In the 2026 proxy season, exclusion notices for proposals from individual proponents surged to over 70%. This directly resulted from the SEC stepping back from its traditional gatekeeping role. The SEC's Division of Corporation Finance will no longer respond to most no-action requests seeking exclusion of shareholder proposals under Rule 14a-8, according to Morgan Lewis. This policy shift, driven by a December 2025 executive order to review Rule 14a-8 guidance, according to corpgov, intended to reduce the SEC's administrative burden. However, it has shifted the burden to companies, leading to more direct challenges and potential lawsuits from shareholder proponents. Increased litigation and a greater number of shareholder proposals reaching a vote appear likely, forcing companies to engage more directly or face legal battles.
The Shifting Landscape of Shareholder Activism
In 2026, exclusion notices for proposals from individual proponents, including those from John Chevedden, surged. Chevedden's proposals alone accounted for over half of all exclusion notices, while notices for all individual proponents exceeded 70%, according to corpgov. This trend suggests a significant empowerment of individual shareholder proponents, whose proposals now more frequently face direct exclusion attempts from companies, bypassing prior SEC regulatory review. The implication is a direct confrontation between companies and individual activists, absent the SEC's traditional buffer.
Companies Pivot to New Exclusion Strategies
Companies are strategically shifting their exclusion tactics. Exclusion notices for environmental and social (E&S) proposals decreased by 85% from 2025 to 2026, according to corpgov. Simultaneously, exclusions for governance proposals doubled, with companies increasingly citing procedural or technical reasons through April 2026. Companies are ceding ground on E&S issues to focus resources on procedural battles, particularly against individual proponents.
Historical Role of SEC No-Action Letters
Historically, the SEC's no-action letter process acted as an informal arbiter, preventing many shareholder proposals from reaching proxy statements. This administrative review provided a consistent, centralized mechanism for companies to seek staff concurrence for excluding proposals under Rule 14a-8. Companies relied on this guidance to manage the volume and nature of proposals, filtering them before they incurred significant corporate resources in proxy statement preparation or legal challenges. The absence of this filter now means companies bear the full burden.
Anticipating Increased Litigation and Direct Engagement
Without the SEC's traditional guidance, companies face a rise in direct legal challenges from proponents. The absence of this regulatory filter means more proposals will reach proxy statements or direct contention. Companies must prepare for higher legal costs and increased time negotiating with shareholder activists, as they are now forced to litigate directly. This transforms engagement from regulatory review into costly legal skirmishes, necessitating more robust internal review processes and proactive, direct engagement to resolve disputes. By the close of 2026, individual proponents like John Chevedden could successfully bring more proposals to a vote, demanding direct negotiation or litigation.
The shift in SEC policy appears likely to solidify a new era of direct confrontation between companies and shareholder activists, with increased litigation and a greater number of proposals reaching a vote in future proxy seasons.
