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2engage / Corporate Governance  / Shareholder Proposals: Lap Dog Directors

Shareholder Proposals: Lap Dog Directors

I can’t make this stuff up. Three separate shareholder proposals submitted to The Boeing Company by, on behalf, or in connection with corporate gadfly, John Chevedden, referred to Boeing’s directors as “lap dogs.”

In two of the shareholder proposals submitted, the statement reads:

“…which can make him a lap dog Lead Director.”

The other shareholder proposal submitted reads:

“CEO directors can tend to be lap dog directors for a fellow CEO.”

Boeing did not object to including the shareholder proposals in its proxy materials but did, however, ask the U.S. SEC to exclude the language, calling the “lap dog” reference a “baseless character attack” that has no place in the company’s proxy materials. Surprisingly, the SEC denied Boeing’s request to exclude the language.

See one of Boeing’s responses to exclude the language here:

Boeing received a shareholder proposal (the “Proposal”) from John Chevedden that refers to Boeing’s Lead Director as a “lap dog.” Boeing does not object to including the Proposal in its proxy materials in connection with its 2018 annual meeting of shareholders (the “Proxy Materials”). However, it has been clear under Rules 14a-8(i)(3) and 14a-9 of the Securities Exchange Act of 1934, as amended (the “Act”), that baseless character attacks have no place in a company’s proxy materials. As a result, Boeing intends to exclude the following highlighted portion of the Proposal’s supporting statement from the Proxy Materials:

“Boeing shareholders also need enhanced oversight rights because an independent board chairman does not oversee our board of directors. And to add to this deficit our Lead Director, Kenneth Duberstein, had 20-years of long-tenure which can make him a lap dog Lead Director.”

The SEC’s Division of Corporation Finance denied Boeing’s request stating the following:

We are unable to concur in your view that the Company may exclude portions of the supporting statement under rule 14a-8(i)(3). We are unable to conclude that the portions of the Proposal you reference impugn character, integrity or personal reputation, without factual foundation, in violation of rule 14a-9. Accordingly, we do not believe that the Company may omit portions of the supporting statement from its proxy materials in reliance on rule 14a-8(i)(3).

Cooley’s governance blog recaps it all here: Get used to it – “lap dog” may now be a favored adjective in shareholder proposals

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