Air Products and Chemicals, an industrial gases company with a market capitalization of more than $70 bn, has asked the SEC for the green light to exclude from its next proxy statement a shareholder proposal seeking information about its lobbying.
The proponent, John Chevedden, has filed a resolution asking that Air Products produce a report each year disclosing:
- ‘[Its] policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications
- ‘[Its] payments used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient
- ‘[Its] membership in and payments to any tax-exempt organization that writes and endorses model legislation
- ‘[A description] of management’s decision-making process and the board’s oversight for making payments described in sections two and three above.’
Chevedden argues in a supporting statement that ‘[f]ull disclosure of Air Products’ lobbying activities and expenditures is needed to assess whether [the company’s] lobbying is consistent with its expressed goals and shareholders’ interests… Air Products fails to disclose to shareholders its membership in or payments to trade associations and social welfare groups, or the amounts used for lobbying.’ This presents reputational risk if the company were to be lobbying in ways that contradict its public positions, Chevedden argues.
Such proposals on corporate lobbying have attracted levels of support governance experts deem to be significant at a number of AGMs in 2024: for example at Morgan Stanley (31.2 percent of votes cast), Verizon Communications (34.6 percent), Goldman Sachs (39.4 percent) and Caterpillar (23 percent).
14a-8 request
Air Products has filed a request with the SEC for no-action relief if it omits the lobbying proposal. Specifically, it argues that the resolution may be excluded per Rule 14a-8(i)(7) because it relates to the company’s ordinary business operations and impermissibly seeks to micromanage.
For example, the company writes: ‘Although the proposal is facially neutral, the text of the supporting statement… makes clear that [it] is in fact narrowly focused on the National Association of Manufacturers (NAM) and, derivatively, NAM’s involvement with the American Legislative Exchange Council and more generally on possible involvement with organizations espousing a pro-business viewpoint…
‘The [SEC] staff has consistently permitted the exclusion of facially neutral proposals under Rule 14a-8(i)(7) as relating to a company’s ordinary business operations if the supporting statement… indicates that the proposal relates to the company’s association, or potential association, with specific organizations or types of organizations.’
Air Products also argues that the proposal is excludable because it relates to specific lobbying activities – in this case those relating to the company’s blue-hydrogen projects, in particular the Louisiana Clean Energy Complex.
In addition, it argues that the proposal ‘seeks to micromanage the company by requesting a highly prescriptive and detailed report that requires dozens of distinct pieces of information. In particular, [it] requests an annual report on the company’s lobbying activities and payments, which is to be subdivided into four sections, with each section being further subdivided into multiple subsections.’
Air Products last year issued its proxy statement on December 13 ahead of its AGM on January 25, 2024.
A request for comment from the company was not returned immediately.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
