During each annual proxy “season,” companies receive and respond to shareholder proposals and often attempt to exclude these proposals from their proxy statements through no-action requests submitted to the U.S. Securities and Exchange Commission’s (SEC) Division of Corporation Finance (the Staff) pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the Exchange Act).

Although the volume and subject matter of shareholder proposal submissions change from year to year, the no-action letter process has become increasingly difficult to navigate.  In recent years, the Staff has issued shifting interpretations of Rule 14a-8 in the form of Staff Legal Bulletin guidance, which has led to unpredictability and confusion in the no-action process.

This volatility continued in the 2025 proxy season, as the shareholder proposal landscape changed once again with the publication of Staff Legal Bulletin No. 14M (SLB 14M) in February 2025.  The timing of SLB 14M was particularly noteworthy, as it was released in the heart of the 2025 shareholder proposal season after most companies had submitted no-action requests.

Substantively, SLB 14M represented a significant step in the Staff’s continuing attempt to provide guidance on the shareholder proposal no-action process.  As covered in detail in our prior client alert, SLB 14M introduced sweeping changes by “rescinding” existing Staff guidance and “reinstating” former Staff guidance relating to, among other things, the ordinary business and economic relevance exclusions.  SLB 14M also provided updated guidance on the micromanagement prong of the ordinary business exclusion.  At the time of its release, many predicted these changes would result in a more deferential approach from the Staff to no-action requests.

Ultimately, however, the impact of SLB 14M was less drastic than predicted.  While there were indeed a number of no-action decisions permitting exclusion of proposals that likely would not have been excluded in the recent past, overall results were more or less consistent with those from the 2024 proxy season.  Moreover, many decisions in the 2025 proxy season presented superficially conflicting results, adding to the existing confusion landscape of the shareholder proposal system.

This alert discusses key results from the 2025 proxy season, along with practical guidance for companies looking ahead to the 2026 proxy season.

Overall Impact of SLB 14M

Increase in No-Action Requests in 2025 Proxy Season, but Not Because of SLB 14M.  SLB 14M was released in mid-February 2025—in the middle of proxy season.  At the time of SLB 14M’s release, the vast majority of no-action requests to the Staff had already been submitted, with over 300 pending Staff decisions.  Overall, more than 360 requests were submitted to the Staff in the 2025 proxy season, representing a dramatic increase from the 2024 proxy season, when around 270 no-action requests were submitted.  This increase was not a result of the updated guidance in SLB 14M, however, because the overwhelming majority of these requests were pending when SLB 14M was published.

Because it introduced sweeping changes to the shareholder proposal no-action process late in the proposal season, SLB 14M led many companies to scramble to analyze or re-analyze shareholder proposals under the new guidance.  Companies that had already submitted no-action requests were left to consider whether the arguments contained in their request were sufficient or whether they should provide an updated argument in a supplement.  While companies grappled with these questions, it did not appear that strictly SLB 14M “compliant” arguments were necessary to obtain no-action relief.

SLB 14M Had Little Impact on Overall No-Action Results.  While the majority of Staff no-action decisions were rendered after the release of SLB 14M, the overall exclusion rates were roughly consistent with those from the 2024 proxy season, with an approximately 69% concurrence rate.  Those results were still much higher than success rates in the 2022 and 2023 seasons, but SLB 14M did not result in a massive shift towards exclusion, as some had predicted.

In addition, following the publication of SLB 14M, most companies did not amend or supplement their no-action requests to provide updated arguments.  While some issuers did provide updates, it did not appear that in most cases arguments needed to cite SLB 14M to obtain relief.

That said, in a handful of instances, the Staff denied relief and specifically noted in response that companies did not provide a sufficient analysis under the guidance in SLB 14M.  Heading into the 2026 proxy season with the benefit of a full year with SLB 14M, companies should make sure to carefully internalize the guidance in SLB 14M and provide a tailored analysis as appropriate.  Some of the more notable trends from the 2025 proxy season are discussed below.

