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    Lecture 4, Reading (B)

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    oceanevesin

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    © All Rights Reserved
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    of 46
    SHCURTTIES AND EXCHANGE COMMISSION rere ran 20 Release No 34396; Fle No $7.29 IN sans ‘roedra Rearmed Reson Thos mde xchange Act Kale He GENCY: Scie md Esha Cominin ACTION: Fn SUMMARY: Wear long amino certain rod esses eth ros eating fo resubited proposals under the sharcholer-poposa ule inorder to denis met ced apy iene rps pre tof sesh TSR RIA EN ST aR recone suis na ant eh fine helt belie bei rope engage with the company with respect 10 ep she isp bn me nae rey msm tit i fh mete hoor ‘hresholis revise the levels of shareolder support apropos mus receive to he ciibe for ‘eubissom a hese company’s fature shareholders’ meetings from 3, 6, and 10 percent © 5. 18a 25 percent. respectively LRFFECTIVE DATE: Theil iaareeBGIGIINSERT DATE 0 DAYS AFTER PUBLICATION INTHE FEDERAL REGISTER) ee fi amend nsution 2 wich eftete NSERT DATE 60 DAYS AFTER PUBLICATION IN THE FEDERAL ECISTER RBIS se Soo i rte niomaton ot renting te ene: FOR FURTHER INFORMATION CONTACT: Mat MeNat Sor Speci Cou the fie Cie oul (2 $1380, Dison of Coperton Func US. Sees sod ExcgeConmiion,10F Stet NE, Waa, DC 2088, SUPPLEMENTARY INFORMATION: Wewe loin amendmen 17 CHR 240408 (ale (ane he Sees Ehret of 19815 US.. 7 ey BAe A [DATE 6O DAYS AFTER PUBLICATION IN THE FEDERAL REGISTER] sough he date the proposals submited tthe company. The archaic wl ao be requis to provide the ompany witha ween statement ha! he shrcole tents comin to ola eas $2000 fs secures tough the aot sharers mating wt which he propos wil considered, This enporry provision wll xp on Jun 1202. 1. orien warrens 7 any of he provisions ofthese rls. orth ppistion ther any person or rcumstancsel obe naldsuch validity shal ot aft aber provisions pplication of ah provisions other persons or ecumstance th canbe given fl witout the vad provision oF apes Pura othe Congcsona Review Ast. the Ofc of Information nd Regulatory Afar fas desi thee amendments as a naj ue,” a deine by 5 S.C. 8042) . : ‘Weare mindiaToFIRS cSt ad beefs ofthe ac amenimes The dcuson below akcescs the economic effets of the ascadments, ncn their anticipated costs and ene, “Suse maa ‘Seco he change Act Seton 209 ofthe Secs At 83, an Secon 6) he nein omit et hn pgm remington tt in ‘sree sweats reas te etn Cangny Actes! Be pi ne ‘Gene ton foie ton ef eeten hte acon wil promt cee. ce a {Sq maton Acton. Schon 24a ibe ache At ote uber akg reo reps ‘te Eachnge Ae oar mong thar mtr, he pach aya sepia i veo ‘Spo a atest he Cems al hot aoa che oregon vc lip BS ‘ncomeiton ats a nsemary open iar f th xchange At ss posible, we have tempted to quay the cons, benefits, and flctsom fin, holding period or can otherwise ast is her Holings to mt he send tesa, ‘Athi dsesson lusts, the changes in sharcho er prponce behavior, atc, inthe ex of nvestment aunt nd hol period andthe effets thereof ae dificult guanity, inching res ofthe telaiely smal percentage of shareholders ht submis hacer ‘oposls, Seton V.D dicate the nei, ost, dfs om ficiency competition. and ‘xptalfomtion ofthe rule amendments by fype of fected pany. tn parca, Section VD.1 © Sena Seon VL 98 chm ht hn mdm on cone ste opm Sea a HS an i pj ik thm eons Sc V.03 dues eft le smd denote gpm Fly, Sein. E deans ieee fe re at ee lye? oF ie seri wik si » ome ‘Theta tsi me on edge sendy, pid ei nda drones sac eens framework andthe crret practices for shareholder propos submissions. The final 2 Secon Vo dees seman consonants © Sex ropong Reese 6674 a eed descriion te a, opt ba pep ee los dr sc lh ay pve he sce ops ce 2 Su ogni Rl 646 fora des design of car mart pas eee sci ‘opal lating petal en demerger poole and en ape oh i Sieh oar ao has popes ino sew he sep ‘Weta tthe 01 bt sedate Props Rls ete ea snes eae of re rrkl prac rnin the schol gropenl proces bcos 3018 was eer on maser wes. selina rc enn a nth fy eno {cc of ec pon seen weiy be 019 ony ea gatas & Pe yl 2119 rey Sem Ree bale sr nade i {sce Son & Cool Rap. sip te 0) Further ur revew of wren ote cae te ‘ls fa ani hele eee othe reson es ing 071 098 a dy Sree Sie cana ear mise 28a er Coma ot ‘Aconument tie thew of ne et of fr oi fh ae rng a sgl ye at may ‘ua beeps cre ocr Seer tm ono Toa Wado ed 2 3008 ‘Shee eH dearer ‘mn fo ai ath in is ee inte Proposing Ree it em 20 coe eve ‘hg ree ec ata wold ot aa aso onlin Never we stn: cena ‘mart deopments che Cove panera at tan sper tos mh be ‘sme of he 3.00 tel rhe wh Ral 3000. Whence va, dtd oat ‘can ats ono he ree sign it smendmen to Rae 448), Rule 14 (and Re 14-4412 il fetal companies subject he il pony rs tha receive sharcholer proposal shareholders ofthese panics, and th proponents ofthese