The Securities and Exchange Commission plans to forge ahead with a controversial rule to allow proxy access in 2010, along with other initiatives aimed at overhauling the entire proxy voting process, the head of the agency said.

In Nov. 4 remarks before attendees of a Practising Law Institute conference, SEC Chairman Mary Schapiro reaffirmed her commitment to bringing final rules on proxy access to the full Commission for consideration early in 2010.

"We recognize that this timing means that any new rules will not be in effect for the 2010 proxy season, but we think it's far more important that we adopt the right rules—rules that make sense and are workable—than it is for us to act rashly."

Under the SEC's so-called proxy access proposal , shareholders who satisfy certain eligibility and procedural requirements would be able to have a limited number of nominees included in the company's proxy materials. The proposed rules would also allow shareholders to submit their own proposals to create an alternative proxy access process for disclosing shareholder-nominated candidates if it doesn't conflict with SEC rules.

In an effort to thwart a legal challenge, which is expected if a final rule is approved, the House Financial Services Committee on Nov. 4 passed an amendment by Congresswoman Maxine Waters (D-Calif.) that would authorize the SEC to implement a proxy access rule. The U.S Chamber of Congress and The Business Roundtable oppose the measure.

Schapiro said the SEC is still evaluating the more than 500 comment letters it received on the controversial proposal.

Meanwhile, the staff is working on education efforts about the impact of the elimination of broker discretionary voting for uncontested elections of directors at shareholder meetings.

"We understand that the implementation of the revised rule heightens concerns about shareholder participation and education, which need to be addressed," she said. "Our staff is working hard on these education efforts, and I believe this is an area where we can continue to work together to develop pragmatic solutions to these challenges."

Schapiro said she has also asked the staff to conduct a "comprehensive review of the mechanics by which proxies are voted and the way in which information to shareholders is conveyed" and to draft a concept release in the coming months to seek public comment on a variety of areas, such as ways to ensure accuracy in vote tabulation; if SEC rules adequately address whether votes are cast by those with an economic interest in the securities, to address issues of "over-voting" and "empty voting," and ways to address low voting rates by retail investors, such as client-directed voting where brokers would be allowed to solicit voting instructions from their shareholder clients in advance of the company proxy materials.

Schapiro said the concept release will ask about the need to allow beneficial owners of a company's securities to object to having their names and addresses disclosed to the company, or whether to instead permit companies to learn the identities of all of their shareholders so they can communicate more directly and cost-effectively with them.

The concept release will also ask about the role of proxy advisory firms in corporate voting.

"We'll probe the need for rules to ensure that advisory firms are basing their research and recommendations on accurate and reliable information," Schapiro said. "And, that they are providing adequate disclosure of any conflicts of interest they may have in providing voting recommendations."

The release will also ask whether shareholders should be more easily able to communicate with one another, and whether any rule amendments are necessary to ensure that the federal proxy rules are flexible enough to adapt to changing legal developments at the state level, such as dual record dates for annual meetings.

In the coming year, Schapiro said the SEC will undertake a review of the line item disclosure requirements in companies' quarterly and annual filings to determine whether any information should be omitted or added.

While she mentioned the SEC's proposed proxy disclosure enhancements, which would require issuers to provide shareholders more information about the qualification of directors and nominees, the structure of board governance, compensation consultant fees and conflicts, and the relationship between a company's overall compensation policies and its risk profile, Schapiro didn't offer any hints as to when those rules might be finalized.

However, she noted that the SEC is "sensitive to the fact that investors are not well-served by a proxy statement that is too long to digest."

"We're not interested in lots of information; we're interested in meaningful information," she said.

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