Micromanagement – A Flood of Concurrences

Although the overall the effect of SLB 14M on no-action requests was relatively muted, arguments under the micromanagement prong of the ordinary business exclusion were a marked exception.  During the 2025 proxy season, micromanagement arguments saw unprecedented levels of success.

As a brief reminder, the “micromanagement” prong of the ordinary business exclusion allows a proposal to be excluded if it probes too deeply into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment.  In SLB 14M, the Staff provided updated guidance that the analysis of whether a proposal micromanages a company turns on the prescriptiveness of the proposal.

In the 2025 proxy season, micromanagement arguments were not only pervasive—being featured in nearly 80% of all ordinary business arguments—but they were highly successful, with roughly 40 concurrences.  This marked a sharp departure from historical trends, where micromanagement arguments were typically unsuccessful.

Moreover, although micromanagement arguments focus on the manner in which a proposal seeks to address a subject matter raised, rather than the subject matter itself, there were a number of successful arguments in the 2025 proxy season relating to proposal topics that traditionally have been difficult to exclude.

Lobbying Proposals.  In a harbinger of things to come, the Staff granted relief under micromanagement in three similar instances in the fall of 2024 on a series of proposals requesting reports on companies’ policies and procedures relating to communications and payments for lobbying activities.  Such lobbying proposals have been a mainstay of the shareholder proposal ecosystem for years but have historically been difficult to exclude.  In fact, the Staff denied relief on the basis of micromanagement for a nearly identical proposal as recently as 2019; thus, these decisions signaled a clear shift in the Staff’s decision-making with regard to micromanagement arguments.  This renewed approach became more evident as the season continued.

Environmental and Social Proposals.  Perhaps encouraged by lobbying proposal decisions, companies advanced micromanagement arguments on a number of other proposal topics, with surprising success.  In particular, many companies succeeded in excluding environmental and socially focused proposals on the basis of micromanagement.  These included proposals relating to topics such as human rights, collective bargaining, greenhouse gas emissions, racial equity, and executive compensation.

In many cases, the proposals that were excluded would have required companies to adopt new procedures or provide detailed reports beyond what the company was already doing, perhaps indicative of the prescriptiveness of the proposals at issue.  In one illustrative example, the Staff permitted exclusion of a proposal that asked a company to adopt a particular deforestation policy across its supply chain.  In another, the Staff permitted exclusion of a proposal that requested a company publish a detailed report on its veteran and disabled employee hiring practices and policies.

Despite Advancements, Confusion Remains. Despite the remarkable success of micromanagement arguments in the 2025 proxy season, the Staff denied a nearly equal number of micromanagement-focused no-action requests as it granted.  In many cases, these decisions seemed at odds with instances where proposals were found to micromanage, resulting in a confusing landscape for companies to decipher.

For instance, in one matter, the Staff permitted the exclusion of a proposal that asked a company to prepare a report on its climate transition plans and how the company intended to align its operations with those plans.  Yet, in another matter, the Staff denied relief where the proposal asked the company to conduct an evaluation of its short- and medium-term greenhouse gas emissions reduction targets and report on how those plans aligned with the Paris Agreement.  Moreover, another proposal asking a company to take the specific action of adopting targets for reducing its greenhouse gas emissions was found not to micromanage.

In addition, there were other instances where seemingly prescriptive proposals were found not to micromanage companies.  In one example, a proposal that asked a company to set and report on goals for reducing the degradation of rubber in its products was found not to micromanage that company.  Similarly, a proposal that asked a company’s compensation committee to adopt and report on integrating sustainability metrics into compensation awards for senior executives was found not to micromanage.

Thus, while it is clear that this is a new era for micromanagement-based no-action relief, it is equally evident that just asking a company to take a particular action does not constitute micromanagement.  Companies should carefully evaluate proposals when considering whether a viable micromanagement argument exists, with particular attention on the prescriptiveness of the proposal.  In addition, while not entirely clear, it seemed that in many cases micromanagement would be denied where a proposal asked a company to take a new action or adopt a new policy if the company had discretion as to how to implement that policy.

“Ordinary Business” Determinations Remain Nuanced

Aside from the increase in successful micromanagement arguments discussed above, the Staff took a more measured approach to no-action requests made under the standard ordinary business exception.

