DealLawyers.com Blog

The big news last week, which was impossible to avoid, was the SEC’s long-awaited proposal to rescind Rule 14a-8 and amend Rule 14a-4(c) to address the issues companies face related to discretionary authority when a shareholder proposal isn’t included in a company’s proxy statement. As client alerts have been rolling in, one implication we’ve seen repeatedly highlighted is that rescinding Rule 14a-8 would “redirect,” not eliminate, activism. Here’s more from this Cooley alert:

Rescission of Rule 14a-8 would eliminate a widely used tool of shareholder activists, but companies should not expect the underlying pressure to disappear. Proponents and other activists are likely to redirect their efforts toward director “vote no” campaigns, proxy contests, opposition to say-on-pay and other management proposals, litigation, direct engagement and targeted publicity campaigns [. . .]

Publicity and board-focused campaigns may become especially important. Rule 14a-8 gives proponents a relatively low-cost way to place an issue in a company’s proxy statement, attract public attention and engage the board. If that channel disappears, proponents may try to recreate the same pressure through targeted media campaigns, dedicated websites, open letters and other public pressure tactics, as well as campaigns aimed directly at directors. Some of these tactics are already emerging: During the 2026 season, proponents litigated exclusions, threatened or pursued Rule 14a-4 zero slate campaigns, and used director elections and public campaigns as alternative pressure points [. . .]

If adopted, the proposed Rule 14a-4(c) amendments would provide companies with greater flexibility to exercise discretionary voting authority on shareholder proposals submitted outside of the Rule 14a-8 process, subject to disclosure and an affirmative shareholder opt-out election. Importantly, however, while the proposed amendments to Rule 14a-4(c) are intended to address the concern that “zero slate” campaigns can pressure companies to include in their proxy materials shareholder proposals that might otherwise be excludable under Rule 14a-8, effectively circumventing the Rule 14a-8 process, the amendments would not prohibit zero slate campaigns. Indeed, if adopted and Rule 14a-8 is rescinded, they could further elevate zero slate campaigns as a prominent activist tool, providing a means for bringing shareholder proposals to a vote.

– Meredith Ervine