The SEC's Division of Corporate Finance issued
Staff Legal Bulletin 14E, regarding shareholder proposals, on October 27, 2009. The
Bulletin discusses the application of Rule 14a-8(i)(7) to shareholder proposals related to succession plans for a chief executive officer (CEO). While the SEC has issued no-action letters in the past barring such shareholder proposals on the basis that the proposal extends down to the level of hiring and management of employees,
Staff Legal Bulletin 14E signals a move away from this position. The
Bulletin language references the strong policy implications inherent in CEO succession planning and states that "Going forward, we will take the view that a company generally may not rely on Rule 14a-8(i)(7) to exclude a proposal that focuses on CEO succession planning."
Staff Legal Bulletin 14E is available on the SEC website, Bloomberg Law, LexisNexis and Knowledge Mosaic. It is not available on Westlaw as of today.