propos We discuss each oe of hese affected patie below 1. Companies ‘The final amendments wil affet companies that expt to receive sharcholder proposals. ‘escent my a ave score en pees inane an adr series sang tin aig ene we he yh il eck ae de propo al acon ung als an 0m paces change ‘Semanmer of eco eter eps ms he ae amenen kewl ane rented et {theta poner oases vay tds nye reer ‘cen conmnir ip tha he ric aay thePpong Rees ot csr te of ‘nt amendmen or rps the an urls dhe comny poe md sce gee x Kr amr Mts td Fbry 3309, Cowe fst! vere ned muy 3,208 ‘ial Aubry Pes Pn Fre ne ery 3.23 Peaster lt! De apn ted Fey 51 0st Me would hte ae eden may tle po tha omg sls “=A imam imu all treet the umber thn ents athe el oe ee ‘enim cnn cee 1 Segal Mey. Whi Rae reqs pany tle rene exon wth te arin “mpi rie ah nahn Wm econ et 9s ee in the proposal (including time dedicated by internal legal, corporate governance. ashe celpcer masiciae e narataaraens pons ‘mater experts executive management nd the hoard of dectorson evaluating each proposal {si cmgagem dsesion with the propor: (i prin and distrib proxy materia and tabulate vote nthe props) communis with ron Ying aie Msinesss and non Proponent shaeho les (proxy sation costs) and engage mth aoa proponent sharcholdr (he company incest xsd the proposal file noi with the Commision; and (si prepare staemet of epost the sbmision RPL SHOAL wht the propo ism nia submission or ‘eschission: (i) whether or nt the company seeks no-aeton rele rom Commission ‘sat (i) the nature ofthe proposal, including whether the topic ofthe propos sone with ‘which the company is faii:2 iv) whether the company engages with he proponent 2 Sg ates a CAPERS te Ft 2120, Cones an Barta pe he ary 30200, Counc sata eter dated Iary 1,302, ern Brora Tests ed et {na Ric Ate ed rs 200. > St ets fon Coc ea ven ated Jam 30 200 Rha, Le ted etry 2S “vce the proponent cages with be company, and here engagement the mer of the reagement (cg. fcesoface metings versus phone cal)?” (the corporate goverance of ‘he company, an any changes thereto, over the eure ofthe yeas of submission. (othe ‘importance ofthe se raise ite proposal tothe company athe proponent and he sesources ach ilies" ad (i the ed 0 sek uti legal a, pony sobctaton serves contig svi. o tar dior services to respond tthe proposal ™ Hence, ‘her i variation i the oss tha companies incu o process harholder proposal. "* _Matroren tthe conany anise AE. Ts Bsn Tah 0 ‘slate ftom other forms of engagement and corporate actives and cannot be reasonably © Seu ts fom Col of tational nets dt ary 299; ein te of ‘Teams sel ebay 3580 Ricard ALi tl ney 30) 2 Se rom chad A. Lda ary 28 208, © Sx. ae tom Coe of seen ves aay 38200 > See. a ham hb Cats ts Raper Jay 30,238 Cos one! ess td ny 3.200 Rc Ail mary 230. 2 Werequotl en cme at i mt eid at woud lo exit oper es uacn wth shale ops, One omer hac tl ae nlc dene as ake ‘Wtergoccmernal boca os hen he et epochal pele Se ees Moe Cai sane ate assy 33120 Ot carmen hove aed tele ‘ep tmp oppor ease companies thre SE ie rom Ameo aes ‘etiin ded Fb 202 asne Rewmi ad Farory 3 SHER Nee ne fee 3 338. ‘itera Asoc ef Muted Febery 3200S Carte ares dae say cose naontinctbe ebay emt 7 ( | “no hi C We estimate haf 18,394 cormpanies are subject the ederal proxy rule anehuscouk! prot foe inane i SN) ‘eins Seon VED raion ™ Sexi Sion VE 5 Teal camps. 15) care 5:58 compan wih cla of iti gered da Sit 12 te Exsnge Ae 20 spp wt caer wed nda Scan 1 henge At tld ony tall 12.714 etre anime ese crpuieoe8usines ‘evelopment Copan OF 590 esha el ry meal it Cama id $3 a seeg cn mlbn ct ioe ncn ci He oma Se Wecsinatthe mnt of reps et cla of curt rps dr Sco 12 Eacane Aty ‘even al Fos 10k ed uring cl et 2018 whe Cas a Cag ts ae eee {cgi thames thangs sears eater ur Scion Hh) Soto {betxcane At Foreign vat reat ed Fm 30 dS al er ed pas fel Fame In Ag cnr Shh Cane wn! em son Ti ‘im nae BDC a sd Frm Weide is ha a of secre repred ner Sec 12 te Excange Ah fl pony ‘mars store 1 et the reorng eign of Enchant Ss 5b bes ‘tgs eit ud ache At Secon 2) 2) (2 eat ny ate ‘Sire ean yor 308 wh th Comin To ry ae como al a DETTE Deri: UraT4a:bercisa.Derwllaaerwisc ere1ah” DEP RIA: DPANTEA Xe PRE a4 PRE 16 PRECL4A, PREMIAA:PREMIAC,PRERISA,PRERIGC: Ferm 18 cm te separa anc ‘Ser rth stone We may evi a Form le Sing lod ox 2 wie Con ‘Suwa om osm Fos 3 tt reece seme To ay eps {Sparing psa Sn 54 ba pat repsted nerSecon Setan Th, rene For iti Sw Crm nr mi smi a a rl themes sre Satie 150 opting egos at th cla of oar gsr ‘Stn 12) Sela 3) estimate the unde of gc eitred manag iv comps a on Fos EN ed ‘nrwce e018 and Avg 01 wh Commision Opewend inde we einen Fam 14. Cae ‘finds ae eitnedon Fr 2 Vacate aay pa aces eps nape! ean ‘Sms bt opto Fan DC ee ahve ens a 14 repring hb Oar sees SDC at a Fn TOK n 31h wlan DC a may be desu ore Red vss hr ngs Ou eine ‘chen holmes of ober BDC | 2. Sen-propennt