Proxy access allows shareowners to place their nominees for director on the company’s proxy card. In the United States, unlike most of Europe, public companies are not required to provide shareowners with access to the proxy to nominate directors. The only way that shareowners can present alternative director candidates at a U.S. public company is by waging a full-blown election contest. For most investors, that is onerous and prohibitively expensive.
The Council believes that a measured right of access would invigorate board elections and would make boards more responsive to shareowners, more thoughtful about whom they nominate to serve as directors and more vigilant in their oversight of companies.
The Securities and Exchange Commission has long held that companies can exclude shareowner proposals relating to the election of directors. But in September 2006, a federal appeals court ruling called the SEC stance into question. As a result, in July 2007, the SEC proposed two conflicting proxy access initiatives: one that would definitively allow companies to exclude proxy access shareowner resolutions from proxy statements, and one that would permit an owner, or group of owners, who have held 5 percent of a company’s stock for at least a year to propose changes in the company’s bylaws governing how directors are elected.
The Council opposed both proposals. But on November 28, 2007, the SEC voted 3-1 to let companies reject shareowner proposals that relate to board nominations or elections. However, SEC Chair Christopher Cox has said the commission plans to reconsider the adoption of some form of proxy access for shareowners. Commissioner-nominees Elisse Walter, Luis Aguilar and Troy Paredes told Senate Banking Committee Chair Chris Dodd (D-Conn.) on June 2, 2008, that they supported revisiting the idea.
Click here to view the Council’s policy on proxy access.
SEC News and Action
February 21, 2008
SEC Strikes Down Proxy Access Proposals (Council Governance Alert)
December 6, 2007
Amendment allowing companies to exclude proxy access shareowner resolutions from proxy statements (adopted by the SEC on Nov. 28, 2007)
November 28, 2007
SEC press release on adoption of proposal barring access resolutions
November 28, 2007
SEC Commissioner Nazareth’s statement criticizing commission action
October 1, 2007
Letter from SEC Director John White to the Council on proxy access
July 27, 2007
Proposal to permit binding proxy access shareowner resolutions in certain circumstances
Council Testimony
November 14, 2007
Jeff Mahoney, before the Senate Committee on Banking, Housing, and Urban Affairs
September 27, 2007
Ann Yerger, before the House Committee on Financial Services
Other Council Comment
November 28, 2007
Council press release on SEC decision to let companies exclude proxy access shareowner resolutions
Council Letters
Comment Letters from Council Members