Comment by Lillian Laubenthal
In April of 2024, a coalition of Alabama miners and the Securities and Exchange Commission's (SEC) new universal proxy rule reshaped the future of shareholder proposals in the United States. For years, legal and business scholars have been calling for the implementation of a new universal proxy card for the purpose of avoiding distorted outcomes in highly contested director elections. However, after the SEC's “universal proxy” rule took effect on September 1, 2022, it had an unforeseen impact, not on director elections, but on nonbinding shareholder proposals. As environmental, social, and governance (ESG) issues become increasingly important in shareholder activism trends in today's corporate world, the universal proxy has been skillfully utilized by activists to bolster their proposals in proxy contests. Warrior Met Coal's recent proxy fight provides a glimpse into the future development of proxy solicitations under the new universal proxy rule and yields a clever new way for shareholder activists to make their voices heard.
This Comment examines how the promulgation of the SEC's universal proxy rule changed the corporate landscape, specifically the solicitation of shareholder proposals, as trends in shareholder activism evolve. Part II provides important background on the history of shareholder meetings, the proxy solicitation process, the need for a universal proxy card, and how the new rule works in both contested director elections and nonbinding shareholder proposals. Part III analyzes the Warrior Met Coal proxy fight, where activists utilized the universal proxy to solicit votes for shareholder proposals related to fair labor practices and corporate governance reform. Part IV discusses the impact of the universal proxy on shareholder activism as a whole, as ESG trends change and conservative lawmakers push to eliminate Rule 14a-8 of the Securities and Exchange Act of 1934 (Rule 14a-8). It also examines a recent proxy fight at News Corporation that utilized the universal proxy in a proposal-driven contest. Part V briefly concludes and provides insight into the future of shareholder proposals in the changing corporate world.
About the Author
Lillian Laubenthal, J.D. Candidate 2026, Tulane University Law School; B.S.M. 2023, Tulane University.
Citation
100 Tul. L. Rev. 203