Bloomberg BNA’s Corporate Law & Accountability Report is available on the Corporate Law Resource Center. This news service keeps corporate practitioners informed of legal developments of...
Oct. 26 — Activist-backed candidates would have an easier time getting onto corporate boards under an Oct. 26 proposal from the Securities and Exchange Commission (RIN: 3235-AL84).
The agency's proposal, backed by a 2-1 vote, would require “universal” ballots showing all director candidates in contested elections so that shareholders who vote by proxy can split their tickets between management- and investor-backed nominees.
Currently, shareholders who don't vote in person must choose between the two slates.
“These changes would allow shareholders to choose individual director nominees whom they believe represent the best mix of skills and qualifications to run their company without being needlessly confined to an all-or-nothing vote on slates of nominees chosen by management or dissidents,” SEC Chairman Mary Jo White said at an Oct. 26 commission meeting in Washington.
Commissioner Michael Piwowar dissented, warning the proposed changes would empower activists and lead to more proxy fights. “The ultimate losers in these fights will be the public shareholders of these companies,” he said at the meeting.
The SEC's chief economist Mark Flannery said the proposal isn't intended to benefit either management or dissidents. But even if it does change board composition and shareholder influence, it isn't clear how that would ultimately impact a company's performance, he said at the meeting.
Republican lawmakers have tried to block agency action on universal ballots through a rider to a federal spending bill (132 CARE, 7/11/16).
The commission's proposal also sets out notice requirements and filing deadlines for proxy contestants. The proposed changes include a minimum solicitation requirement under which dissidents would be required to solicit shareholders representing at least a majority of the voting power of shares that can be voted at the election. The public has 60 days to weigh in on the proposed changes after they are published in the Federal Register.
To contact the editor responsible for this story: Yin Wilczek at firstname.lastname@example.org
An SEC fact sheet is available at https://www.sec.gov/news/pressrelease/2016-225.html .
The proposal is at https://www.sec.gov/rules/proposed/2016/34-79164.pdf.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)