shredders ‘he au andes he oer mm rope reef compe eg strc ropa. Ths scold, prklr when cme he agg ay ince sien cost esr and vote on hr prope, STEER te Cos open mele esi rm poy ie fo oe et ave BR ap contin 0 xe sy bandon te 2016 Se of Consumer Fina. approximately 68 milion hoascholis owned socks directly o nicely “Tec le roy mata whe Cnn 5490 aoe fac erties 18588) ‘hi tayo he flowing gon mars Sang een yw 208 wh he Camisen DEFT. DEC Devatta’ bere DePMan-DEFMIsC, DEFRIGA-DEFRIGC,DEANI#A: N14 PRE T4A, PRE 1, PRECIAA. PREMIUA, PREMIC.PRERLUN PRERLC = Sev spin exe malig role egal ding cent e208 tn in on open were tes cape out of he Ral 00rd. Ue Fae eprom {ESN huey! lt see! ae we ae hn 21K he we 19 ea ‘Sich propos emparwide tc Rc 300) er” Ov als cso eps ‘ned cer hn Ris nen ene hs peer vu any seed Sets pope Sc term eset Canny ont ad Feary, 200 New York Ste Cant aed avait Cn tc Else Retoment Ser ed Flay 3,2. We ected aed ‘Sens san hte oom erp! sibamentoRle (through ther investment instruments)" Our analysis of Form N-CEN data shows tha there vere 14605 reseed investment companis a of May 2020."pNomgroponentabasinies ig 3. Proponents f shares propeae Tern shi opts om be mel i eon of min on pecuniary beefs ud may be fed bythe al mendes, ch mayb sty os sharcolerpopsl. Weel hit he were 170 proponrie—38 Initiated 132 ahi prope ed ued pres ofc Feet daring let yn 3 snd tls bre rope nt ws india roxy statemen."* ASS Same VE ROIE TOF ane ened” ponent whose proposals apnea proxy ate ng 2018 (Le, 1700 he suber ft ist ern aps as roy as, 8 in 6 ‘SSA UHRA oe ates han reste open et rion investors. In other words, fr both institutional and ret shareholders the pool of See ee Bihar al. Chg 5 Fam Pane fam 23 206 Bde fm he Sve Comer Pee 103 Fi a Be 28, 9 Sep 3017, eae (Dre ea 2017/1 eo he 1260 ion tired omelet i rai ee 2% ta eee fm Far NEN ing wh th Camino May 2020. Fe CEN oly covery titel ves Steeped ine erp. Dis ied pony stamens Gn roping Heo 6H fo ceo of thi a nd ‘tos Tis tinh shold popes pared oe compan” oy vata {OV ns header et sted sharon rer hich eds voto nd wen props, ‘Sauna at aie pone ed apn! ss ind pen cooper Ui cork {Jor d0le Dau sree Go 158 Auli shareholders tha has demonstrated an interest in subiting sharcholee proposals gener s suntan sification AR ©. Esimated reduction in the mamber of sharsbldr prope ‘ecause ofthe potential ways in which proponents may sai, ter ther behavior sais amend ome cl rt ee _enssbaldi] The ragnitod of the overall reduction will dstermine the magnitude ofthe benefits and cos discussed in Section V.D below We rece two comments onthe Preiminary Staff Analysis and the Aust 14,2020, ‘memorandum. ™* One ofthese commenters aserted that the Commision shoul have provided ~ Soe oman sted ae mi ys acne he eon es a eyntmet les the fics hese Re eS ae fa Sr Swed Wont dated Agus 2,305 parece ed ha escent Rae 30) il ‘me rr seer roa a amend ese frees ese mene ae 12 wt alow manage nice xy vtg oc bee tecemmersten rested ‘ops ut nase eae trae Se lees an Ce Utd Fry {one Sth sts Grip ded any 2020 Tm Ae Manoganon ed Eby 3020 8 “ment ai tl a he sender Re 2) wl eae che so of pce ‘Richt pps: eae ect of prety ig uc nc ln sd peng se il ‘oman Sate tH Canc as ise xd Imay 02090 Yo tb et Matt inne hry’ ont of rcesing sch pease amen o Re 1.2 myc sving esa wie ese meester so he ae ue toy beter, veto ne eh ys eft et en ets ee ‘Reames ie od 20) hy he rl aie fan a ae 51 incl eran esis ned ome tnd ensues Wied yc ‘ovens an reed © Sects fom Cote oti ies eS 2029, Sheed Brown dtd Ast 101 the publ noie of nd an oppontanty comment onthe Preliminary Staff Analysis i the Proposing Release As icussd above and inthe August 14,2020 memorandum when ‘Comission taf reeves dita set nthe context of uemaking. olen wil tien to conc retiminary analyses withthe data nan effort to determine whether anal he data ‘oul relly infor the Commision decison making cing esi Viitatins the ta andasumpins regarding th atti would be ncesay or appropriate a Wlas is nally to he proposed rulemaking ofthe fmt nd assimptions {Consistent with that pprach sal analyzed he dt et provided by Brodrge in comnston ith the Commision’s consideration ofthe proposed amendments o Rule Hak. However, esrb inthe August 142020 memrandum fromthe Conimissions Chie Esomomis secompanying the Preliminary Sto Anal, to the ignitcat tatons in the dat and the exen and nature of the rested assumptions tat woul e neces 0 make we of either th dataset nor the associated Preliminary laff Analysis could be wat reli ly assess "Me potential impos of ow rae amendments on retail shareholders and acordingly eth the ata no the related analysis wee inched i the Proposing Relee. This sot am npreedented occumenc inthe coatext of proposed rulemaking. and we note that inthe Proposing Release the Commision quested thet commenters submit dats that would allow the Commnsion to eably asses the imu of