenters stated that a
representative's ability to deliver evidence of the shareholder-
proponent's ownership sufficiently demonstrates the representative's
authority to submit a proposal on a shareholder's behalf,\109\ while
two others stated that it does not sufficiently demonstrate such
authorization.\110\
---------------------------------------------------------------------------

    \109\ See letters from Council of Institutional Investors dated
January 30, 2020; James McRitchie dated February 2, 2020.
    \110\ See letters from Exxon Mobil Corporation dated February 3,
2020; Southwestern Energy Company dated February 3, 2020.
---------------------------------------------------------------------------

3. Final Rule Amendment
    We are adopting the amendment as proposed, but with a modification
in response to commenters that clarifies that the shareholder-proponent
must identify the specific topic of the proposal, rather than the
specific language of the proposal, to be submitted. The rule will
require shareholders that use a representative to submit a proposal for
inclusion in a company's proxy statement to provide documentation that:
     Identifies the company to which the proposal is directed;
     Identifies the annual or special meeting for which the
proposal is submitted;
     Identifies the shareholder submitting the proposal and the
shareholder's designated representative;
     Includes the shareholder's statement authorizing the
designated representative to submit the proposal and otherwise act on
the shareholder's behalf;
     Identifies the specific topic of the proposal to be
submitted;
     Includes the shareholder's statement supporting the
proposal; and
     Is signed and dated by the shareholder.
    As discussed in the Proposing Release, companies receive proposals
under Rule 14a-8 from individuals and entities that may not qualify to
submit proposals at a particular company in their own name, but arrange
to serve as a representative to submit a proposal on behalf of
individuals or entities that have held a sufficient number of shares
for the requisite amount of time.\111\
---------------------------------------------------------------------------

    \111\ See Proposing Release at 66465-66466.
---------------------------------------------------------------------------

    We also understand that shareholders may wish to use a
representative for a number of reasons, including to obtain assistance
from someone who has more experience with the shareholder-proposal
process or as a matter of administrative convenience. Often, the
shareholder has an established relationship with the representative
(e.g., the shareholder has previously used the representative to submit
proposals on his or her behalf, or the representative serves as the
shareholder's investment adviser). In practice, the representative
typically submits the proposal to the company on the shareholder's
behalf along with necessary documentation, including evidence of
ownership (typically in the form of a broker letter) and the
shareholder's written authorization for the representative to submit
the proposal and act on the shareholder's behalf. After the initial
submission, the representative often speaks for and acts on the
shareholder's behalf in connection with the matter. When a
representative speaks and acts for a shareholder, there may be a
question as to whether the shareholder has a genuine and meaningful
interest in the proposal, or whether the proposal is instead primarily
of interest to the representative, with only an acquiescent interest by
the shareholder.\112\
---------------------------------------------------------------------------

    \112\ See, e.g., Baker Hughes Inc., SEC No-Action Letter 2016 WL
722853 (Feb. 22, 2016) (investment adviser failed to provide
documentation sufficient to ascertain the shareholder's identity,
role, or interest in the proposal); Chevron Corp., SEC No-Action
Letter 2014 WL 262988 (Apr. 4, 2014) (same).
---------------------------------------------------------------------------

    We believe that these amendments will help safeguard the integrity
of the shareholder-proposal process and the eligibility restrictions by
making clear that representatives are authorized to so act, and by
providing a meaningful degree of assurance as to the shareholder-
proponent's identity, role, and interest in a proposal that is
submitted for inclusion in a company's proxy statement. We also believe
that these requirements will reduce some of the administrative burdens
associated with confirming a shareholder's role in the shareholder-
proposal process and that the burden on shareholder-proponents of
providing this information will be minimal; in fact, we note that much
of it is often already provided.
    Although much of this information is already provided in accordance
with staff guidance,\113\ we do not agree with commenters who suggested
that current practices obviate the need for an amendment.\114\ We
believe that an amendment will promote consistency among shareholder-
proponents and provide greater clarity to those seeking to rely on the
rule. In addition, we believe it is important that the documentation
include the shareholder's statement authorizing the designated
representative to submit the proposal and otherwise act on the
shareholder's behalf, as well as the shareholder's statement supporting
the proposal, neither of which is addressed in staff guidance. At this
time, however, we do not believe that any of the additional
informational requirements suggested by commenters are necessary to
demonstrate a shareholder-proponent's identity, role, and interest in a
proposal and, accordingly, we are not adding any additional
requirements.
---------------------------------------------------------------------------

