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...
By Yin Wilczek
Feb. 18 — The U.S. Chamber of Commerce Feb. 18 urged the SEC not to require universal proxy cards at public companies, saying the action would only increase “the frequency and ease of proxy fights.”
In a letter to Securities and Exchange Commission Chairman Mary Jo White, the chamber's Center for Capital Markets Competitiveness said the agency historically has remained “neutral” with respect to interactions between companies and their shareholders.
“We do not understand why the SEC would now pursue a policy that would increase the regularity of contested elections or cause greater turnover in the boardroom,” the chamber said.
The SEC Feb. 19 held a proxy roundtable to consider, among other topics, whether changes should be made to its proxy rules to facilitate the use of universal proxy ballots by management and proxy contestants.
Investors voting by proxy cannot “split their ticket” by picking and choosing between candidates on the management slate and those supported by shareholder proponents.
In January 2014, the Council of Institutional Investors petitioned the SEC for amendments to 1934 Securities Exchange Act Section 14 to create a “fairer voting process” for proxy contests. The group urged the commission to eliminate the requirement to obtain a nominee's consent to be named on a proxy card in contested elections and to allow shareholders to vote for their preferred combination of shareholder and management nominees on a single card.
This would ensure “that investors voting by proxy have the same practical ability to vote their shares for their preferred mix of nominees that they would have if they attend a shareholder meeting in person,” the CII said in the petition.
The SEC also is mulling a more limited fix recommended by its Investor Advisory Committee (IAC). In July 2013, the IAC suggested that the commission provide proxy contestants with the choice of using universal ballots in connection with short slate director nominations.
At least one SEC commissioner has come out in support of universal ballots. In a May 2014 speech, Commissioner Kara Stein said the SEC should allow, if not mandate, universal proxy ballots to ensure that shareholders who don't attend meetings aren't “stratified”.
In its letter, the chamber suggested that universal proxy cards may enable a “small vocal minority” to advance their “own parochial agenda” without regard to the broader interests of the company or other shareholders.
“Proxy contests are significantly disruptive to public companies, often to the ultimate detriment of their investors,” the chamber said. “Promoting proxy contests should not be a goal of the SEC, as boards of directors would be increasingly forced to focus a company’s resources in support of board-nominated candidates, detracting from managing and overseeing company business.”
To contact the reporter on this story: Yin Wilczek in Washington at email@example.com
To contact the editor responsible for this story: Ryan Tuck at firstname.lastname@example.org
The chamber's letter is available at http://op.bna.com/car.nsf/r?Open=ywik-9tusw2.
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)