Beyond the Pendulum: Lessons from SEC’s Implementation of Staff Legal Bulletin 14M

On February 12, 2025, the Staff of the Division of Corporation Finance (the “Staff”) of the U.S. Securities and Exchange Commission (the “SEC”) issued Staff Legal Bulletin 14M (“SLB 14M”) introducing significant interpretive changes in its implementation of the shareholder proposal Rule 14a-8’s “ordinary business”(i)(7) and “relevance” (i)(5) exclusions. SLB 14M represents a pendulum swing between administrations, shifting back to some interpretations prevalent between 2017 and 2020 and away from the guidance in effect from 2021 to 2024.

These frequent shifts pose challenges for proponents and issuers alike — but they also provide learning opportunities and the potential to define a workable, middle ground interpretive framework that endures beyond administrative cycles.

Through a review of many of the Staff’s no-action letters, we identified key developments in interpretative approach and takeaways. While some of the new interpretations offer clear, practical guidance, others risk abrogating investors’ rights to raise material concerns with their companies. We suggest areas meriting further attention by the SEC and Rule 14a-8 stakeholders.

History of Controversy: Staff Legal Bulletins from 2016 to 2025

The SEC periodically issues Staff Legal Bulletins to clarify how it interprets provisions of Rule 14a-8.

2017-2020: Under Division Director William Hinman the Staff issued Staff Legal Bulletins 14 I, J, and K, which added numerous interpretive wrinkles that expanded opportunities for exclusion of proposals as engaging in micromanagement or failing to transcend ordinary business.

2021: Under Division Director Renee Jones, Staff Legal Bulletin 14L (“SLB 14L”) was issued, withdrawing those three Hinman-era bulletins. SLB 14L drew criticism from issuer representatives and in congressional hearings, with some critiques reflecting apparent misunderstandings or mischaracterizations of the rule — particularly the repeated refrain that, under SLB 14L, proposals no longer needed to be relevant to the companies receiving them. For example, a report of the House Financial Services Committee of December 19, 2023 stated:

SLB 14L rescinded the SEC’s content-neutral guardrails that previously enabled companies and investors to take a company-specific approach to evaluating the relevance and suitability of shareholder proposals submitted to company proxy ballots.

Instead, SLB 14L declared that the SEC would ‘‘no longer focus on determining the nexus between a policy issue and the company.’’ Instead, it mandated the inclusion of all proposals with a ‘‘broad societal impact’’ to be included on the proxy ballot when they are submitted.

As one of the authors of this article has previously explained, the concern about proposals  being submitted without significance to the receiving company was  largely unfounded, because SLB 14L did not repeal the relevance rule, which remained fully operable to exclude proposals with no relationship to the company’s business.

2025: In response to these critiques, SLB 14M rescinded SLB 14L and restored certain elements of the prior Hinman-era bulletins. As noted recently, the largest portion of exclusions granted this season were based on the ordinary business exclusion. Efforts to challenge proposals as irrelevant to the receiving company met with limited success.

Beyond the pendulum, an iterative and dynamic learning process that merits continued calibration

Close examination of this season’s decisions reveal that, beyond a pendulum shift, the no-action process is continuously evolving — underscoring the need for steady, balanced oversight by the SEC.

Some of the new changes appear better calibrated than others toward preserving investors’ capacity to elevate consideration of potentially material issues to company management attention, while screening out proposals that bear no real significance to a company’s business model or its investors. Key questions remain: Do the principles and determinations of the Staff allow for efficient action by issuers and proponents? Do they allow for predictable analysis and the drafting of proposals to avoid exclusion? Do they provide clarity for companies to avoid unnecessary challenges?

A review of recent no-action decisions shows that certain aspects of the new interpretive framework work better than others. It also highlights areas worthy of further deliberation and refinement to stabilize and modernize the framework — rather than continuing to cycle through partisan pendulum shifts.

Elevated focus on whether a proposal is significant to the company receiving it

As noted above, a critical concern expressed about SLB 14L was that its determinations of whether a proposal transcends ordinary business focused on whether the issue raised had a social impact versus the importance of the issue to the company receiving it.

