Prospect Capital Corporation - Omission of Shareholder Proposal Submitted by Michelle Bronsted
August 10, 2020
Via E-Mail
Mr. Michael K. Hoffman, Esq.
Mr. Kenneth E. Burdon, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036-6522
michael.hoffman@skadden.com
kenneth.burdon@skadden.com
Re: Prospect Capital Corporation
Omission of Shareholder Proposal Submitted by M. Bronsted
Dear Messrs. Hoffman and Burdon:
In a letter dated June 23, 2020, on behalf of Prospect Capital Corporation (the “Company”), you requested confirmation from the staff of the Division of Investment Management (“IM”) that it would not recommend enforcement action to the Securities and Exchange Commission (the “Commission”) if a shareholder proposal and supporting statement (the “First Proposal”) submitted by Michelle Bronsted (the “Proponent”) on May 13, 2020 is excluded from the proxy materials for the Company’s 2020 Annual Meeting (the “Proxy Materials”). The First Proposal provides:
Resolution - In order to improve director accountability to shareholders and help make Prospect Capital comparable with general industry standards regarding board terms, shareholders request our Board of Directors to adopt as a policy, and take the steps necessary, to amend our governing documents, to repeal/eliminate the “qualified” or “staggered” board, and establish annual elections for all directors following the board election of 2020.
The Company maintains that the First Proposal may be excluded from the Proxy Materials: (1) pursuant to Rule 14a-8(i)(8)(ii) and (v) because the First Proposal would improperly remove a director from office before his term expired and could otherwise affect the outcome of the election of directors at the upcoming annual meeting; and (2) pursuant to Rule 14a-8(c) because the Proponent is a nominal proponent and the actual proponent has submitted more than one shareholder proposal.
There appears to be some basis for your view that the Company may exclude the First Proposal under Rule 14a-8(i)(8)(ii) and (v) to the extent it could, if implemented, disqualify directors previously elected from completing their terms on the board and could otherwise affect the outcome of the election of directors at the upcoming annual meeting. It appears, however, that this defect could be cured if the First Proposal were revised to provide that it will not affect the unexpired terms of directors elected prior to the First Proposal’s implementation. Accordingly, unless the Proponent provides the Company with a proposal revised in this manner, within seven calendar days after receiving this letter, we will not recommend enforcement action to the Commission if the Company omits the First Proposal from its proxy materials in reliance on Rule 14a-8(i)(8)(ii).
We are unable to concur in your view that the Company may exclude the First Proposal from the Proxy Materials under Rule 14a-8(c). We are unable to conclude that each shareholder has submitted more than one proposal. Accordingly, we cannot assure the Company that we would not recommend enforcement action if the Company excludes the First Proposal from its Proxy Materials in reliance on Rule 14a-8(i)(3).
We also received a supplemental letter from the Company dated July 23, 2020 (the “Supplemental Letter”), which seeks confirmation that the staff of IM would not recommend enforcement action to the Commission if the Company excludes a revised shareholder proposal submitted by the Proponent on June 26, 2020 (the “Second Proposal”). The Company maintains that the Second Proposal may be excluded from the Proxy Materials: (1) pursuant to Rule 14a-8(e)(2) because the Second Proposal was received after the deadline for submitting proposals; and (2) pursuant to Rule 14a-8(i)(3) because the Second Proposal contains materially false and misleading statements.
There appears to be some basis for your view that the Company may exclude the Second Proposal under Rule 14a-8(e)(2) because the Company received it after the deadline for submitting proposals. Accordingly, we will not recommend enforcement action to the Commission if the Company omits the Second Proposal from its proxy materials in reliance on Rule 14a-8(e)(2).
We are unable to concur in your view that the Company may exclude the Second Proposal from the Proxy Materials under Rule 14a-8(i)(3). We are unable to conclude that you have demonstrated objectively that the proposal is materially false or misleading. Accordingly, we cannot assure the Company that we would not recommend enforcement action if the Company excludes the Second Proposal from its Proxy Materials in reliance on Rule 14a-8(i)(3).
We note that the Company did not file its statement of objections to including the Second Proposal in its proxy materials at least 80 calendar days before the date on which it will file definitive proxy materials as required by Rule 14a-8(j)(1). Noting the circumstances of the delay, we waive the 80-day requirement.
Attached is a description of the informal procedures IM follows in responding to shareholder proposals. You may contact imshareholderporposals@sec.gov if you have any questions.
Sincerely,
/s/ Lisa N. Larkin
Lisa N. LarkinSenior Counsel
Attachment
cc: Michelle Bronsted
Last Reviewed or Updated: Aug. 13, 2020