Multiple matters that are so inextricably intertwined as to effectively constitute a single matter need not be unbundled. To illustrate this principle, the C&DI poses a hypothetical in which management of a reporting company has negotiated with holders of a series of its preferred stock to reduce the dividend rate on the preferred stock in exchange for an extension of the maturity date. The C&DI asks whether a single proposal submitted by management to holders of the company's common stock to approve a charter amendment containing these modifications must be unbundled into two separate proposals under Rule 14a-4(a)(3), one relating to the reduction of the dividend rate and the other relating to the extension of the maturity date. In this particular case, the Division's staff would view the two matters as being inextricably intertwined because each relates to a basic financial term of the same series of capital stock and was the sole consideration for the other provision. However, the staff would not view two arguably separate matters as being inextricably intertwined simply because the matters:

(Question 101.01.)

The Division's staff would not ordinarily object to the bundling of any number of immaterial matters with a single material matter. The C&DI describes a situation where management of a reporting company intends to present an amended and restated charter to shareholders for approval at an annual meeting, with proposed amendments that would:

In this particular case, the Division's staff would not object to the bundling of these amendments into a single proposal. The C&DI notes that although there is no bright-line test for determining materiality in the context of Rule 14a-4(a)(3), companies should consider whether a matter substantively affects shareholder rights. In the example given, the declassification amendment would be considered material, while the amendments relating to par value and preferred stock would not be since neither substantively affects shareholder rights. Therefore, the three amendments in the example could ordinarily be included in a single restatement proposal since only one would be considered material. The C&DI notes, however, that if management knows or has reason to believe that a particular amendment that does not substantively affect shareholder rights is nonetheless one on which shareholders could reasonably be expected to wish to express a view separate from their views on the other amendments that are part of the restatement, the amendment should be unbundled.

The C&DI also notes that the analysis under Rule 14a-4(a)(3) is not governed by the fact that, for state law purposes, the amendments could be presented to shareholders as a single restatement proposal. For example, if the restatement proposal also included a charter amendment to add a provision allowing shareholders representing 40% of the outstanding shares to call a special meeting, the staff would view this amendment as material and therefore required to be presented to shareholders separately from the declassification amendment.

(Question 101.02.)

Multiple changes to an equity incentive plan presented in a single proposal do not need to be unbundled. The C&DI describes a situation where management intends to present for a vote of shareholders a single proposal covering an omnibus amendment to a registrant's equity incentive plan that would:

Although the staff will generally object to the bundling of multiple, material matters into a single proposal, it will not object to the bundling of multiple changes to an equity incentive plan as long as the individual matters would require shareholder approval under state law, the rules of a national securities exchange or the company's organizational documents if presented on a standalone basis. This applies even if:

(Question 101.03.)