the proposal” The Commission sted ts obligation under the Administative Procedure Act ("APA") to include inthe Proposing Release “ether th terms or substance ofthe proposed rule or 3 Soe ter ho Count sion gins ied Spor 62030 > Se ropsing Rene 408-6609, wr eseripton ofthe subjects and issues involved." and to “yive interested petsons sn opportunity {o participate in the rulemaking through submission of writen data views, o arguments “These equtemens abo ent duty "0 Mei and make aviale ceria studs and ta ‘hati has emp in reaching the deisons propose particular us" Asthe ‘Consio’s Ce Economist explained in bis August 14, 2020 memorandum seconmanying the Preliminary Sai Analysis he taf dt nat ely on he Hrd data et the rtm Stai Analysis formulating recommendation forthe Commission, having ocd that he data et a ita tat sigan narrowed its pote vale in alvin the pct ofthe proposed amendments: Consequently he Commision di not ly ‘on this data oa yi ia determining to ropes the amendine ns Akhough the Commission was ot obligated odo, referenced the Broadridge dita stands ian nthe Proposing Release and nied commenters to submit dat that woukd alow ust ely estimate the potenti eet of heal "* Moreover, we have provided an “opptunity fr pubic comment onthe Preliminary Staff Analysis aswell t= memorandum | suse ssi ssi. cn 20m uae ome * 8034 186 20105 D6 dnd wat eit he Propsing Rese, Un recent, rode ad ted nto be eit ast re teeta aA, rie Sit ab eat et th ai em, Tic inrencom the ep fermen. Aer ecevng cts at he a rad ite ‘wong faut rame he lsd the Pray Sta Asie te cman le 103 bi comment file on August 1,202." tn forming the nal amendments, we have onsite the comment recive snes tht tne, diced itr below" “Two commenters sete th he Proposing Release shoul! hve adres the Fgwes inthe Preliminary Stal nals ding the temps to esti the ptentage of ompaics or which thin 2544 o 5% o acount in the road dat st would be ‘igibew have the surehoker propos incaed inthe company’s proxy statement under the Dosen and unde the proposed amemens As dsr in the August 14, 2020 memorandum, he Broads data et sed ro sigan mations. Ax only one example, inanalyzing the ptenal ipa of possible changes to shareholder proposal isi. the staff was unable fo determine with asonable accuracy fom the data et whether the sapshot of ecount olings provided by Brovdridge ‘ould be wie to determine wheter individual invesioes in fct met ownership and duration ‘On sore he Pei Sal Aas wala te am ef the conn. ‘pnd sd Prune etn Cnc of aan nan a da epee 00. The rng Reese mace however, Gl pe hal") a mond wr tne ‘rete cm fe ding tin rane” Ser Prpning Heese a 6858 Mere, Carso [Sisaurtee hooey come comnts te ssn pare css tar or dan ‘oatml consent sh he Comino! nd Other sre 17 CFR 3024), Ce ht rae wehawe onsen 2 Weare nh ent wf raed ath son of he mina Sa Ants inthe comet {eprops Rees war ncn wi he a Cunt Canoes on een ass we ‘ulemlings Ser iter fo Coe of insta vests a ed Sep 90 (cig Caren, ‘Gsdinceo Feo An SEC Rae ae (Saf aide”) Asse urea msl nso oa Sekine {Bors he Popo Heee pil etl ha Sheeran ahr hate Sama ‘Sitio econ lane teeming” Nv eth Saf Gone tur ut he Coa en ‘Sesseomc aul tse nl at renonay bees amet ey mim a tee ee eet ‘Dian oft ale Sar Sa Code Rar te Sa Gasca ar As oe one ay otic raking a 2) a the approche ee we propria the coma te [Sy evns ne ef anes ted bm he Cnty pti nr be APA se ehnge Ae arog tea do a ee pn nai eee fh: Sa tr Con ton ets a ite Septet 42920 Shrad roe aed Au aan 108 ‘Heeshols under the current o revised eligibility requirements (and therefore was unable to determine wit sonable accuracy the potential impact), becass the dataset docs na enti sccountholngs ofthe deadine fo submit a sharchoker proposal o as of he annual meeting ate, Rather, nly cds daa poins as of the record dae which do ot extend suficiently inten o capture the minimum holding equiemsts. Addon. nether Broadridge nor the staff wee able o contr tha the anonymized accounts in the Bostridge dl so represented ‘et shareholders, andthe data was provided onan account level ass, ot an investorleel sts while investors my hol secur inthe sae company through more than one ae coun or these and other reasons inching those set forth inthe August 14,2020 memorandum, we butieve the Brose dat, icing though the Preliminary Staff Analysis, cannot be used to ‘elaby determin the numberof retail investors wh would be affected by the proposed sndmcns addition, and par fom the specific sues associated with he limitations of the Broadtdge data andthe relisbilty ofthe Preliminary Staff Analyt we do ot live an ‘says of which companies have, for example. 5%, 10%. oF 25% oftheir accounts eligible vo ‘bit proposals under the curent or revise submission teshokls provides a meaningful basis ‘on which to analyze the inact ofthe proposals. We note, for cumple, that we approximate that ‘only roughly 0,000%% of investors actually submitted harehokler proposals tht appeared in 2018 prony statements, an that such a general analysis Would not allow us estimate reliably ‘the impact ofthe proposals en that small subset of shareholders ha ate key to submit roposa.