The ordinary business exception of Rule 14a-8(i)(7) permits companies to exclude shareholder proposals that deal with matters “relating to the company’s ordinary business operations.”  Companies may exclude proposals relating to matters that are “so fundamental to management’s ability to run a company on a day-to-day basis that they could not, as a practical matter, be subject to direct shareholder oversight,” unless, in the Staff’s view, the proposal focuses on policy issues that are sufficiently significant because they transcend ordinary business and would be appropriate for a shareholder vote.  The question of whether a proposal focuses on a significant policy issue is often the crux of the Staff’s analysis of ordinary business arguments.

On this point, SLB 14M provided updated guidance reversing a view that had formed in recent years that considered the significance of a policy issue to society at large, rather than to individual companies.  Instead, SLB 14M reoriented the focus to consider whether a particular policy issue raised by a proposal is significant to a particular company on a case-by-case basis, instead of universally.

This updated approach was evident in the 2025 proxy season.  Specifically, the Staff concurred with the exclusion of a number of proposals focused on environmental and social issues as relating to ordinary business matters.  For example, proposals relating to topics such as human rights, collective bargaining/unionization, corporate DEI policies, and climate change were excluded under the ordinary business exception.  In one example demonstrating the new SLB 14M approach, the Staff concurred in the exclusion of a proposal that requested an evaluation of a company’s oversight of religious discrimination against customers.  A nearly identical proposal was denied relief in 2023, with the Staff noting at the time that the proposal “transcends ordinary business matters.”

Despite this clear shift in policy, though, overall success rates under the ordinary business exclusion were consistent with those from prior seasons.  SLB 14M may have evened the playing field from the significantly proponent-friendly approach of recent years, but did not result in higher-than-average concurrence rates.  The Staff also denied no-action relief in a number of prominent cases, making clear that the Staff truly takes a “case-by-case” approach to the ordinary business exception.

More Confusion Remains.  While the Staff granted relief under the ordinary business exception for a number of environmental and socially focused proposals, the Staff also denied relief on numerous occasions on similar proposals.  As was the case with micromanagement decisions, many of these determinations were seemingly at odds with one another, leading to confusing results and a hard-to-discern framework going forward.

For example, in one instance the Staff permitted exclusion under the ordinary business exclusion for a proposal that sought a report on the research and analysis a company’s board undertook before making changes to its DEI policies in the past, with the Staff noting that the proposal “relates to the [c]ompany’s ordinary business operations.”  On the other hand, however, the Staff denied relief under ordinary business grounds for a proposal that asked a company to consider abolishing its DEI program and policies, noting that “the [c]ompany has not demonstrated that the [p]roposal relates to its ordinary business operations.”

In another set of decisions that were seemingly at odds, the Staff granted relief on the basis of ordinary business for a proposal that requested a report on how the company oversees risks related to discrimination against customers based on their religion, noting that the proposal related to “the [c]ompany’s ordinary business operations.”  Yet, for the same company, the Staff denied relief for a proposal that requested a report on risks to the company related to political or religious discrimination of advertisers.  In that instance, the Staff noted that “[u]nder the approach described in [SLB 14M], the [c]ompany has not explained whether the policy issue raised by the [p]roposal is significant to the [c]ompany” and therefore it could not conclude that the proposal related to ordinary business matters.

Such results are difficult to reconcile, but the Staff’s response letter language may give some clues.  Going forward, companies should keep in mind that the under SLB 14M, the Staff will assess the significance of a policy issue raised by a proposal to a particular company.  If a proposal’s subject matter is clearly related to the business of a company, either because the topic of the proposal is relevant on its face or because the company has publicly committed to supporting the topic raised in a proposal, then it likely will not be enough to discuss the significance of the issue raised by a proposal in the abstract.  Accordingly, companies should carefully consider the specific terms of each proposal and provide a robust and non-generic analysis if they wish to prevail under the ordinary business exception.

The “Economic Relevance” Exception – Revitalized, but Rare

The 2025 proxy season saw an increase in arguments under the economic relevance exception, but those arguments found little success, consistent with prior years.

