Recent Developments for Directors — December 2025

SEC Permits Companies to Exclude Shareholder Proposals Without SEC Preclearance

In a significant change to how the SEC Staff handles requests to exclude Rule 14a-8 shareholder proposals, during the 2025–2026 proxy season companies will no longer need to seek Staff no-action relief before excluding a proposal, except for proposals excluded as improper under state law. Instead, companies need only notify the Staff and the proponent at least 80 days before filing definitive proxy materials that they intend to exclude a proposal. The Staff will not consider traditional no-action requests for proposals unless the company asserts the proposal is improper under state law. The Staff will provide an optional, written non-objection to companies that include in their notice an unqualified statement that they have a reasonable basis under Rule 14a-8 to exclude the proposal. Past adverse no-action responses are not binding and we believe that the greater flexibility given to companies this proxy season will promote a beneficial realignment of the entire Rule 14a-8 shareholder proposal practice. Responsible use of the SEC’s guidance will give companies a newfound ability to rely on the rule as written.

Retail Voting Programs Attract Attention

A new type of retail voting program recently received clearance from the SEC Staff, allowing retail stockholders to elect to align their votes automatically with board recommendations while retaining the flexibility to opt out or override. Companies are assessing whether this type of program could help increase retail stockholder turnout and influence close outcomes in proxy fights, director “vote no” campaigns, M&A, and non-routine matters. If successful in bolstering retail support, companies adopting such a program could more easily achieve a quorum and clear high vote thresholds. The technical requirements could necessitate revisions to governing documents. Currently, a lawsuit has challenged the program for entrenching board and management, and operational challenges and cost may inhibit broader adoption. Broadridge, an investor communications and financial services company, has been managing an influx of interest from public companies that wish to pursue a retail voting program.

SEC Policy Now Permits Mandatory Arbitration Provisions

Companies are evaluating possible bylaw or charter amendments requiring mandatory arbitration of stockholder claims under the federal securities laws. In a recent policy statement, the SEC confirmed that it will no longer block registration statements of companies whose governing documents include mandatory arbitration of securities law claims. These provisions could make stockholder class action claims harder to bring. Questions persist regarding the extent to which state corporate law may limit arbitration provisions, and whether federal law favoring arbitration preempts those state-law restrictions. Boards are examining these issues, reviewing D&O insurance coverage and indemnification agreements, and working with legal advisors to monitor developments in this area, recognizing that mandatory arbitration could attract legal challenges and governance scrutiny.

Directors Oversee Supply Chain, Tariffs, and Tax Risks

Boards continue risk oversight of industry-specific exposures, regulatory developments, and market trends. Areas of concern include changes to disclosure of risks relating to supply chain resilience, tariff sensitivity, and global tax changes. Given the dynamic circumstances, companies are focusing on their public disclosures — revisiting and strengthening disclaimers regarding guidance and other forward-looking statements concerning future expectations.

Companies Focus on AI and Information Governance

Boards and management teams are focused on AI and information governance frameworks to address how companies build and use AI and data. Boards are focusing on data foundations for training and fine-tuning AI models. Companies are adopting policies to manage data, check AI models, test for bias, privacy, and IP compliance, all supported by audit-ready documentation. As these policies evolve, they distinguish between internal and external uses of AI, and consider risk-based assessments of different AI use cases. Companies are reviewing their AI models to ensure that they remain reliable, appropriately tailored, and legally compliant as the emerging technology continues to evolve.