SEC Plans to Propose Proxy Access in May - 6 Apr 2009

Monday, April 6, 2009

SEC Plans to Propose Proxy Access in May
Submitted by: Ted Allen, Publications

http://blog.riskmetrics.com/2009/04/sec_plans_to_propose_proxy_acc.html

Mary
Schapiro, chair of the Securities and Exchange Commission, said the SEC
will propose several proxy access alternatives in May to allow
shareholders to nominate director candidates to appear on management
proxy statements.

The details of the alternatives are still under discussion, but the
proposals likely will include a “direct access” rule and a mechanism to
allow shareholders to file access bylaw proposals at companies,
Schapiro said during a speech today to the Council of Institutional
Investors (CII) in Washington. SEC officials are looking at whether to
have a sliding scale (based on company size) for the minimum economic
stake required to nominate board candidates; that percentage would be
smaller at large-cap firms.

“We want to make sure that we have rational requirements—not a means
to thwart investor participation,” Schapiro said, prompting applause
from the CII audience.

Schapiro said the SEC is committed to addressing proxy access this
year, but she acknowledged that the issue “will be the most
controversial issue we address this year after short-selling.”

The SEC has been grappling with the thorny issue of proxy access for
decades. The commission proposed a market-wide rule in 2003 that called
for a two-step process for shareholders to obtain access, but then
abandoned that proposal in 2005 amid opposition from companies and Bush
administration officials. In 2007, the SEC proposed a 5 percent
ownership requirement (and various disclosure mandates) for
shareholders to file bylaw proposals to establish access procedures.
Investor advocates complained that the ownership and disclosure
standards were too rigorous, while many companies opposed the idea of
access altogether. A divided commission ultimately adopted a rule to
bar investors from filing access proposals.

Schapiro said the SEC was reviewing the 2003 and 2007 proposals, as
well as reviewing what international markets have done. She said the
commission specifically was looking at how Scandinavian countries have
addressed the issue.