SEC Proposes Rules for Hedging Disclosure; Staff to Review Rule 14a-8(i)(9)

by Cozen O'Connor

SEC Proposes New Rules Regarding Disclosure of Hedging by Directors, Officers and Employees

On February 9, 2015, the Securities and Exchange Commission (SEC) proposed for comment new corporate disclosure rules regarding public company issuer hedging policies applicable to directors, officers and employees. The SEC’s proposed rules implement Section 955 of the Dodd Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), which amended the Securities Exchange Act of 1934 to add a paragraph requiring issuers to disclose whether employees or directors are permitted to purchase financial instruments designed to hedge any decrease in the market value of the issuer’s equity securities granted as compensation to, or held by, the director or employee. The proposed rules would require the disclosure to be made in any proxy or information statement relating to an annual meeting at which directors are to be elected, and would apply to all companies subject to the federal proxy rules, including smaller reporting companies and emerging growth companies. The purpose of the disclosure is to provide investors with additional transparency about company governance policies that may affect the alignment of employee and director interests with shareholder interests. The SEC will seek public comment on the proposed rules for a period of 60 days following their publication in the Federal Register.

SEC to Review the Scope and Application of Conflicting Proposals Under Rule 14a-8

On January 16, 2015, SEC Chair White directed the SEC Division of Corporation Finance to review the proper scope and application of Rule 14a-8(i)(9), a provision that permits a public company issuer to exclude an otherwise qualified shareholder proposal from its proxy materials if the subject matter of the proposal directly “conflicts” with a company’s own proposal. Notably, in connection with this review, the Division of Corporation Finance also changed its long-standing position of responding to company requests for “no-action” relief and staff informal concurrence with an issuer’s decision to omit a shareholder proposal from its proxy materials pursuant to Rule 14a-8(i)(9). During the 2015 proxy season, the Division of Corporation Finance will express no views on the application of Rule 14a-8(i)(9), leaving many public company issuers that have submitted “no-action” requests under Rule 14a-8(i)(9) without any guidance how to handle conflicting shareholder proposals during the upcoming proxy season. In a speech given at Practising Law Institute’s Corporate Governance program on February 10, 2015, Division of Corporation Finance Director Keith Higgins discussed the background of the rule and the division’s historic consideration of its application. Director Higgins also announced that as it reviews the scope and application of the rule, the division is soliciting input from interested parties regarding Rule 14a-8 and the meaning of “directly conflict” in the context of shareholder proposals. Interested parties may send comments to the SEC at


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Cozen O'Connor | Attorney Advertising

Written by:

Cozen O'Connor

Cozen O'Connor on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.