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Third Circuit Ruling Allows Wal-Mart to Exclude Trinity's Stockholder Proposal from its Proxy Materials


April 2015

In a closely watched corporate governance case, the Third Circuit Court of Appeals ruled on April 14, 2015 that Wal-Mart Stores, Inc. could exclude a stockholder proposal submitted by Trinity Wall Street from its 2015 proxy materials.  The Third Circuit’s ruling should alleviate concerns that corporations will be required to include “corporate governance reform” stockholder proposals in their proxy materials that effectively allow stockholder review of a corporation’s ordinary business decisions, such as deciding what products to sell.  Moreover, the ruling should clear the way to ensure that corporations can continue to rely on the precedent established by the SEC’s longstanding interpretations of SEC Rule 14a-8(i)(7)’s ordinary business exclusion.  Finally, the order will hopefully discourage stockholders from flooding corporations with proposals that relate to products for sale that are artfully framed as requests for corporate governance reform.

The full alert is available here.

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