    \113\ See Staff Legal Bulletin No. 14I (Nov. 1, 2017).
    \114\ See, e.g., letters from AFL-CIO dated February 3, 2020;
CalPERS dated February 3, 2020; James McRitchie dated February 2,
2020.
---------------------------------------------------------------------------

    We do not expect these requirements will interfere with a
shareholder-proponent's ability to use an agent, or prevent
representatives who act as fiduciaries from carrying out their
fiduciary duties. Although shareholder-proponents who elect to submit a
proposal through a representative will be required to provide
additional information about their submissions, the rule will not
prevent them from using representatives in accordance with state law.
Moreover, the rule's requirement to disclose this information is only a
condition on the ability of a shareholder-proponent, under federal law,
to submit a proposal for inclusion in a company's proxy statement. The
rule does not substantively alter the agency relationship between a
shareholder and a representative. Thus, we do not agree with the
commenter who stated that the proposed amendment ``interferes with
state agency law by requiring that shareholders provide express and
specific authorization of the designated representative to submit a
shareholder proposal.'' \115\ Furthermore, in response to commenters
who suggested that the amendment would intrude on a shareholder-
proponent's ability to use an agent by requiring the shareholder-

proponent to pre-authorize the form and content of a shareholder
proposal prior to its submission,\116\ we have revised the rule text to
state that the shareholder-proponent must identify the specific topic
(as opposed to the text) of the proposal to be submitted. Likewise, we
do not believe that the rule will interfere with a representative's
ability to act as a fiduciary or satisfy any applicable fiduciary
obligations. Rather, the rule is intended to help shareholders and
companies more clearly understand the nature and scope of the
relationship between a shareholder-proponent and his or her
representative.
---------------------------------------------------------------------------

    \115\ See letter from AFL-CIO dated February 3, 2020.
    \116\ See, e.g., letters from AFL-CIO dated February 3, 2020;
Boston Trust Walden et al. dated January 27, 2020; Shareholder
Rights Group dated March 18, 2020.
---------------------------------------------------------------------------

    In addition, we agree with those commenters who expressed the view
that a representative's ability to obtain a broker letter from the
shareholder's broker does not offer a sufficient degree of assurance as
to the shareholder-proponent's identity, role, and interest in a
proposal.\117\ Although the ability to obtain a broker letter will
generally require the shareholder's authorization, the scope of such
authorization may not be evident. In this situation, it may be unclear
whether a shareholder is aware of or has authorized the submission of
the specific proposal to a particular company. The new requirements
will provide a greater degree of certainty with respect to these issues
with minimal burden on the shareholder-proponent.
---------------------------------------------------------------------------

    \117\ See letters from Exxon Mobil Corporation dated February 3,
2020; Southwestern Energy Company dated February 3, 2020.
---------------------------------------------------------------------------

    Furthermore, we are clarifying in response to commenters \118\
that, where a shareholder-proponent is an entity, and thus can act only
through an agent, compliance with the amendment will not be necessary
if the agent's authority to act is apparent and self-evident such that
a reasonable person would understand that the agent has authority to
act. For example, compliance generally would not be necessary where a
corporation's CEO submits a proposal on behalf of the corporation,
where an elected or appointed official who is the custodian of state or
local trust funds submits a proposal on behalf of one or more such
funds, where a partnership's general partner submits a proposal on
behalf of the partnership, or where an adviser to an investment company
submits a proposal on behalf of an investment company. On the other
hand, compliance would be required where the agency relationship is not
apparent and self-evident. For example, compliance would be required
where an investment adviser submits a proposal on behalf of a client
that is a shareholder. A private relationship between a third-party
investment adviser and the adviser's client would not be apparent or
self-evident because these private relationships are generally governed
by private contractual arrangements where the scope of the principal-
agent relationship does not as a matter of course extend to
representation with respect to the submission of proposals.
Additionally, there are inherent difficulties in ascertaining the scope
of such a relationship, as investment advisers can provide a wide range
of services to their clients,\119\ which may or may not include
shareholder advocacy on the client's behalf.\120\
---------------------------------------------------------------------------

