Proxy access is shorthand for a crucial mechanism that gives shareowners a meaningful voice in corporate board elections. It refers to the right of shareowners to place their nominees for director on the company's proxy card. This lets investors avoid the enormous cost of sending out their own proxy cards when they are dissatisfied with a corporate board and want to run their own candidates for director.
The Council believes that proxy access would invigorate board elections and make boards more responsive to shareowners and more vigilant in their oversight of companies.
Shareowner access to the proxy has been standard practice for years in many countries, but not the United States, where board elections are one-sided affairs: The company mails proxy ballots that list only its slate of nominees for board seats.
In 2010, Congress paved the way for a U.S. proxy access mechanism by including a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act that reaffirmed the authority of the Securities and Exchange Commission (SEC) to issue a proxy access rule. A month later, on Aug. 25, 2010, the SEC approved a proxy access rule aimed at making it easier for shareowners to nominate their own candidates for director.
But a lawsuit challenging the rule prompted the SEC to put the rule on hold. The U.S. Chamber of Commerce and the Business Roundtable sued the SEC in the D.C. Court of Appeals on Sept. 29, 2010. The Council, TIAA-CREF and 14 other Council member pension funds submitted an amicus ("friend of the court") brief supporting the SEC rule. On July 22, however, the court ruled in favor of the BRT and Chamber. On September 6, the SEC announced that it would not to seek a rehearing of the decision by the court. However, the SEC will allow shareowners to file proxy resolutions seeking access to the proxy at companies selectively.
Why Proxy Access Matters
Council Resources
Council Statement on Court Ruling
Council Statement on SEC Proxy Access Decision (Sept. 7, 2011)
Council Statement on Shareowner Proposals Addressing Proxy Access (Nov. 28, 2011)