The economic relevance exception permits a company to exclude a shareholder proposal that “relates to operations which account for less than 5 percent of the company’s total assets at the end of its most recent fiscal year, and for less than 5 percent of its net earnings and gross sales for its most recent fiscal year, and is not otherwise significantly related to the company’s business.”

Historically, this exception was seldom successful because the Staff took the view that if a company conducted any business, no matter how small, related to the issue raised in the proposal, then the exception would not apply.  In SLB 14M, however, the Staff revised its approach to state that its analysis will focus on a proposal’s significance to the company’s business.  Proposals that raise issues of social or ethical significance may be excludable, notwithstanding their importance in the abstract, based on the application and analysis of each of the factors of Rule 14a-8(i)(5) in determining the proposal’s relevance to the company’s business. Much like the “case by case” approach to the ordinary business exception, SLB 14M notes that when a matter raised in a proposal is not “otherwise significantly related to the company,” the availability of the economic relevance exclusion will depend on “the particular circumstances of the company to which the proposal is submitted.”

Despite this updated approach, companies did not find an immediate payoff.  Only four of the roughly 21 arguments made under the economic relevance exception succeeded, and notably, three of those four were from no-action requests submitted prior to the publication of SLB 14M, indicating that SLB 14M may not have been relevant to the decision.  Nevertheless, these decisions may give some hints as to how the economic relevance exception can be used going forward.

In one example, a proposal that asked for a report on the effectiveness of a company’s efforts to uphold its human rights standards throughout its supply chain in India was excluded under the economic relevance exception.  The company’s argument noted that the proposal was not “significantly related” to its business because the company’s operations in India were only a small part of its overall operations, the company did not purchase the products specified by the proposal in India, and the company had an existing code of conduct for its supply chain that addressed the proposal’s concerns.

In another example, a proposal relating to the sale of particular pharmaceuticals was excluded under the economic relevance exception.  The company argued that sales of the drug were a small part of its overall operations and that the proposal, on its face, failed to establish a correlation between any of the potential policy concerns addressed in the supporting statement of the proposal and the company’s business.

While these decisions were relatively straightforward, there were many cases where the decision-making was less clear.

For example, in one matter, a proposal requested that a company’s board of directors commission an independent third-party report assessing the effectiveness of the company’s human rights policy in high-risk areas where the company operated, including Russia and Ukraine.  The company argued that the proposal should be excluded under the economic relevance exception because its operations in Russia and Ukraine were a small part of its overall global business operations, but the Staff denied relief.  Notably, the proposal itself alleged that the company had faced public backlash for its operations in the region, thus it may have been difficult for the Staff to determine that the proposal was not significant to the company.

Going forward, companies should assess whether there are clear connections between the company’s business and the subject matter raised in a proposal, even if that subject relates to an economically small piece of a company’s business.  If there are, it may be difficult to obtain relief under the economic relevance exception, despite the updated guidance in SLB 14M.

A Substantial Comeback for Substantial Implementation

In a welcome change for companies, arguments under the “substantial implementation” exception were more successful in the 2025 proxy season than in recent years.

While it did not provide updated guidance on the substantial implementation exception of Rule 14a-8(i)(10), SLB 14M noted that the SEC “has not adopted” amendments that were proposed in 2022 that would have made it more difficult for companies to exclude proposals.[1]  The timing of those proposed amendments coincided with a significant and aberrational decline in the success rates of substantial implementation arguments in recent seasons, leading some to speculate that the Staff was prospectively applying the proposed rules.  SLB 14M seemingly sought to dispel that notion.

Many of the substantial implementation decisions in the 2025 proxy season were relatively straightforward, especially in cases where the proposal related to corporate governance matters.  For example, in one instance a proposal sought to eliminate supermajority voting provisions in a company’s governing documents.  In arguing that the proposal was substantially implemented, the company noted that both its charter and bylaws did not contain any supermajority provisions, and that the only potential supermajority voting provisions applicable to the company were those where the company was following the default standard under state law.  In granting relief, the Staff’s response letter noted that “[i]n similar requests, the Staff generally will not consider voting implicit in state law unless the Proposal identifies the specific state law provisions at issue.”  The Staff cited similar language in response to a proposal that requested a company replace each voting requirement in the company’s governing documents that called for a greater than simple majority vote to be replaced with a majority of votes cast standard.