    \118\ See letters from AFL-CIO dated February 3, 2020;
International Brotherhood of Teamsters dated February 3, 2020;
International Corporate Governance Network dated December 4, 2019;
Paul M. Neuhauser dated February 3, 2020; New York City Comptroller
dated February 3, 2020.
    \119\ See Regulation Best Interest: The Broker-Dealer Standard
of Conduct, Release No. 34-86031 (June 5, 2019) [84 FR 33318 (July
12, 2019)], at 33319.
    \120\ An investment adviser may advise multiple clients who
submit their own shareholder proposals, as long as the adviser
complies with the one-proposal limitation. See infra Section II.D.3.
---------------------------------------------------------------------------

C. The Role of the Shareholder-Proposal Process in Shareholder
Engagement

1. Proposed Rule Amendment
    We proposed to amend Rule 14a-8(b) to add a shareholder engagement
component to the current eligibility criteria, which would require a
statement from each shareholder-proponent that he or she is able to
meet with the company in person or via teleconference no less than 10
calendar days, nor more than 30 calendar days, after submission of the
shareholder proposal. Under the proposal, shareholders would also be
required to include their contact information as well as business days
and specific times that they are available to discuss the proposal with
the company.
2. Comments on the Proposed Rule Amendment
    We received numerous comments on the proposed amendment regarding a
shareholder-proponent's statement of ability to engage with the
company. Some commenters supported the proposed amendment,\121\ while
others opposed such a requirement.\122\ Of those that opposed the
proposed amendment, several expressed the view that such a requirement
would not make companies more likely to engage with shareholders.\123\
Some commenters also questioned the basis for and appropriateness of
the 10 to 30 calendar-day window,\124\ or suggested that requiring a
statement of availability would impose a burden on shareholders.\125\
---------------------------------------------------------------------------

    \121\ See letters from Business Roundtable dated February 3,
2020; Center for Capital Markets Competitiveness dated January 31,
2020; CFA Institute dated February 3, 2020; Church Investor Group
dated January 29, 2020; Energy Infrastructure Council dated February
3, 2020; International Corporate Governance Network dated December
4, 2019; Nareit dated February 3, 2020; Nasdaq, Inc. dated February
3, 2020; National Association of Manufacturers dated February 3,
2020; Pension Investment Association of Canada dated January 23,
2020; Robeco dated January 16, 2020; Society for Corporate
Governance dated February 3, 2020.
    \122\ See, e.g., letters from AFL-CIO dated February 3, 2020; As
You Sow dated February 3, 2020; Boston Common Asset Management dated
February 3, 2020; Boston Trust Walden et al. dated January 27, 2020;
CalPERS dated February 3, 2020; Ceres et al. dated February 3, 2020;
John Chevedden dated January 30, 2020; Christian Brothers Investment
Services, Inc. dated January 21, 2020; Council of Institutional
Investors dated January 30, 2002; Figure 8 Investment Strategies
dated January 31, 2020; First Affirmative Financial Network, LLC
dated January 24, 2020; Harrington Investments, Inc. dated February
3, 2020; Interfaith Center on Corporate Responsibility dated January
27, 2020; International Brotherhood of Teamsters dated February 3,
2020; Local Authority Pension Fund Forum dated February 3, 2020;
Maryknoll Sisters of St. Dominic, Inc. dated January 17, 2020; Paul
M. Neuhauser dated February 3, 2020; New York City Comptroller dated
February 3, 2020; New York State Comptroller dated February 3, 2020;
Nia Impact Capital dated February 2, 2020; NorthStar Asset
Management, Inc. dated February 3, 2020; Pension Investment
Association of Canada dated January 23, 2020; Paul Rissman dated
January 15, 2020; Rockefeller Asset Management dated January 31,
2020; Segal Marco Advisors dated February 3, 2020; Shareholder
Rights Group dated February 3, 2020; Singing Field Foundation dated
January 31, 2020; State Board of Administration of Florida dated
February 3, 2020; John Taylor dated November 14, 2019; Trillium
Asset Management dated February 3, 2020; UAW Retiree Medical
Benefits Trust dated January 30, 2020; Worker Owner Council of the
Northwest dated February 3, 2020.
    \123\ See, e.g., letters from Council of Institutional Investors
dated January 30, 2020; Local Authority Pension Fund Forum dated
February 3, 2020; New York State Comptroller dated February 3, 2020;
UAW Retiree Medical Benefits Trust dated January 30, 2020.
    \124\ See, e.g., letters from As You Sow dated February 3, 2020;
Boston Trust Walden et al. dated January 27, 2020; Council of
Institutional Investors dated January 30, 2020; Interfaith Center on
Corporate Responsibility dated January 27, 2020.
    \125\ See, e.g., letters from Boston Trust Walden et al. dated
January 27, 2020; John Chevedden dated January 30, 2020; UAW Retiree
Medical Benefits Trust dated January 30, 2020.
---------------------------------------------------------------------------