* "00% ~ 1 ga opens hat sind prop erence cepa’ ony seme steal ypsoon os copa cing lon ea 218 6Selee Snvet Se mp ae 7 os ‘Separate fom he limitation inherent in extapolting from a urge poo of shareholders ih ives preferences to very smal subse oft group that xpress pci ‘referene such genera analysis sate and therefore, would ot eet he expectation hat stareoldes with pei preference fr sabmiting proposal woul adjust tc holdings o ‘ce the reve sbmison thresholds, including by holding shares foram adn riod of time others adjusing thei pote, For example, many investors sony! though ‘ovesnem fms, which would not be captured by company: specie secounteel data However, thse shareholder cou reas tot nd holings once thi postions in individual companies if they deste o submit a sharcholdes proposal and did not wan o wait 0 ret the reve ligibilty requirements. Shreolders ako could make various other adjustments wo their ollings wo addres thei individual city preirencss, Because, as siscssed below, we donot eet te marginal oat of these adjutments to be sgn the ‘natty to acount fortis behavior significantly nrowed he pte value ofthe analysis in nalying he pet of posible hams othe giro. os commen ese hee twtr hit bec i sven tl pont nt pa on et mien _ st thematic ales i ct ‘vests who have not exercised the rights Yo havea shareholder propo included in the! _ company’s proxy starement would nonetheless hear cost those rights were taken away! ee sand popen a en pepe Sea dng ‘Sona you 218 represent on approach B00 ol als ep ones, Serle fom Con tion avr tak ded Spee 4200, 106 eps oe sere Commision coe pe ewan ‘ofthe rule smendmets, eluding those associated with etal shareholders who, in the fture, ‘would meet he curently threshols but who may not meet the revised thresholds theause, for exp, they ehoose na to contin o hold atleast thee $2,000 worth of company scutes or ars dena requ ine, WERGREREEW BERNE ha 6 Te ee a VF Stic ere company tbe ble n company and sharcholder resources fs ic fo in cen ow seca rime hw aren ey re. oad open ops LEAL LEER NITES ern when te ct ey eng im ni hi ig i We a co ne pon EY _brthecmmante ain cnt main cy me hme sy snchiding, for exompe, costs aesoinod with masitaining atleast $2,000 worth of stockbodings Fora maximum of two alison yar (which euld be ofiet to some extent by benefits oF 7 For | ‘example nd more pci (1) gen ht sch smal rum of wl shold ve submited proposal overtime, wouldnt be expected tht significant umber of smaller, shorte-em shareholders that have not previously demonstrated a die Yo submit saree oposa would chang he preferences and dest submit ropa, nd (2) cn i particular sarholer changed his o ee preteens, eo he could chose to remain lle ‘by incurring he rargina cst of holding atleast $2,000 of his or her current sharchoing for» total of thee year, Inthe Proposing Release, we estimated the reduction inthe number of shatcholer ‘proposals assuming no change in sharcholer-proponcnt behav asa result of the rule sense ian rove a per Bude of te edi in share soa at nob hod in pai ns pn ly orn sc oat eas one ea i carta th po sab ops yong caning ‘Erm Sof company es aon fr ear 10x However as noted above, extrapolating fom the ptccllaniahatatasenndasal ener pool of sareholes has sigeican tations and ti dificult o antlpatethe cea RST RGES CST Fai apatoa ale F srerra =. EIN asicieidel a dotestiae ion oatmuatcmce amine sit linen hls tie cassis ies pc ‘[Eesc Ti po anita ns ot pi ti cat ura hc pupa a cae eae avout Sammie sheet iecetiraneene cicero estar si igi tt te a i a tp smd a nic Nei wasn i 3h: clniaaies mi cxaitonla Tinea wire naae ‘sociated with changes to the oenrship thresholds because we do mot have data on duration of holdings for sharchokle-proponcnts We do ot expect the Gna amendments eating othe ‘3 Propmung Wes ter eo he chdsagy aed imitne. Ta | dot mi aca posite oven of tae pops rs al sme pacar al end pa 2 Feria popea tng nb ened Re 0) aan Re Tsay we le (Nipple eimai ft ca a ach of a om © Seva canmentrs proved wa wih sates read gay lds of US. In pal, sew commis ode mney tephra om CAPERS ‘ied Farry 2050 i Ate Finn Neer. may 4S ae Re ed ‘ove 201% ames eRe de uy, 200. Ce oe es Deptt Le sy ‘courant hemdian argent nc ofS eso 820 31 i tr fon ter ‘ts ied Feary 3.200 (ing ADVE ANALY ConseTNG GOLF & De BoL ‘Acasa 90,209, a {pneu es ESAs aenekenmtkonge sm hea {Beat ft Say" Ar ccna hele Dp ss sy on a Santos wh stakcnge rat ound S3tn000m skew wegen Re ne ule oe dated Feseunry 320m fe Dernat ahrSa AB cme ctl rar os ‘Syn atameng hh aan botgr ok an ma 47 Steer PH dd sory S00 cng use ous Rea hs, Wr Wo) liom Sve Us Ces Pea (Oe 01 tne hon noel