There were, however, a number of no-action letter decisions that turned primarily upon substantial implementation arguments where the facts and results were less clear.  Similar to the instances described in other sections herein, these decisions sometimes seemed at odds with one another.

For example, in one instance, a company was asked to consider abolishing its DEI program, policies, department, and goals.  The company argued that it had substantially implemented the proposal because at recent board meetings, the company’s management presented to the full board updates on the company’s DEI programs, which addressed challenges and risks that the board should be aware of regarding such programs.  The company explained that after considering the presentation, the board made a determination to continue the company’s DEI efforts.  The Staff granted relief on the basis of substantial implementation.  In another similar case, a company received no-action relief where it completely eliminated its DEI program in response to a proposal asking for an evaluation.

On the other hand, a number of companies facing similar proposals failed to obtain no-action relief on substantial implementation grounds, despite seemingly taking similar actions.  In one example, a proposal asked a company to consider abolishing its DEI program.  The company argued it substantially implemented the proposal because it reviewed its policies and strategies relating to human capital management annually, including diversity and inclusion, and necessarily “considered” whether to continue or abolish its current program in doing so.  The request was denied relief, suggesting the company did not do enough to implement the proposal.

While these results are somewhat confusing, it appears that in cases where the Staff granted relief for substantial implementation, the companies were able to demonstrate more than that they addressed the proposals’ concerns in the ordinary course.  Going forward, companies may want to keep this in mind when considering the viability of a substantial implementation argument.

Unusual Success Under Rule 14a-8(i)(3)

In another noteworthy development, the 2025 proxy season featured a surprising number of proposals excluded under Rule 14a-8(i)(3), which prohibits proposals or supporting statements that would violate the SEC’s proxy rules.

SLB 14M did not provide updated guidance on this exception, which is perennially one of the more commonly argued bases for exclusion.  The 2025 proxy season continued this trend but saw an unusually high number of successful arguments.  Interestingly, almost all successful arguments were granted under the “objectively false and misleading” prong of the exclusion, which permits the exclusion of a proposal when the company demonstrates objectively that a factual statement is materially false or misleading.  Because these arguments are necessarily fact-dependent, it was not clear that these no-action letter results were the consequence of an updated staff policy.

On the other hand, arguments under another commonly used prong of Rule 14a-8(i)(3), that proposals are impermissibly vague or indefinite, were largely unsuccessful.  This was consistent with historical results.

Consequently, the unusual success of arguments under Rule 14a-8(i)(3) may have been attributable to unique factual circumstances in the 2025 proxy season, rather than any clear policy shift.

Looking Ahead

As demonstrated through numerous actions taken by the current SEC administration and in public statements, times are changing at the SEC.  SLB 14M caught many by surprise and introduced sweeping changes to the shareholder proposal ecosystem.  While these changes did not necessarily result in atypical results, no-action letters from the 2025 proxy season indicate that balance is returning to the shareholder proposal system after years of a shareholder-centric approach.

The SEC’s rulemaking agenda also indicates that the Staff “is considering recommending that the Commission propose rule amendments to modernize the requirements of Exchange Act Rule 14a-8 to reduce compliance burdens for registrants and account for developments since the rule was last amended.”  While the substance of potential amendments is unknown, it seems likely that any updates to the rule would be in favor of companies.

Nevertheless, issuers and their counsel are reminded that no-action relief is not a guarantee, even in close cases.  As has been the case in the past, companies need to carefully analyze their shareholder proposals when considering no-action requests and should pay particular attention to the precise language contained in SLB 14M.

ENDNOTE

[1] In June 2025, the formally withdrew these pending amendments.

This post comes to us from Morrison & Foerster LLP. It is based on the firm’s memorandum, “A Season of Change: Shareholder Proposals During the 2025 Proxy Season,” dated September 22, 2025, and available here.