REQUIREMENTS

While a company dialogue can begin at any time, shareholder resolutions have technical requirements that require pre-planning and that are critical to follow otherwise the resolution may be omitted from the proxy by the company. Recent changes to SEC rules made under the Trump administration have substantially changed filing requirements. 

 

Shareholder resolution filing requirements:

 

  • Stock holdings of at least $25,000 held continuously for 1 year prior to the filing date, or $15,000 held for 2  years, or $2,000 held for 3 years.

  • Will hold the stock through the annual meeting at which time the proxy will be voted.

  • Stockholder or representative must present the resolution at the annual meeting.

  • A shareowner can file no more than one resolution with a company in a single year (but can file resolutions at several companies in a given year).

  • A resolution is limited to 500 words and must meet the 16 technical and substantive rules as set forth by the SEC.

  • A company can inform the shareholder that it intends to omit the resolution and the shareholder can appeal to the SEC or challenge the company in court.

  • Most environmental and social proposals are non-binding.

  • Proposals must receive a minimum number of votes to be allowed on the proxy the following year. Resubmission thresholds are 5% of the total vote the first year it is filed, 15% the second year and 25% its third or consecutive years. If it fails to meet these minimum votes, it may not be resubmitted for 3 years.

  • Mutual fund stocks cannot be voted by individuals or used to file resolutions.

Image by Benjamin Child
TIMELINE

Proxy Season:

 

Shareholder engagement has a seasonal pattern that revolves around the date of a company’s annual meeting. The annual meeting determines when a resolution can be filed, key leverage points in dialogues, media opportunities, solicitation of other shareholders, analysts and production of research reports. 

 

  • 90% of annual meetings and proxy voting happens in the spring "proxy season" (April - June) and the filing of resolutions happen six months prior to that (Oct. – Dec.).

  • Dialogues happen all year round but they are often most productive before fall filing deadlines or in the winter when the company is eager to have the resolution withdrawn before it prints its proxy.