Issue: Corporate Governance
Court: U.S. Court of Appeals for the Third Circuit
The RLC urged the Third Circuit to reverse a lower court decision that disrupts the Securities and Exchange Commission's careful corporate governance balance by inventing a broad shareholder proposal exception that will divest management of authority over ordinary business operations.
In an order released less than a week after it heard oral arguments in the case, the Third Circuit reversed the trial court's decision and permitted Wal-Mart to exclude Trinity's Proposal from its 2015 proxy materials. In its full opinion, the court explained that Trinity’s proposal was excludable from the company’s proxy materials under the Securities and Exchange Commission’s (SEC’s) ordinary business exception. To reach its decision, the court identified the subject matter of the proposal and determined that it “relate[d] to” a company’s ordinary business operations. The court cited the RLC’s brief in its discussion of why a shareholder proposal relating to product selection is at the heart of a retailer’s ordinary business operations.
Procedural History and Case Documents: