When a stockholder presents a proposal to a board of directors, the default rule is that such proposals shall be included in the proxy unless the board of the subject company has a legitimate reason to exclude the proposal.
In the case that follows, animal rights activists sought to include a proposal relating to the inhumane treatment of animals in the preparation of food products sold by the subjct company. The board of subject company sought to exclude the proposal. In seeking an no-action letter from the SEC, the board Iroquois argued that the stockholder's proposal lacked relevance and thus could properly be excluded.
In this opinion, the court provides guidance on how the SEC will typically treat these kinds of social proposals.