Some observers suggested that this caused the process to drift toward proposals which are not tailored to a particular company but instead “seem aimed at promoting a certain narrative or viewpoint,” according to Kai Liekefett, a partner at Sidley Austin in an article in Agendaweek.

SLB 14M shifted the interpretive focus from whether the proposal addresses a “significant social impact” to whether the proposal topic is significant to the company receiving the proposal.

SLB 14M also escalated the importance of “significance to the company” in interpretation of Rule 14a-8(i)(5), the relevance rule. That rule permits exclusion of proposals addressing less than 5% of assets, net earnings, or gross sales. Such proposals are generally excludable, but the rule includes an exception for proposals that are “otherwise significantly related to the company’s business.”

SLB 14L had aligned with a longstanding judicial interpretation of the relevance rule that proposals could be “otherwise significantly related” because of the proposal’s ethical or social implications. See Lovenheim v. Iroquois Brands, Ltd., 618 F. Supp. 554 (D.D.C. 1985). In contrast, SLB 14M requires that, regardless of ethical or social implications, the proposal must be tied to “a significant effect on the company’s business.” Evidence that a proposal may have a significant impact on segments of the business or poses a risk of significant contingent liabilities is sufficient but the “mere possibility of reputational or economic harm alone” is insufficient. Such evidence will be considered in light of the “total mix” of information about a company. This could effectively block some proposals that are grounded in ethical or reputational concerns where the proponent fails to provide evidence of at least some financial relevance to the company.

Significance to the company is assessed through a functional burden shifting mechanism

In practice, when imposing the new requirements for demonstrating significance to the company under both Rule 14a-8(i)(7) and Rule 14a-8(i)(5), Staff determinations implied a sophisticated allocation of burden of proof between the proponent and issuer. Although an issuer may claim that a proposal is not significant to the company to seek an exclusion under Rule 14a-8(i)(5) or Rule 14a-8(i)(7), proponents can respond with evidence from the company’s own communications, websites, marketing materials, etc., to demonstrate that there is substantial evidence of significance. To the extent that the proponent is able to present such evidence, the burden of proof then shifts to the company for persuasive evidence of insignificance to the company and, in several instances during the 2025 proxy season, companies were unable to surmount the evidence offered by proponents:

• Verizon: proposal asked how the company “oversees risks related to discrimination against ad buyers and sellers based on their political or religious status or views.” Proponent raised concerns that Verizon was collaborating with other companies to coerce social media platforms, among others, for expressing disfavored conservative political and religious viewpoints under the guise of “misinformation”and “hate speech.” Staff rejected the exclusion claim, noting that Verizon had not explained whether this concern raised by the proposal was significant to the company.

State Street: proposal concerned company’s “transition finance strategy.” The ompany sought exclusion under Rule 14a-8(i)(5), asserting that it lacks a “transition finance business.” The proponent offered evidence that the company’s own publications showed substantial engagement in climate transition strategy such as prominent references to climate transition on the company’s website, including the role of the financial services sector and the company’s products and services in facilitating the low carbon transition. The company was unable to rebut these evident benchmarks of significance and therefore the Staff was unable to concur with the exclusion request. See also Mondelez and Wells Fargo.

Staff did concur in exclusion where companies met their burden of proof:

• AbbVie: proposal asked for report on the risks associated with the company’s promotion of puberty-blocking drugs for off-label uses. The company demonstrated that these drugs comprised well under 5% of its business and the proponent offered only generalized arguments in response about ethical concerns and speculative risks. With the burden having shifted to the proponent, the Staff granted no-action relief to AbbVie under Rule 14a-8(i)(5).

The new Staff interpretive approaches to significance to the company provide an appropriate burden shifting framework between the parties which seems calibrated to enable exclusion of poorly targeted proposals (such as efforts to blanket the market with proposal templates more relevant to some companies than others).

Systemic risks and diversified investors

SLB 14M eliminating consideration of “significant social impact” as a basis for a proposal transcending ordinary business is problematic for diversified investors, for whom the consideration of systemic or beta risks associated with their investments is often a critically important element of shareholder proposal filing and voting.

SLB 14M shifts the focus of whether a proposal transcends ordinary business from “social impact” broadly, to significance to a company. But in examining significance to a company the Staff cannot ignore significance to the company’s investors. Recent surveys show sustained support for sustainable investing strategies, and a growing movement toward system stewardship that prioritizes the protection of environmental and social systems as essential to long-term portfolio value.

