(The article featured below is a selection from SEC No-Action Letter Weekly, which is available to subscribers of that publication.)

Bank May Omit TARP-Related Executive Pay Reform Proposal from Proxy Materials

The SEC's Division of Corporation Finance has agreed that SunTrust Banks, Inc. may omit from its proxy materials a shareholder proposal relating to executive compensation in connection with the Troubled Asset Relief Program established by the Economic Emergency Stabilization Act. SunTrust sought to omit the proposal for a number of reasons, but the staff concurred with the bank's view that the proposal was vague and indefinite due to its failure to impose a specific limitation on the duration of the proposed reforms.

The shareholder proposal was submitted by the International Brotherhood of Teamsters Fund and addressed reforms to be implemented if the bank chose to participate in TARP. The proposal was submitted on October 23 and the bank announced its intention to participate in TARP on October 27. On November 17, SunTrust announced the completion of its sale of newly-issued preferred shares to the Treasury under the program.

The proposal outlined nine separate limitations on senior executive compensation, one of the bases on which SunTrust sought to omit the proposal. SunTrust contended that the proposals were all separate proposals because many of them had been the subject of separate no-action letters. SunTrust also argued that the proposal fell under the ordinary business exclusion and that the proposal had been substantially implemented. The staff did not address these other bases for omission.

Although the fund said that its intent was that the reforms remain in effect as long as SunTrust participated in TARP, the staff noted that the proposal appeared to impose no limitation on the duration of the specified reforms. Accordingly, the staff concurred with SunTrust that the proposal could be omitted from the bank's proxy statement under Rule 14a-8(i)(3).