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
March 9 — The Council of Institutional Investors urged the SEC, in the wake of its proxy voting roundtable, to make the requirement for universal proxies a rulemaking priority.
In a March 5 letter, CII said the rulemaking is broadly supported by the investor community, and would lower or eliminate impediments for investors to exercise their fundamental shareholder rights.
“Accepting those two criteria, there is little question that rulemaking to facilitate universal proxies should be given a high priority on the” Securities and Exchange Commission's agenda, said the letter, signed by CII General Counsel Jeff Mahoney.
SEC spokesman John Nester declined to comment on the correspondence or to provide updates as to what steps the commission expects to take going forward.
Under current state and federal requirements, investors voting by proxy—unlike investors who attend meetings in person—cannot “split their ticket” by picking and choosing between candidates on the management slate and those supported by shareholder proponents.
A universal proxy card would allow shareholders to choose among all eligible director candidates.
At the SEC's Feb. 19 proxy voting roundtable, institutional investor and corporate participants clashed over whether the commission should mandate universal ballots.
While corporate representatives and attorneys suggest that they would be costly and lead to more proxy fights, investors argued that they would level the playing field for shareholders that can't attend annual meetings.
CII petitioned the SEC in January 2014 to amend its proxy voting rules 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.
However, universal proxies are not listed in the SEC's latest regulatory flexibility agenda or on the agency's list of long-term rulemaking items. However, SEC officials suggested in 2014 that although there is no active rulemaking on the matter, the staff still is thinking through ways in which the rules may be improved.
In its March 5 letter, CII argued that universal proxies would lessen investor confusion and lower voting costs.
CII also argued that it would not be difficult for the SEC to provide implementation guidance on the mechanics of the process. “The guidance might simply require that the cards ‘list the names of all director nominees clearly, equally in terms of form, and on the front of the proxy card,'” it said. It added that the SEC guidance may also “appropriately require that the nominees be grouped by slate.”
To contact the reporter on this story: Yin Wilczek in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Ryan Tuck at email@example.com
CII's letter is available at http://www.sec.gov/comments/4-681/4681-7.pdf.
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 firstname.lastname@example.org.
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 email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)