To some degree, the “significance to the company” test is not inconsistent with addressing these beta value issues. For example, this season climate change risks remained a prevalent shareholder proposal topic and recent Staff decisions confirm that climate change continues to be treated as a public policy issue that can transcend ordinary business under Rule 14a-8(i)(7), provided the issue is shown to be significant to the company or its investors, consistent with SLB 14M. See Ameren and Alliant.

However, under the new framework Staff also concurred in the exclusion of other significant social impact issues that might relate to investors’ beta returns , such as whether a company respects collective bargaining rights or addresses the safety and well-being of its workers.

Shareholder oversight of board deliberations is not ordinary business

A fundamental principle of corporate governance is that the board of directors is elected by, and should be accountable to, the shareholders. Yet, in some instances during the 2025 proxy season, the Staff concurred in ordinary business exclusion of proposals seeking greater transparency into the board’s decision-making processes on issues of substantial concern to investors.

For instance, the Staff permitted exclusion on ordinary business grounds of a proposal at Tractor Supply requesting a report describing the research and analysis the board undertook before making changes to its diversity, equity, and inclusion (DEI) policies in 2024. The company contended that the proposal sought inappropriate disclosure of board deliberations and internal governance processes, and thus represented an inappropriate attempt to intervene in board-level decision-making. See also Harley Davidson.

Such rulings are particularly problematic given the role of the proposal process in seeking transparency for investors, including on board oversight. Based on precedent, it seems that a report seeking either third-party evaluation of board oversight on a significant policy issue or a summary of the board’s oversight and research process, excluding confidential or proprietary information, would remain an appropriate shareholder proposal request.

Micromanagement, not significance, emerges as the principal barrier to proposal inclusion

Under Rule 14a-8(i)(7), even if a proposal’s subject matter transcends ordinary business, a proposal still may be excludable if the language of the proposal is seen by the Staff to “micromanage” the company’s business.

In practice, challenges regarding “significance to the company,” or whether a subject matter transcends ordinary business, may be less concerning for proponents than micromanagement interpretations. Shareholders typically file proposals at companies where the subject matter of the proposal is demonstrably significant to the business. By contrast, micromanagement determinations turn less on the underlying issue and more on the language of the proposal — making them a more subjective and unpredictable barrier to inclusion.

The rescinded SLB 14L had described a nuanced and shareholder-centered approach to assessing micromanagement. That guidance focused on whether the level of granularity of a proposal unduly constrained board or management discretion or delved into matters too complex for shareholder oversight. In evaluating whether a proposal’s granularity was appropriate, the Staff indicated it would consider factors such as the general sophistication of investors on the issue, the availability of relevant data, and the extent of public discussion and analysis.

In doing so, SLB 14L reaffirmed the proposing shareholders’ duty, under the directive in Rule 14a-8(a), that proponent’s “proposal should state as clearly as possible the course of action that you believe the company should follow.”

SLB 14L also acknowledged that a level of specificity is often necessary for proposals to provide investors with meaningful insight into a company’s risks, impacts, or progress toward stated objectives, and to enable shareholders to thread the needle between overly granular proposals and those so vague that companies can credibly claim substantial implementation.

SLB 14M returned to the guidance first adopted in Staff Legal Bulletin 14K under which Staff may find proposals excludable if they request “a specific method, strategy, timeline, action, or outcome, thereby supplanting the judgment of the management and the board.” These broad criteria — board and management rather than shareholder centered — could apply to many proposals seeking meaningful action or disclosure from issuers, and thus leaves substantial room for subjective determinations by the Staff.

As applied in the recent season, the interpretive framework appears to draw a sharp line against proposals that request specific corporate actions, often treating any shareholder request that the company make a policy change or take other kind of action other than disclosure or target setting as potential micromanagement. Staff found the following proposals to constitute impermissible micromanagement:

• Ford Motor: asked the company to “adopt and disclose a Noninterference Policy committing to uphold the human rights to freedom of association and collective bargaining in its operations.”
• Mondelez: requested adoption of a “No Deforestation, No Peatland, No Exploitation (NDPE) policy.”
• Verizon:  asked for the adoption of a policy relating to senior executive compensation.
• Tesla: asked for the Company to commit to a moratorium on sourcing minerals from deep sea mining.

