The SEC voted to amend its shareholder proposal rule to let directors block a proposal that relates to a "nomination" to the board as well as one that relates to an "election."
No, this is not the end of Christmas. As Dealbreaker reports:
[M]ost of what you need to know about the proxy access proposals can be found by looking at its biggest proponents: labor unions and union dominated pension funds. The funds and unions favor proxy access rights not because they have an altruistic urge to help shareholders in general or out of a metaphysical attachment to democracy. They supported it because they believed it would give them a leg up in negotiations with management and corporate boards. Ordinary shareholders can breath a little easier that this attempted power grab has failed.
Here's my discussion a year ago of what prompted the SEC action:
In AFSCME v. AIG the Second Circuit permitted a shareholder proposal for shareholder access to board nominations. The current SEC shareholder proposal rule doesn't allow proposals on director nominations. The SEC had dropped a proposed amendment to allow direct shareholder nominations, indicating that the prior prohibition was intact. This court ruling now permits proposals for general corporate voting rules. Thanks to this judicial spanner in the works, the SEC has clarify what the rule is. The political forces will soon be facing off at an SEC hearing, and the WSJ and the NYT are publishing their samizdats in preparation for battle.
Indeed, the politics were hot and heavy, and no doubt will continue to be. But as I testified at the SEC, this issue of internal corporate governance should be left to state law.
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