Weighing in on what has been a heated debate—and one drawing out some strange bedfellows—on Feb. 11, the Securities and Exchange Commission issued a “no action” letter to Johnson & Johnson stating that it will not intervene if the company excludes from its proxy materials a shareholder proposal that would force investor disputes into mandatory arbitration.
Mandatory binding arbitration is a contract provision that requires the parties to resolve contract disputes before an arbitrator rather than through the legal system. The proposed bylaw would also prohibit class actions and included a five-year sunset provision unless reapproved by shareholders.