    Several commenters raised questions about certain technical aspects
of the proposal, such as whether the times specified for engagement
should be during the company's normal business hours,\126\ and when the
10 to 30

calendar-day period starts to run where co-filers submit their
proposals on different dates.\127\ One commenter stated that
shareholder-proponents should be available to discuss the proposal, but
encouraged the Commission to provide clarity as to whether the
shareholder-proponent must identify a minimum number of dates and/or
times that the proponent would be available to discuss the proposal, or
whether the dates and/or times offered must be convenient to the
company.\128\ This commenter also suggested that a lack of clarity on
these points could result in unnecessary no-action requests.\129\
---------------------------------------------------------------------------

    \126\ See letters from Center for Capital Markets
Competitiveness dated January 31, 2020; Council of Institutional
Investors dated January 30, 2020; Society for Corporate Governance
dated February 3, 2020.
    \127\ See letter from Council of Institutional Investors dated
January 30, 2020.
    \128\ See letter from International Corporate Governance Network
dated December 4, 2019. Another commenter also sought clarification
on the ramifications of a shareholder being unable to meet on one of
the dates the shareholder identifies. See letter from Boston Trust
Walden et al. dated January 27, 2020.
    \129\ See letter from International Corporate Governance Network
dated December 4, 2019.
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    A number of commenters stated that companies also should be
required to be available to engage with the shareholder-proponent and/
or to state that they attempted to engage with the proponent prior to
submitting a no-action request.\130\ Two commenters that were
supportive of an engagement-related mechanism suggested that, instead
of stating their availability to engage, shareholder-proponents should
include a statement with their submission as to whether they attempted
to engage with the company prior to submitting the proposal.\131\
Another commenter indicated that a statement of general availability
would be preferable.\132\ Other commenters expressed the view that
shareholder-proponents should be required to make a good-faith effort
to meet with a company after stating their availability to engage,\133\
or that there should be a penalty for failing to engage.\134\ Another
commenter suggested that where the shareholder-proponent is different
from the lead filer, the lead filer should be required to participate
in the engagement.\135\
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    \130\ See letters from AFL-CIO dated February 3, 2020; CalPERS
dated February 3, 2020; Ceres et al. dated February 3, 2020; Church
Investor Group dated January 29, 2020; Council of Institutional
Investors dated January 30, 2020; First Affirmative Financial
Network, LLC dated January 24, 2020; Illinois State Treasurer dated
January 16, 2020; International Brotherhood of Teamsters dated
February 3, 2020; International Corporate Governance Network dated
December 4, 2019; Local Authority Pension Fund Forum dated February
3, 2020; Loring, Wolcott & Coolidge dated January 31, 2020; James
McRitchie dated February 2, 2020; Mercy Investment Services dated
January 31, 2020; New York City Comptroller dated February 3, 2020;
NorthStar Asset Management, Inc. dated February 3, 2020; Pension
Investment Association of Canada dated January 23, 2020; Tom
Shaffner dated December 17, 2019; Shareholder Rights Group dated
February 3, 2020; State Board of Administration of Florida dated
February 3, 2020; Trillium Asset Management dated February 3, 2020;
US SIF dated January 31, 2020; Worker Owner Council of the Northwest
dated February 3, 2020.
    \131\ See letters from Baillie Gifford & Co. dated February 3,
2020; Stewart Investors dated January 30, 2020.
    \132\ See letter from James McRitchie dated February 2, 2020.
    \133\ See letter from National Association of Manufacturers
dated February 2, 2020.
    \134\ See letters from Center for Capital Markets
Competitiveness dated January 31, 2020; Nasdaq, Inc. dated February
3, 2020.
    \135\ See letter from Society for Corporate Governance dated
February 3, 2020.
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    A number of commenters expressed concern about the requirement that
the contact information and availability be the shareholder-