sh. A fot em Sty te Non reo Rear, as an 0 Cone ‘dso tothe me U're su Pane han fons ere {etn emt sect lnc apron 3500, Se ee Pan AFL-CIO da ery 3, {82h ing hoa Ecos rman ams Gre Rs ox Wows Mo ‘anew ten mt Sica a Se 207 ena shee thas {cimr.GUL24 8 crete cel spon cig ‘nwoge ab tee ger 17 of 108200 elena Fon Shc Ces Sia 1200 cog Roary vars ipo Fasc Feist eae ru dar ls arlene Te Fate Comers ced ta as fetal wre toe 070 fn owe fom ‘Sir net Ferny 3208. Aa commer ce sete exe bulma sh een ‘tenet or he nied Ses war 500000518 es eg eer nee ed Petey Seabee etre (017 ams ne Saas son Rd aad 2230 ito sass share omerng Sm eat pd yoke emmen) dy. Sane ‘Semen ed ht pi hr pens met ae apy ge oe ‘case merited bet kpc ass hoc tele mcd {ers onan prof meses Bon i Afra Fane Never LE nl ay 2,20, ‘These ecsuenel nutes owe mabe tt medic te min rs bem py ees smn js ose pric omerap sera of pte carat ape ‘herent bso sng ews lng fat rca Se hangs ‘iether ao se ppt ws hot er een ao comets rove wo wi ais ce crip a Popsing Reset ‘100 oon sts hare’ vey tren) np one er sd we Feperht simted vga of ons sen al sara of et Des 218 {Sig of stare rae fr NYSE ied seater rene they Pre ean es ‘Shrher Rigs Groped Deemer 301 Ans cma ed sede Hy me etme ‘athe aeae holy pr fn accanr as 1S Gem bacnge ee Tem betes 11 196 et et foe AP-CIO de ebay 33080 cong bra Raber & Terence Ocean sara Your Heath The Common Sed iene: Pefomaner Inia iain, 381, ENP. 77S Baer & Od (2007) Using tha tm Bre Osea 200, se pe a ‘be mln olin pe of cal ey 30 rd neSe Des Angew Mea Caen ‘Vidco: Do dnd! veer eee Trancon Cv (Wering Pape 20) el a comnui-297308 A aurdcorment cho sey i ena ate eng ing eto a ata beter 20s 2015 15.01. Sse en AFL-CIO de oe, sn (ing Aenea Tchr The Long and The Shor Papa Tune ats & Ms! Pd ores Te rent) } Cont L3H (UI), Falah caer nd nao yt he tae ‘nan Garton hans mst inves 208 i Yn Se ern Inf Poy Inept de Febru 3200 ting Nain Crone & Sine M. Spe: soa srs Corpor Goveraee and Pm Ta, 1 Sear UL R872 QUIN). Neto ec oir detion ‘dings of shor opeens Ro ess brine ho a npr orld ‘harley tsa sted ae eyo abit sar hl pops Dt ences se ‘Sto blige nthe es rove by cama eid erly ae tre 10 ‘onepercent owiship threshold ad shareholder enagement othe Final amendment requiring ‘certin docomcmiation when using representative to mssningfily impact the number of share er proposals incidedin companies’ proxy ments, because the one-percen ‘ownership threshold currently rarely utilized in ight of the $2,00008-yar threshold and the ‘majority of shareholders hat submit proposal though a representative already provide much oF the document hat is marated by the final amendments, consistent with ewsting stat sputdance.™ “able 1: Upper bound eimate of the percentage af encode repos by rle smcadment assuming we change in sharcelderproponents”behislor Fagg ‘le 14.80) onneaip held and petition on aggregation 0 so ‘beeen tn a aie tia Jom impacto he end tfc une tess and the rion nage shuld Se mien sc reals coed ncompumes pry marten ne, ‘Sects et dogs the owner rebel ming Sard byw ep hlange ‘rom saeer tpn mide ead is redaten Benumof hes pen cd ‘Scamp pro stone 304 heer rae tpt the seta ec tt eta prego gy coe alr pec sag women ele dt ‘evcroaad ms change in hm of shrapnel cance tone 20% Sc Popsing Ree 6647 Rule H.12)—renbmsion retold Tesi en reli thio ne tee wit cit soe ote, rents eeaceofpiy hd sete pp hems ee un ap nv Wt ee sic pen ng, Nil te iy ini Aste ie nln Seo) aed oe op tryed py ea ek eos fi 8 ‘wer individuals (the est were instttionlsvestor) TOES REW il A "Inthe Proposing Rle we eimated h te amendments le 1412) cul ve rnd 30 ‘atone nr 28S Pepnng Rl a 480025 eeun we ace peg feopned orm urement vali cuter fdr rege se an he repre ye Cf ce oto 93) Seopa Ren 20500 07. ‘oncom ete te mae fall apna rtf the amend the bese theta end 2 Seer ry Suse ves nite ted Feb 33030, The crown earnest fhe he ane on sere ls peel ‘ea clade yovemance on le pope mala ski, hed wu wndansng fe Imebodlogy wee bee tate cmon sexo he Tet of ec ns ested ‘ewe the amma cats ar xe ropa ot dt et eens eis of ‘het hse reps wee ltnae rentmtiel emWe re e cstum whee mes ‘onion pepo sebmeusneaerae Te we tes py We wed sas ok ‘St om be 3080 roxy sno onde by Sse vem neon dm sch ‘te ee fr Cau otal neste a ie oy 2, Saat menses eg mn ‘ie Ses o et he amended ligt reguiemeniY 1 shareholders respond by Fourth, the aggregate reduction in shareholder proposals may be lower han the one sei fe etn mye i yg cn inst pp eek pop igs ne kr, the etl amber oewlyexeludableshareholker proposals as aes of changes ol Aiterert companies ot submit proposals othe sme company bt on aire opi in ad Rue as) ‘eaponte a cange the resubmission esos [Last aeRO EOP WU “Scher ei an Oe ee eb pop my BS Sammi fc fiers _ Freund Te a reli on rst oF ewe ler prod by sii gf ‘While we expect changes in behavior described above to moderate the reduction in submitted _ Proponents