SEC Requires Companies to Allow Shareholder Proposals on Stock Plans

The Securities and Exchange Commission has ruled that companies cannot exclude shareholder proposals under the Rule 14a-8 exclusion that allows companies to avoid shareholder votes on proposals dealing with "ordinary business matters," such as employee compensation. Some companies had been relying on this rule to preclude shareholder votes on equity plans that were broad-based. A prior SEC ruling had allowed this interpretation, but the new ruling reverses this stand in cases where the plan would result in "material dilution." Similar proposals have been made by NASDAQ and the NYSE, but the SEC proposal would apply to all public companies, wherever they are traded. The change was based on the SEC's conclusion that the social and economic environment had changed, making equity compensation an issue beyond ordinary business. For more details, go here.