The Shareholder Rights Group, a shareholder rights advocacy group, recently published an initial report on the 2026 shareholder proposal season, titled “Shareholder Proposals and Corporate Governance in a Season of Regulatory Uncertainty.” The report touches on the regulatory backdrop that set the stage for the unusual proxy season (read about it here, here and here) and analyzes the substance of a number of proposals that companies determined to exclude under Exchange Act Rule 14a-8. In addition, the report explores questions regarding how the Securities and Exchange Commission (the “SEC”) Staff’s decision not to provide substantive guidance on the application of Rule 14a-8 to shareholder proposals in 2026 impacted the ability of shareholders to raise material questions with companies, and how it impacted the behavior of companies following receipt of proposals. Some interesting high level conclusions include:
- In the 2026 proxy season, shareholders filed approximately 20% fewer proposals than in 2025, while companies filed over 100 fewer exclusion notices with the SEC. However, proposals were excluded by companies at a similar rate to 2025, in proportion to the number of proposals filed; however, “the data suggests companies exercised more caution in omitting proposals” than in 2025.
- One of the biggest hurdles seemingly faced by shareholder proposal proponents in 2026 was the use of the Rule 14a-8 process to exclude proposals on novel or emerging issues, such as immigration policy, or proposals that were substantially revised in response to SEC Staff comments in the previous proxy season. In these situations, companies relied on Rule 14a-8 (and, notably, the ordinary business exemption thereunder) to exclude proposals for which there was no clear precedent, and thus questions exist as to whether the Staff would have reached a different conclusion were it to have conducted a substantive analysis.
- Another hurdle faced by proposal proponents was the expansion of previous Staff determinations to proposals on similar, but not identical, topics. For example, the report noted that some companies relied on the Staff’s prior decisions with respect to lobbying disclosure proposals to justify excluding proposals addressing corporate political contributions, which, in the opinion of the report’s authors, “represents an aggressive extension of the [prior] decision contrary to decades of staff determinations.”
Despite these challenges, the report noted that several companies continued to engage with shareholders in a proactive manner, while others included proposals in their proxy statements for which there might have been a basis to exclude, or withdrew requests to exclude and subsequently included the proposal in question in their proxy statement. In other words, despite the SEC’s lack of guidance, companies generally do not appear to have viewed this proxy season as a time to unilaterally override their shareholders and continued to engage proactively, keeping an open dialogue for the benefit of all parties.
On the opposite end of the spectrum, the report notes that some proponents turned to litigation following the exclusion of their proposals. To date, six lawsuits have been filed by shareholder proposal proponents; three of which have settled with the proposal being included in the proxy statement. As the report noted, “litigation is slower, more expensive, and far less accessible than the SEC’s longstanding administrative process.” Only proponents with deep “war chests” have the ability to pursue litigation, limiting the ability of small shareholders to respond with their proposals are excluded. While some shareholders have found alternate ways of protesting exclusions—for example, by organizing “vote no” campaigns for director elections, these options are also likely of limited use to many smaller investors.
The report closes with five recommendations for shareholder proposals and the Rule 14a-8 process going forward, including (i) preserving Rule 14a-8 as a communication mechanism between shareholders and management, (ii) restoring the substantive review of Rule 14a-8 requests to exclude shareholder proposals, (iii) eliminating “no-objection” letters based solely on the company’s opinion that a proposal can be excluded, (iv) providing more clear, objective SEC Staff guidance addressing reasons a proposals may be excluded under Rule 14a-8, and (v) protecting smaller shareholders’ ability to submit material proposals and make their views heard by management. Finally, the authors shared a word of caution, “if Rule 14a-8 is allowed to function only at the discretion of issuers, or only when proponents can afford to litigate, the result will be a system that no longer serves its essential purpose. A functioning shareholder proposal process is not a peripheral feature of U.S. corporate governance. Preserving it is essential to safeguarding accountability, transparency, and responsible governance in U.S. public markets.”
Read the report here.
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