The Securities and Exchange Commission staff has rebuffed a request by Hewlett-Packard to omit an investor proposal that seeks a bylaw or charter amendment to require a shareholder vote on any future "poison pill" takeover defense.

The binding proposal was filed by shareholder Nick Rossi, who argues that it would "improve the lack of accountability" on the company's board. H-P's board was criticized by some institutional investors and lawmakers after the firm disclosed a boardroom leak probe last year that sought the phone records of directors and journalists. The company's chairman, general counsel, and three other executives later resigned.

In seeking no-action relief, H-P argued that Rossi's proposal was excludable under SEC Rule 14a-8(i)(10) because the company already "substantially implemented" the proposal by adopting a pill policy in 2003. That policy "allows the submission of any poison pill to a stockholder vote," but it includes a "fiduciary out" provision that allows the board to act on its own, if directors conclude that such a vote "would not be in the best interests of shareholders under the circumstances."

The Palo Alto, California-based computer maker, which doesn't have a pill in place, also argued that the fiduciary out provision is required under Delaware law for directors to satisfy their fiduciary duties. H-P cited recent instances where the SEC staff granted no-action relief to Radio Shack, Tiffany, and Home Depot based on that argument.

H-P also sought to exclude Rossi's proposal by asserting that it contains irrelevant and materially false and misleading statements. The proposal calls for retaining a new outside attorney and raised the issue of proxy access. The staff of the Corporation Finance Division was not persuaded by H-P's arguments and issued a Dec. 21 letter denying the company's no-action request. (H-P also is seeking to exclude a proxy access proposal filed by four pension funds. For more on that proposal, see the lead story in this week's issue.)

Unlike poison pill proposals filed by investors last season, Rossi's proposal did not ask H-P to amend its charter or bylaws "if practicable." Last year, the SEC staff allowed Electronic Data Systems and other firms to exclude bylaw proposals that contained that phrase, as the SEC staff concluded such qualified proposals were not substantially different from the pill policies that those firms had in place.

Four other companies have filed no-action requests to exclude 2007 bylaw proposals that are similar to the resolution at H-P, but it was not known as of press time whether the SEC staff had ruled on those requests.