proponent's, and not that of the shareholder's representative (if the
shareholder uses a representative).\136\ Some of these commenters
suggested that this requirement would disadvantage shareholder-
proponents who require a representative's assistance in utilizing and/
or navigating the shareholder-proposal process.\137\ Other commenters
suggested that this requirement could have a chilling effect on
shareholder-proposal submissions because shareholder-proponents may not
feel comfortable engaging with companies themselves.\138\ One commenter
also expressed concern about a shareholder's private telephone number
or email address being made public through the no-action process.\139\
Another commenter indicated that the proposed amendment could
indirectly raise costs on shareholders.\140\
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    \136\ See letters from Emily Aldridge dated January 31, 2020;
Jennifer Astone dated January 17, 2020; Kate Barron-Alicante dated
January 31, 2020; Jane Bulnes-Fowles dated February 3, 2020; Brian
Canning January 31, 2020; Harvey Christensen dated January 28, 2020;
Christian Brothers Investment Services, Inc. dated January 21, 2020;
Clean Yield Asset Management dated February 3, 2020; Sara Culotta
dated February 3, 2020; Daughters of Charity of St. Vincent de Paul
dated January 30, 2020; John Eing dated January 31, 2020; Nancy
Faris dated January 27, 2020; First Affirmative Financial Network,
LLC dated January 24, 2020; Global Affairs Associates, LLC dated
February 3, 2020; Gorge Sustainable Investing dated December 27,
2019; Green America et al. dated January 29, 2020; Patricia Hathaway
dated January 31, 2020; Andrew Howard dated December 14, 2019; Neela
Hummel dated January 31, 2020; Andrew Ish dated February 2, 2020;
Brent Kessel dated January 31, 2020; Laird Norton Family Foundation
dated January 28, 2020; Lynnea C. Lane dated February 3, 2020; James
McRitchie dated February 2, 2020; Margaret Miars dated December 13,
2019; Thomas Miars dated December 13, 2019; Anne Miller dated
January 23, 2020; Laura Morganelli dated January 31, 2020; Oneida
Trust Enrollment Committee dated February 3, 2020; Pension
Investment Association of Canada dated January 23, 2020; Rhia
Ventures dated January 31, 2020; Cheryl Ritenbaugh dated January 17,
2020; Rockefeller Asset Management dated January 31, 2020; The Arntz
Family Foundation dated January 14, 2020; The Pension Board--United
Church of Christ, Inc. dated January 29, 2020; Upcyclers Network
dated January 17, 2020; US SIF dated January 31, 2020; Luci Walker
dated December 9, 2019; Barbara J. Wolf dated January 31, 2020; Ann
W. Woll dated January 18, 2020.
    \137\ See, e.g., letters from Boston Trust Walden et al. dated
January 27, 2020; Interfaith Center on Corporate Responsibility
dated January 27, 2020; Singing Field Foundation dated January 31,
2020.
    \138\ See, e.g., letters from As You Sow dated February 3, 2020;
Paul Rissman dated January 15, 2020.
    \139\ See letter from James McRitchie dated February 2, 2020.
    \140\ See Recommendation of the IAC, supra note 18.
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3. Final Rule Amendment
    We are adopting the amendment largely as proposed, but with some
modifications in response to comments received. We believe that
encouraging company-shareholder engagement through this new requirement
will be beneficial both to shareholders and to companies. As we
explained in the Proposing Release, while Rule 14a-8 provides a means
for shareholder-proponents to advance proposals and solicit proxies
from other shareholders, the rule is only one of many mechanisms for
shareholders to engage with companies and their fellow shareholders and
to advocate for the measures they propose. While other forms of
engagement may sometimes accomplish a shareholder's interest in
communicating with a company and its other shareholders without the
burdens associated with including a proposal in a company's proxy
statement, we understand that shareholder proposals are at times used
as the sole method of engaging with companies even if the company is
willing to discuss, and possibly resolve, the matter with the
shareholder.\141\ In those cases, Rule 14a-8 may result in a
shareholder burdening other shareholders and the company with a proxy
vote that may have been avoided had meaningful prior engagement taken
place.\142\ We believe that having shareholder-proponents state their
availability to discuss their proposal will facilitate dialogue between
shareholders and companies in