These exclusions, some of which represented a reversal from prior years, do not seem based on granularity concerns, but rather on the idea of seeking a specific outcome that the board or management might oppose.

Based on these decisions, it appears Staff now tend to find proposals asking for the adoption of a particular policy to constitute micromanagement. This change is jarring given the long-standing recognition that shareholder proposals requesting the adoption of concrete policies on environmental or human rights issues, such as limiting contribution to fossil fuel supplies or banning the sale of products resulting from animal cruelty, address appropriate subjects for shareholder engagement that have, in many cases, garnered meaningful investor support.

Compounding these challenges is the growing overlap between the micromanagement and substantial implementation exclusions. For proposals addressing issues on which companies already have some level of disclosure or policy, proponents increasingly must navigate between these two overlapping exclusion risks. Under SLB 14M, proposals that push companies to go further, by enhancing reporting, increasing ambition, or aligning with external standards, may be excluded as micromanaging if they are viewed as directing specific outcomes or strategies. But if proposals are too general or deferential, companies may argue they have already been “substantially implemented” under Rule 14a-8(i)(10). The result is a narrow and uncertain space in which proposals must be drafted with enough specificity to show they are not duplicative of existing company efforts, but not so much as to trigger micromanagement concerns.

In contrast, proposals that are “outcome agnostic”— that ask companies to evaluate or provide information or assess an issue without prescribing a particular result — have been more likely to survive no action challenges:

• State Street: proposal asked “whether and how” the company addresses worker and community concerns in its transition finance strategy. Staff declined to find micromanagement. The proposal’s neutral framing aligned with an example described in SLB 14M, in which a “proposal did not seek to micromanage the company because it deferred to management’s discretion to consider if and how the company plans to reduce its carbon footprint…”
•  Linde: proposal asked the company to report “whether and how” its lobbying activities align with its climate goals. Although Linde had previously disclosed information on both its climate commitments and its lobbying activities, the Staff declined to grant no action relief on ordinary business and substantial implementation grounds. The proposal’s outcome-agnostic phrasing and focus on evaluating alignment — not mandating a particular result — likely allowed it to survive both challenges.

The best metaphor for the current interpretation of micromanagement is that the proposal can ask a company whether and how it intends to jump higher, but can’t tell them how high to jump. If the company has said how high it intends to jump, a proposal can ask for an assessment of the likelihood of company actions achieving that stated intent, as long as the assessment is not prescriptive.

Other micromanagement takeaways

Adopting targets is a permissible ask

Staff sometimes declined to concur in the exclusion of proposals asking for the adoption of targets, for example:

• Columbia Sportswear: proposal requested that the company “adopt targets for measurably reducing its GHG emissions” and report annually on progress. Notably, the supporting statement gave management discretion over the scope and structure of those targets, such as whether to include supply chain emissions, thus preserving flexibility and avoiding specific directives.
• Goodyear Tire: proposal asked the board to “adopt policies that result in setting tire wear shedding goals and timelines.” Although the proposal clearly sought a particular outcome — reduction in tire wear particle emissions — it avoided mandating a precise benchmark or methodology.

Evaluating targets is permissible depending on the wording

Proponents and voting shareholders remain strongly interested in corporate greenhouse gas targets — especially in assessing whether company actions are sufficient to meet stated goals or if those targets amount to puffery or greenwashing. Shareholder proposals have taken different approaches with varying levels of success:

• Ameren: the Staff did not find a proposal excludable that requested a third-party assessment of the alignment of Ameren’s existing greenhouse gas targets with the Paris Agreement’s goals.
• Amazon: a proposal was found not excludable which asked the company to report on how it would meet its climate commitments amid rising energy demands from AI and data centers.
• Targa Resources: the excluded proposal asked how the company intends to reduce its full range of Scope 1 and 2 operational greenhouse gas emissions in alignment with the Paris Agreement’s goals. The proposal was specific in which emissions should be targeted, set a benchmark for “how high to jump” and essentially, in talking about intent, asked the company to establish a course of action to fulfill the specific level of action for the identified range of greenhouse gases.
• Domino’s Pizza: the excluded proposal asked the company to issue a climate transition action plan, above and beyond existing disclosure, describing how it intends to align its operations and full value chain emissions with Domino’s climate ambitions. Since the proposal merely echoed the company’s own stated climate ambitions, which included its operations and value chain emissions, it does not appear overly granular. Did the decision suggest that the Staff found existing company disclosures as sufficient, treating a request for more as micromanagement?

