The debate over shareholder access to the proxy is on again, with the issue officially on the Securities and Exchange Commission’s agenda this month, as expected.

According to a May 12 Sunshine Act Notice the SEC has slated an open meeting on May 20 to consider whether to propose changes to the federal proxy rules to facilitate director nominations by shareholders—an issue that has dogged the agency for years. The announcement is in keeping with public statements by Chairman Mary Schapiro that the SEC would revisit the issue this month.

In April, Schapiro said the SEC would look at proposals it considered in 2003 and 2007 as well the potential impact of proposed changes to Delaware’s corporate law that have since been approved, though she said the agency would view the issues with “fresh eyes” to ensure that any procedural requirements for access are “rational, and not a means to thwart effective investor participation.”

The changes to Delaware law, which take effect Aug. 1, will permit Delaware companies to adopt bylaws letting shareholders place nominations for board directors in the proxy statement, and bylaws to reimburse proxy solicitation expenses of shareholders waging dissident campaigns.

In 2007, the Commission floated a proposal that would've allowed access for shareholders that held at least 5 percent of the company’s shares for at least a year, a threshold widely criticized as too high, but the agency ultimately voted to adopt a competing proposal that allows companies to exclude shareholder proposals that relate to a nomination or an election for board members or a procedure for such nomination or election.

In 2003, the SEC floated a failed proposal that would’ve allowed certain investors to nominate their own director after a two-step process over a two-year period that required one of two initial triggers to be tripped.

Topics