the shareholder-proposal process, and may lead to more efficient and
less costly resolution of these matters. Company-shareholder engagement
can thus be an efficient alternative to the shareholder-proposal
process. We understand that proactive company engagement with
shareholders has increased in recent years,\143\ and that shareholders
frequently do not submit, or ultimately withdraw, their proposals as a
result of company-shareholder engagement.\144\
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    \141\ We recognize that some shareholder-proponents use a
shareholder proposal as a way to open a dialogue with management and
not with the objective of having the matter go to a vote. See
Transcript of the Roundtable on the Proxy Process (Nov. 15, 2018)
(``Roundtable Transcript''), available at https://www.sec.gov/files/proxy-round-table-transcript-111518.pdf, comments of Michael
Garland, Assistant Comptroller, Corporate Governance and Responsible
Investment, Office of the Comptroller, New York City.
    \142\ We acknowledge that engagement outside the shareholder-
proposal process can also result in burdens on companies, but our
rules do not mandate that such activity occur.
    \143\ See letters in response to the Proxy Process Roundtable
from Business Roundtable dated June 3, 2019; Chevron Corporation
dated August 20, 2019; Society for Corporate Governance dated
November 9, 2018.
    \144\ Company-shareholder engagement with respect to shareholder
proposals frequently leads to withdrawn proposals. See, e.g.,
letters in response to the Proxy Process Roundtable from Everence
Financial dated December 6, 2018 (``[A]n increasing number of
resolutions end up being withdrawn by the proponent because of
conversations between [the proponent] and the company.''); Praxis
Mutual Funds dated December 6, 2018 (same); Principles for
Responsible Investment dated November 14, 2018 (``[A] growing number
of shareholder proposals are withdrawn due to corporate management
developing workable solutions with investors.''). See also Proposing
Release at 66478 fig.2.
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    Under the amendment, shareholder-proponents will be required to
provide the company with a written statement that they are able to meet
with the company in person or via teleconference at specified dates and
times that are no less than 10 calendar days, nor more than 30 calendar
days, after submission of the proposal.\145\ For example, for a
proposal submitted on October 1, the shareholder-proponent would be
required to identify dates of availability between October 11 and
October 31.\146\ Although some commenters questioned the basis for this
window of availability,\147\ we believe that it is appropriate for
several reasons. While we recognize the point made by commenters that
some companies may choose not to engage until after the deadline for
submitting proposals or later,\148\ we believe that encouraging
engagement shortly after submission can lead to swifter resolution of
these matters and obviate the need for a no-action request. In this
regard, we note that where a proposal is submitted at or near a
company's deadline for receiving proposals, the company will have a
relatively short amount of time to prepare and submit a no-action
request.\149\ Thus, early engagement may help avoid the time and
expense of the no-action process. Nevertheless, the amended rule will
not permit shareholders to identify availability earlier than 10 days
after the proposal's submission, so that the company will have
sufficient time to consider the proposal prior to engagement taking
place.\150\ In addition, shareholders may have a better sense of what
their availability will be 10 to 30 days after submitting the proposal
compared with longer periods. Moreover, shareholders have some degree
of flexibility in choosing when to submit a proposal prior to the
submission deadline and therefore can do so when they are more likely
to have greater availability.
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    \145\ The contact information and availability will have to be
the shareholder's, and not that of the shareholder's representative
(if the shareholder uses a representative). The amendment, however,
does not preclude a representative from participating in any
discussions between the company and the shareholder. The proposal's
date of submission is the date the proposal is postmarked or
transmitted electronically. In the event the proposal is hand
delivered, the submission date would be the date of hand delivery.
    \146\ Companies that intend to seek exclusion under Rule 14a-
8(b) based on a shareholder-proponent's failure to provide some or
all of this information must notify the proponent of the specific
defect(s) within 14 calendar days of receiving the proposal so that
the shareholder-proponent has an opportunity to cure the defect(s),
and the shareholder-proponent is required to respond to this notice
within 14 days. See 17 CFR 240.14a-8(f)(1). Where a company sends a
deficiency notice for the purpose of requesting identification of a
shareholder-proponent's availability to engage, the shareholder-