in corstion wih thr shreolder ropes, Tho ees pial ae writen by _sharcholderproposis and impact the economic effects of the rule amendments, we cannot Soledad aera te pemotnnE Sg ete meine pc br met yd nt ih een eee ee eee Say manny it “Fosse ema el ap ttt Amendments ream OER hic il temporarily decrease the mmr of exchable | Jing thos hat comic to be ey us na proposals as res ofthe amendments tothe ownership thresholds. Finally. we mote that vile the fina amendments may esl in a edetion i the mumber of sharcholdr proposals, 1D, Analysis of Coss and Benefits and Eets on Efficiency, Competition, and Cspital Formation ofthe Final Rule Amendments 1 Companies cnet te bo einen SY Seay weather my ‘ake steps to significa oie the eet resaling fom the change to hentia submission hess at elanely aw cost (ca sharchaler who cally met the ent hosel of Hing a lest 2.00 of company stock far ane year can, the exten tha thas area held he tc fr tre year, me the revise tresbol by hog the tock frat mot wo mre yeas or co ey onthe ranstion provision for temporary period of time). Than we ‘ne more confident thatthe changes in the resubmission thesbols wil reduce the number of "The wane evn wl onfray eemp oe thee rtp ect sabe rope th fre ey fears aed am cnn xe ee ae {img hth. Yocom eso sar rps chun cope ene 8 eve ine sin 32.00 esl ° Carman sho pe ha cain rpm et fing are fap a mcm rete con omen aed angen See, ler Fem Cie Caples {Conpeswene ed unary, 5030 Weste ime uti haber nd hw Regent eto {itech ee manent ny re Be arene oot ah es ea pope wd ‘edn cir vet me myn copa deep hts snp er to ake us | Cost Savings due to Fewer Shareholder Proposals ‘To.quanify the cost savings companies wil likely experience as Yesult ofthe final snes enone per tint fetter y — 2 What pile at area fe reve tetnson red, opment f props ae stl the obsonheshrybees y o o aeopnts may Ds hy ‘Set tt hr ep lb cals heute Ane fame tepid or eg dato the et of her prop. One mei mated tha hast on expec cme alr ho a ese rea 2 copedene reps mot tsa nt cle tw taro pop, wits maga oo ie ‘Sep fe ha $2000. Se, ery CAPERS eed Femy 339. Twcammens Sd ie SInbr2 con eta im an a tg orb priposa al mh Papert Reco At {CPA tn ofthe Maing lean ee hm ly 20 ub Basen Rove So ety ‘Bo et Con nd rr pd aay 30,292 Come onsen notary ned anny $0 210mg econ ewes fae ern pone Fsa Shree Nims Reese ie 089 ne Sb) (26 Sa ane Th 309) em Dsmen Ree ed Aa 17300 ‘el era onan 71006207 (2008 HT Laer) Yt ante {Scents dtd athe of saree pope ranges a $5000 510,00 ot mae pr peal ‘Serle fry Bases Rosie dF 9303 (eng at tough many manor cgone| {cpr ti oun he coos Stes preps wer pred cots mn oe ‘Sooo $i0n0onorarcpar pope Iredin at feos wt tut es ffi ‘epost gn bp han vee remeron Flys omen ‘heS1 2001815000 per pop ang af see er pe Pople ee at [reread ehh hermes MoCo Cpl a oy On commen unc veo is ams eng eons asec wih sare popes. See tees ter Sct Corer Genre Gated Fray 53930, Aco the es 3 oe Feed sae ths Nyse 0 mney neler arto veg aaa) manage ed ‘ethereal, estate tte pnd mote am neil soa esha 85.8 ie né BRRIGREE epee inthe estimation ofthe ost savings to companies in the Proposing Release, A number of commenters angie that he cos extimates dacs ine economic nulyss ofthe Proposing Release wer unlisle”” In panics, commer arged tha the ‘150.000 cot este provided by a commenter in espns ote Proxy Process Roundtable and sd a an per bound of our cost exits inthe Proposing Release ic unelale becuse (46 not sed om any had dt i) ic based on costs incurred by fnanal services me ren memo ha hey end vee 00a $10.8, nd 2% id a hy pd se $10.00 {Usa aie» mer of ery wget ued they pnd mer ten 38.80, Fr {Marlen op eel sons {peace of 580000 ae vos apr ene ele” 51350 depo tried ca expr o 19.194 w Km ad eo ‘wcingneacton let me epost ond 13347801 fr opal the try nnd he [Rot sat Ther epee eat po SOHN an ts epee epee es "er a 30.0" ecm eps sete pct here pepo ee lng fr eos te arena pretelyetae t snmg scad th ‘heute wmenmens bcs they fk ot smal oo ural poe fr ex oped an Iheuasos angie open Whi we hema tether of rg sted ch oper "Be Rc 200m ws ack nemo emi evens T ea ana [Reps ect year. Forr he Coe ofstineaner iats ha SP 30 cone corte paste by Ral cps fs he i ue 20 ie as Rn ‘rnd ane Frgutted Qin ao Share Properly COA Ue TONAL ADV 11 td A202) ae hp cH FAQ") td Sct er Crore Geman ate Fopnnh were SAP arth tees fen nied he srtey tapos rset epoca En ‘are fp ttl a2 pl sao opel Seles om AFLAC ie eb 200s Ya Soda Fey 1.2090 Ber Mahe td ety 32RD CA%ERS dtl Fy 3,200 es Conca ts Raped Jy 10300, oun st! essed omy 3099; einent Coup ed ey 32080 bop ‘st Manag tal mary 20.228 ath Cnr on tere Repay ded Inay 37 2 {nema Bre Tenses ted Fury 3580 Red Al ed aay 382020 Ph ‘ene da ism 8,200 Sel Waren Ads de sry 359 Tom Sat dated Dec T7208, UAW Rates Niel ees Tela 0 2080 Suef pt ted eee ‘ce th doated nthe eyung Ree et Poponng Rete 6h Se her nent te Poy Process Rene Gum