Note that the proposals in Targa and Domino’s Pizza asked the companies to explain how they intended to align specific emissions scopes with climate goals — making it unclear whether asking to report on “intent” to fulfill a benchmark, whether the company’s own or alignment with Paris, crosses over into suggesting a course of action.

Referencing external frameworks is not disqualifying

SLB 14L acknowledged that references to well-established national or international frameworks — such as the Paris Agreement or the Task Force on Climate-related Financial Disclosures (TCFD) — could signal that a proposal addressed matters suitable for shareholder input that should not be considered micromanagement. In contrast, SLB 14M omitted that language but acknowledged in an example that asking a company to describe whether and how it might reach alignment with the Paris Agreement could be an acceptable form for a proposal.

It is important to recognize that referencing external standards or benchmarks is a routine and appropriate feature of modern shareholder proposals. Investors increasingly rely on widely accepted third-party frameworks to ground their requests in established norms and comparable metrics and doing so. helps ensure that company disclosures are credible, decision-useful, and aligned with investor expectations. Rather than presuming that references to international frameworks constitute micromanagement, the burden should rest with companies to demonstrate that such references, in context, improperly constrain board or management discretion.

Conclusion: Where SLB 14M and Staff Implementation Are Functioning Effectively

In some respects, SLB 14M and its implementation have brought greater clarity and functionality to the no-action process:

• The Staff’s approach to assessing whether an issue is “significant to the company” under Rules 14a-8(i)(5) and (i)(7) establishes a workable evidentiary framework. Proponents are able to rebut exclusion claims with a company’s own disclosures, marketing materials, or public statements — and companies are held to a corresponding burden to show insignificance. This framework appears to filter out poorly targeted proposals while preserving investor access for those raising material concerns.
•  The Staff’s decisions this season indicate continued recognition that referencing third-party standards — such as the Paris Agreement or SBTi — does not necessarily constitute micromanagement, particularly if the reference is not directive but offered for comparative analysis against the company’s own plans or targets. This aligns with modern investor practices and enhances the utility and comparability of proposals.

Recommendations: Where Further Refinement Is Needed

Despite some workable refinements, SLB 14M leaves critical gaps and introduces new challenges that require clarification:

• Staff interpretations should be consistent with investors’ duty to state as clearly as possible the actions that they want the company to take, and therefore a proposal should not be treated as micromanaging so long as its request is not overly granular. For example, an advisory proposal from shareholders asking a company to improve its disclosure, policies or performance to align with  well-recognized norms or guidelines
  does not interfere with board or management discretion.  There is no value in insulating the board and management from the advice and  perspectives of their investors on such an issue.
• Staff should confirm that asking a company for additional details regarding how it intends to achieve the company’s own targets does not constitute micromanagement.
• Guidance should affirm shareholders’ right to ask a company to improve upon its current practices as long as it is done with flexibility, by clarifying that proposals  broadly urging enhanced scale, pace, or rigor in company responses  to a particular issue — beyond existing actions or disclosures — will not be seen as micromanaging. Additionally, these requests should be generally insulated from a substantial implementation challenge as long as some of the possible “above and beyond actions” are described in the proposal’s background section.
• When it comes to assessing significance to the company in many instances the rules are functional. However, because company activities may substantially contribute to market- or portfolio-wide risks, the Staff should recognize that “significance to the company” includes “significance to the company’s investors” and that for market moving and market leading companies, impact on broader portfolio returns represents an appropriate focus area for shareholder proposals.
• The Staff should afford particularly broad latitude to proposals seeking disclosures related to director accountability, given directors’ role as the elected representatives of shareholders, focusing on whether the proposal micromanages rather than whether it requests material that the board might prefer not to disclose.