proponent must identify dates of the shareholder-proponent's
availability that are within the remaining 10- to 30-day window. For
example, where a proposal is submitted on October 1, the company's
deficiency notice is received by the shareholder-proponent on
October 15, and the shareholder-proponent responds to the deficiency
notice by email on October 20, the shareholder-proponent would be
required to identify business days between October 21 and October 31
that the shareholder-proponent is available to discuss the proposal.
    \147\ See, e.g., letters from As You Sow dated February 3, 2020;
Boston Trust Walden et al. dated January 27, 2020; Council of
Institutional Investors dated January 30, 2020; Interfaith Center on
Corporate Responsibility dated January 27, 2020; New York City
Comptroller dated February 3, 2020.
    \148\ See, e.g., letters from Boston Trust Walden et al. dated
January 27, 2020; Interfaith Center on Corporate Responsibility
dated January 27, 2020; UAW Retiree Medical Benefits Trust dated
January 30, 2020.
    \149\ For a regularly-scheduled meeting, the deadline for
submitting proposals is ``120 calendar days before the date of the
company's proxy statement released to shareholders in connection
with the previous year's annual meeting.'' See 17 CFR 240.14a-
8(e)(2). A company that intends to exclude a proposal ``must file
its reasons with the Commission no later than 80 calendar days
before it files its definitive proxy statement and form of proxy
with the Commission.'' If a proposal is received at or near the 120-
day deadline and the company intends to file its definitive proxy
statement at or near the anniversary of the prior year's proxy
filing date, the company will generally have approximately 40 days
from receiving the proposal to notify the Commission of its
intention to exclude the proposal.
    \150\ Although the rule will require shareholder-proponents to
identify their availability within the 10- to 30-day window, the
parties can arrange to engage on a date that is not within that
window.
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    Shareholder-proponents will also be required to provide their
contact information \151\ and identify specific business days and times
(i.e., more than one date and time) that they are available to discuss
the proposal.\152\ In response to commenters, we are modifying the
final rule to clarify that the times specified should be during the
regular business hours of the company's principal executive
offices.\153\ If these hours are not disclosed in the company's proxy
statement,\154\ the shareholder-proponent should identify times between
9:00 a.m. and 5:30 p.m. on business days in the time zone of the
company's principal executive offices. If a company is not available to
engage with the shareholder-proponent on the specific date(s) or
time(s) originally identified by the shareholder-proponent, engagement
may take place at a different date and/or time, provided that it is
acceptable to both the shareholder-proponent and company. If the
shareholder-proponent's availability changes, the company should be
notified and alternative date(s) and time(s) should be provided to the
company.
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    \151\ In response to one commenter's concern regarding the
potential for a shareholder's private contact information to be made
publicly available through the no-action process, see letter from
James McRitchie dated February 2, 2020, we note that Commission
staff removes personally identifiable information from no-action
requests and related correspondence before making these materials
publicly available on the Commission's website.
    \152\ Where shareholders elect to co-file a proposal, all co-
filers must either: (1) Agree to the same dates and times of
availability or (2) identify a single lead filer who will provide
dates and times of the lead filer's availability to engage on behalf
of all co-filers.
    \153\ See letters from Center for Capital Markets
Competitiveness dated January 31, 2020; Council of Institutional
Investors dated January 30, 2020; Society for Corporate Governance
dated February 3, 2020.
    \154\ The Commission's proxy rules do not require issuers to
disclose this information, but companies may choose to do so to
facilitate shareholder engagement with respect to shareholder
proposals. If an issuer chooses to disclose this information, we
suggest that it appear alongside the deadline for submitting
proposals.
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    We do not agree with the commenter who suggested that providing a
general statement of the shareholder-proponent's availability would be
preferable to identifying specific dates and times.\155\ While a
general statement of availability could indicate a shareholder-
proponent's willingness to engage, the identification of specific dates
and times would add certainty as to the shareholder-proponent's
availability, and we believe that engagement may be more likely to
occur where the company knows the

shareholder-proponent's availability in advance.
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