Q: May a registrant rely on Rule 14a-6(a) to file a proxy statement in definitive form in a contested proxy solicitation for the election of directors by simply not referring to the solicitation in opposition in its proxy statement when the registrant knows, or reasonably should know, of the solicitation in opposition?

A: No. Rule 14a-9 prohibits a registrant from omitting a material fact from its proxy statement at the time of the solicitation. The staff believes that it is inconsistent with this provision of Rule 14a-9 when the initial definitive proxy statement does not disclose the existence of a solicitation in opposition when the registrant knows, or reasonably should know, of a solicitation in opposition. The staff believes the existence of alternative nominees is material to security holders' voting decisions. Further, it is not appropriate for the registrant to omit this information from its initial proxy statement and wait to address the solicitation in opposition at a later time in the solicitation. It is also inappropriate to merely disclose the existence of the solicitation in opposition in a press release issued at the same time the registrant mails to shareholders the definitive proxy statement that omits the information.

Q: When the parties to a proxy contest settle that contest, what filing and disclosure obligations arise?

A: The staff believes that, pursuant to Rule 14a-9, shareholders are entitled to disclosure when a proxy contest is settled because the settlement may nullify their previously-granted proxy. This is the case where a shareholder grants a proxy to an insurgent group that later terminates its solicitation because of a settlement with the company. Even where the insurgent group has filed a proxy statement but settles with the company before it is disseminated, shareholders may learn of the contest through the filing or other publicity surrounding the dispute. They are entitled to know the terms of any settlement. It is the company's obligation to provide this disclosure to its shareholders. If the insurgent received proxies, the insurgent also should take steps to notify those shareholders that their proxies will not be voted. Means of dissemination by the company and the insurgent may include a press release, proxy supplement, letter to shareholders or other means reasonably calculated to inform shareholders of the new development. These materials should be filed, generally as definitive additional proxy materials.