Activist investor groups and proxy access advocates hoping for the reinstatement of mandatory access to the corporate proxy should not hold their breath.
Speaking at last week’s Council of Institutional Investors spring conference, SEC commissioner Troy Paredes said he does not see the commission pursuing rule 14a-11 and launching a challenge to the court ruling that overturned its implementation, at least in the near term.
Paredes told Jane Hamblen, chief legal counsel at the State of Wisconsin Investment board, that he had voted against 14a-11 both at the policy formation and implementation stages because of the mandatory nature of the rule.
‘I think the private ordering rules under 14a-8 are the right way to go and we support that. We need to give private ordering time to play out and see how things develop,’ he explained.
‘Investors are getting access to more information that provides them with a greater ability to make informed choices about the boards that represent them. Investors have a useful tool with 14a-8 and we will be monitoring the situation closely this year.’
A handful of large US companies have voluntarily implemented proxy access and several others face proposals from shareholders. It is expected there will be in the area of 40-50 proposals faced by companies this year.
Those investors looking to put forward an access proposal need to be careful not to overreach with the proposal language.
In early March, the SEC upheld no-action letters from 10 companies on the grounds that they violated 14a-8 subsections (b) and (c), meaning the proposals were deemed to contain more than one proposal or were not self-contained.
The message for investors looking to file a successful proposal that will survive the no-action process is to closely follow the United States Proxy Exchange’s model proxy access proposal.
This article originally appeared on the website of Corporate Secretary, the sister publication of IR magazine.
