Proxy Access for Shareholder Proposals and Director Nominations
Written on August 26, 2010 by Administrator
SEC Adopts New Measures to Facilitate Director Nominations by Shareholders
FOR IMMEDIATE RELEASE
2010-155
FACT SHEET: FACILITATING RIGHTS OF SHAREHOLDERS
TO NOMINATE DIRECTORS
SEC Open Meeting
August 25, 2010
The Proxy Voting Process
Public companies across the country hold elections to select members of their boards of directors, which oversee the management of the company. In most cases, the existing directors nominate the slate of candidates and the company sends information to the shareholders through so-called proxy materials, so those shareholders have information to vote their shares.
But, because the shareholders rarely have any input into the slate of candidates, they are not always able to vote for the person they believe may be best suited to fill the post.
In many situations, companies permit shareholders to show up to the annual shareholder meeting where the election occurs and nominate different candidates than the ones on the ballot. But, by then it is too late to be meaningful because the proxy votes will have already been cast.
As a result, shareholders who wish to nominate their own candidates today must launch a proxy fight in which they mail out their own ballots.
Recent Developments Regarding Proxy Access
Last year, the Commission proposed amendments to its rules that would provide shareholders with a meaningful ability to exercise their state law rights to nominate and elect directors.
Since then, the SEC has received and reviewed more than 600 public comments about its proposal.
And, more recently, Congress passed a new financial reform law that specifically states the SEC has authority to adopt rules that require companies to include shareholder board nominees in company proxy materials.
The Rules
The rules approved today are the result of careful consideration of the comments received during the public comment process. Under the final rules, shareholders who otherwise are provided the opportunity to nominate directors at a shareholder meeting under applicable state or foreign law will be able to have their nominees included in the company proxy materials sent to all shareholders.
Shareholders also have the ability to use the shareholder proposal process to establish procedures for the inclusion of shareholder director nominations in company proxy materials.
INCLUDING NOMINEES IN THE COMPANY’S PROXY MATERIALS
New Exchange Act Rule 14a-11