Amercn Stes Anion ate ne 2 "7 ‘ater han corporations and (i) key athe high endo rags of costs Comumentes ss aru ht the $50,000 pr proposal cost eine provided by on observer! an sed as ‘ower bound of our cot estimates in the Proposing Relese ky i uoiabe hse it ‘used on ance report” Finally a numberof commenter, without proving cost ‘atts oftheir own, argued thatthe aul ess of rocesing shasholer propos ae ler than exising cst estimates Because thes estimates are exaggerated by eran commenters * Some ter comments sah the conan amy UT RE 2 Ses ses om Dae Mk dad ebay 2, 2090; Cans thr Rap dtl ant 0 202; Camo feral inves te Jay 30, 310 neh Ce Cope Rony ated ‘amar 27, 2030; Sea Maco Ads ed ety 3, 2020 Tan Sas dad Dect 308, UAW" eer Ms Benet Tat amar 3.300 °% Sex Steno Dal Sty siden ad CE. Sie or Cape Gennes, efi he. Con, cn Fun Sunes Subumen e Cop al cs Gsm Sperered Elan op 13116 (meer ilo i bt ea aes hfe Ray pre om] ‘zm fone cd i tn hn tit omen ddd we tle Pps eles bat which we ht ane the xian ef cnt sang ese they fel wie lowes pit bends ton sie wr el Seem msm AFETD dau ny» Coo ‘Sinnamon ny 35 ire Ceo Cp Reiy ee ry 27209 [iw La el Febru) 0 Sep Mc dno el Fay URW Ree Mebel ee rae ry 2 Sexo ems om tn Cats dre Roper dtd aay 3,303; Cts nna Ivers tad ey 3 300 2 $e ee om AFLCIO did Novambs 12017 a Neen 27,201 Ades Inge ‘ia nary 17,320 Demnen Ste Spring Mins aad any 3, 3% Inga Ane Mange ‘ie ray 28200 Soe Levi ed inary 2,220; Nee Bern led anay 77.2000 CS ‘tet Sinus 81,202 Asse mate deal ow the seats wed ne cua saan ‘termed he Commins caer ong epee ih ale He nh ares ef aes ie ony occ fate Comms hunted ve Yes See te us HEE In prc several commenter argued tha th volume of unsicetflno-aton requess is suggeine ofan unproductive we of company resoures and ths the aca non 2 Ses ee AFLCV dd ey, Comc simone ae ay 38, comme si ape hs he ge cont ened ih alr propo te co of meting ‘hanes Cas sa nh ely ropes lable he ew ier eal tone ha ‘Sherwin he rere Me Fh nd wen ma a wi he ho peony [cpt hehe“ er er tn Cone snd ars Rape ied amy 30200. We trad ‘hncaminn oe ha eps aida he le snes dhe ha whe ee ‘tevoqueens ule 1 od ts congeners mar cor amet wihs Doon ‘oot cide hac popana, We Snape ih be Sime een ntefog ue ee nt Fetaampe 4 roca aay bees a ee be te propo mt hae ‘ecm n em cry aha ay ne eae yt epory tehe t ‘eases esr prazep i ote Hk. Toh xn hat ra mendes il ae popes {em bing bane urn rps oe cele te a ee nd Rae rt ‘quent eae dhe shelisel sheet angry sono eg esc (eicter mac ame popes Sem canes at Sec ny pepo wide oo cele pop sal Sree fom inp At Mane aed) 30-2930 Wedge wi sme bce ‘Soup my mr po on prio ag te nn Sure crete) ogee at cman wih ov epithe pce ve propo her ny ata Se ee om fp Ae ‘ioctl ary 29,2120 Compare wd te ores newest raed wi econo epi te pss moa I uw eee Hu cg My wl expend wed 0 {nse ind sc sarc pooner sue tbr vot wie he on wil nea {crtrchl ors he oman wt he proper ay eRe Se tr rm Cae of taal nests ia ry 39, 200 Ft Aman ian egrrkELC dnl ny 2020 Riche A Lol ed any 23080 es McRae aed Fy 2 Sle US'S ded nawy 31.200, Se Bow 017 ape ste 320 3 Ada Kaa, The ‘angen "ta of Mra Roem Ne Shear Pops, Hard Scheel Fare on Cope ‘Gover Fai Reixion U3, 207) eas og sg 0700 he alonateteam ie Mie SE Pad fdr Sd ‘ese: oma ea Sarr (24 ‘espe othe fin Faces Rowe fom ner Voce SR nd Newent 3018, 19 icretionaty costs of processing sharholder proposal (and consequently the actual cos savings ‘ofthe rule amendmcas) are tow. seein 344 Sa ltr Cotes nro Reper ie ry 0200; snl ees ad ny 30.3020 120 EEE tine we 150.000 he per bud ror dc con ‘tints nthe economic analysis which we believe reresens a esomale upper end of ‘poteat cots of prcesing shareholder propo, inctaing lea and management tne to considera dare er proposal andthe cost of subriting 8 no-action request Commision sta Neves, we acknowledge tha the om of roscsing cetin propos maybe ‘outside of his $2000 1 $180.00 range die ote age variation nthe ypes of proposal ‘Scoping Rene 4810 ting 20 BRT Ln 32). Wee tia i thee {mp tenee cos of png rd ating sean pen ie nl remecnny coat sieges eur ny co mol a nc Ton [mie sn muting orl eps hone once s a thet case te emp) ‘ymca i wcew wher host ne epee eon of ling was race sale [Reem Indi hot nate ob naa co ting an sang # srl ops a Teoh natn cos oping ood ating a ldo More re Sox Mopoumg Rese tS hetero Cer Copal Mae dtd ay 3, 3030 ° Some sores see ha he Comino shod av and depend ech he co of cla propolis i Crane ef tate! esos mia 0 200 rath a Copa Resale) 27-2020. Went at he Comma i od os fn fret veh pens he ony ces mca hing the Poy Proce Rema nd ‘lng pai pt on ie nen eed of ang ead propo ‘hat nti co ema nthe rpg Ree nd we pete spared cnc ce “tines nd shel eine a sa We ors his neon enh, eran ‘Sado oeaprome th ale Mok when casing wc hc ite ert i od sent |Wekimc renner tr aoa sn he cost ear popeais mtd usd cel

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