April 8, 2026
Public companies and their shareholders were thrown for a loop this proxy season when the U.S. Securities and Exchange Commission announced it wouldn’t respond to most executive requests to exclude shareholder proposals from their voting ballots.
The long-time referee for the proposal process, the SEC had for decades reviewed company requests to omit shareholder proposals from their voting materials and issued no-action letters if they believed the company was justified.
But in November, the agency announced that due to resource constraints, it wouldn’t respond to those no-action requests for the 2025-26 proxy season, leaving companies with the largely unquestioned authority to decide for themselves.
Some investors are taking note of who’s blocking what. According to data from Law.com’s Radar, shareholders have filed at least six lawsuits over excluded proposals.
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But Molly Bowen, a partner at Cohen Milstein Sellers & Toll who represents pension funds and other institutional investors, warns that companies are risking more than just litigation if they leave a proposal off a final ballot.
In this environment, there’s a “really perverse incentive” for shareholders to escalate, “rather than companies using this predictable, structured process that happens one time a year … If it’s harder to do that, that really encourages investors to look at their other tools,” she said.
Shareholder proposals are governed by Rule 14a-8, which provides a mechanism for shareholders to get their proposals onto proxy statements for an investor vote. Under the rule, companies must include proposals, or show they are exempt from the rule’s protections. Exempt proposals include those that are improper under state law or focus on an immaterial aspect of a company’s operations.
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But Bowen said that a successful shareholder proposal isn’t necessarily one that passes—it’s one that gets executives to talk with investors.
“Often the real goal and the real best outcome is the proponent and the company get together and reach a good, amicable resolution,” she said.