## Facts

- A shareholder pension plan holding AIG common stock submitted a shareholder proposal requesting a bylaw amendment establishing “proxy access.”
- The proposal would require AIG, if specified ownership and procedural conditions were met, to list certain shareholder-nominated director candidates in AIG’s proxy statement and proxy card alongside management’s nominees.
- SEC Rule 14a-8 generally requires qualifying shareholder proposals to be included in a company’s proxy materials, but Rule 14a-8(i)(8) permits exclusion of proposals that “relate[] to an election” for board membership.
- AIG sought and received an SEC Division of Corporation Finance no-action position permitting exclusion of the proposal under Rule 14a-8(i)(8).
- AIG omitted the proposal from its proxy materials, and the shareholder sued to compel inclusion.

## Issues

1. Whether a shareholder proposal amending bylaws to create a general proxy-access procedure “relates to an election” and may be excluded under SEC Rule 14a-8(i)(8).
2. What weight to give the SEC’s competing interpretations of Rule 14a-8(i)(8) over time when the rule’s text is ambiguous.

## Decision

- The Second Circuit reversed the district court’s denial of a preliminary injunction and remanded.
- The court held the proposal was not excludable under Rule 14a-8(i)(8) because a bylaw amendment establishing a procedure for including shareholder nominees on the corporate ballot does not “relate to an election” within the meaning of the election exclusion.
- The court treated the rule as ambiguous and relied on the SEC’s contemporaneous (1976) interpretation, finding the later, broader interpretation insufficiently justified.

## Legal Principles

- When an agency regulation is ambiguous, an agency’s contemporaneous interpretation at the time of implementation or revision generally controls unless the agency provides adequate reasons for a later change.
- Rule 14a-8(i)(8)’s election exclusion, under its earlier SEC interpretation, targets proposals tied to an immediate election contest or proposals that would determine outcomes in a specific board election.
- A shareholder proposal of general applicability that sets procedures for future elections—such as proxy-access conditions for including shareholder nominees—does not fall within the election exclusion and must be included if other Rule 14a-8 requirements are met.
- The determination addresses inclusion in proxy materials under federal securities law and does not decide the validity of the proposed bylaw under state corporate law.

## Conclusion

The court required inclusion of a proxy-access bylaw proposal, holding it did not “relate to an election” under Rule 14a-8(i)(8), and it constrained the SEC’s later expansive reading of the election exclusion absent a reasoned explanation for departing from the agency’s earlier, contemporaneous interpretation.


Am. Fed’n of State, Cnty. & Mun. Emps., Emps. Pension Plan v. Am. Int’l Grp., Inc., 462 F.3d 121 (2d Cir. 2006)