The court in Business Roundtable also decided that the Commission “arbitrarily ignored the effect of the final rule upon the total number of election contests.” The Commission did include data on the total number of proxy contests and included data on the total number of access challenges. In adding the two numbers together, there would be no more than around 100 proxy contests/access challenges each year out of approximately 12,000 public companies.
The court, however, faulted the SEC for failing to determine whether some of the access challenges would replace proxy contests, thereby lowering the total number of challenges/contests. Why was this important? Apparently, the total number of contests were necessary to know “whether the rule will facilitate enough election contests to be of net benefit.” See Id. (anticipating "beneficial effects" because the rule will "mak[e] election contests a more plausible avenue for shareholders to participate in the governance of their company").
What the court didn't explain was why it was material to know the actual number of proxy contests/access challenges given that the maximum number was very small. With the maximum number at 100, it is hard to see the relevance of knowing that in fact the actual number might be 90 (to the extent some shareholders opted for an access challenge in place of a proxy contest). Neither number presents a serious risk that an election contest will occur.
In short, the court was faulting the Commission for failing to calculate a number that was in fact immaterial to the economic analysis.
For more thoughts on the court's opinion in Business Roundtable, see Shareholder Access and Uneconomic Economic Analysis: Business Roundtable v. SEC. Primary materials on the case, including the relevant briefs, can be found at the DU Corporate Governance web site.