SEC says SeaWorld can exclude shareholder proposal for ‘micromanagement’
The SEC has said SeaWorld Entertainment may exclude an animal rights group-backed proposal seeking a report on moving its business away from using animals on the grounds that it constitutes micromanagement.
The proposal from the People for the Ethical Treatment of Animals (Peta) states: ‘In order to address the most pressing issues SeaWorld faces today – specifically, the public’s continued opposition to captive-animal displays and the consequential impact of the Covid-19 pandemic – the shareholders urge the board to conduct a study to determine how soon SeaWorld could feasibly eliminate animal-based programs, excluding legitimate animal rescue work.’
In a supporting statement, Peta says public opposition to keeping animals in captivity continues to grow, with large numbers of people avoiding SeaWorld facilities and corporate partners having cut ties with the company since the release of the documentary Blackfish in 2013.
The group also states that ‘cutting-edge forms of animal-free entertainment save a significant amount of money while allowing ticket holders to feel as if they’re interacting with real animals. New animatronic dolphins look, feel and act just like real ones, and interactive digital aquariums have been called the way of the future.’
It adds that Canadian authorities have banned keeping cetaceans in captivity and French authorities have announced they are banning marine parks from breeding or acquiring new orcas and other dolphins. France also intends to move those now in captivity to ocean sanctuaries.
SeaWorld requested no-action relief from the SEC for omitting the proposal on multiple grounds: that the proposal deals with a matter relating to the company’s ‘ordinary business operations;’ that the proposal is ‘vague and misleading;’ that the company has already ‘substantially implemented’ the proposal; and that it ‘relates to the redress of a personal claim or grievance against the company.’
The SEC posted to its website last Tuesday that it agrees Rule 14a-8(i)(7) provides a basis to exclude the proposal on the grounds of micromanagement. It did not make any comment on the other arguments advanced by the company.
Micromanagement has been cited this proxy season in five instances as grounds to exclude a proposal out of a total of around 135 decisions saying a company has grounds to omit. Most recently, the SEC pointed to micromanagement in regards to Rooney Rule-type proposals filed by the American Federation of Labor and Congress of Industrial Organizations Reserve Fund with Activision Blizzard and Amazon.
Among other things, SeaWorld argues that ‘the underlying substance of the study [in the Peta proposal] relates to the imposition of specific methods for implementing complex policies, essentially requiring the company to replace the products and services it currently offers to customers of its parks with the products and services suggested in the supporting statement.’
It adds: ‘By attempting to impose upon the company specific decisions with respect to the experiences it offers in its parks as well as its activities outside its parks (which require the company to maintain highly trained staff and specialized facilities), the proposal, like the proponent’s past proposals, again seeks to micromanage the company’s operations, interfering with complex decisions upon which the company’s shareholders, as a group, are not in a position to make an informed judgment.’
Peta executive vice president Tracy Reiman says in a statement: ‘SeaWorld is committing company suicide by fighting against progress every step of the way, and its stubbornness has cost it ticket sales, employees, CEOs and corporate partners… [H]olding complex, intelligent animals in barren tanks and forcing them to perform stupid tricks have no place in a post-pandemic world.’
A request for comment from SeaWorld was not returned.