SEC to weigh 'universal'
proxies sought by investors
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[October 26, 2016]
By Ross Kerber
(Reuters) - U.S. securities regulators on Wednesday will consider
allowing investors to pick directors from a single ballot, in what would
be the latest move to open up the governance process of large
The rule changes to be considered by the U.S. Securities and Exchange
Commission could also empower activist investors looking to add
directors to corporate boards, depending on the recommendations of the
Reformers want to allow corporations to use a so-called "universal proxy
card" in contested director elections, which would allow shareholders to
pick candidates from a single form rather than from multiple ones.
Some executives worry the changes could make their boards vulnerable to
disruptive activist campaigns, said Blair Petrillo, an attorney at the
law firm of Reed Smith LLP whose clients include corporations and
But Petrillo said some changes will probably be adopted eventually.
"There has been enough momentum that some form of universal proxy ballot
is likely," she said.
The SEC also on Wednesday will consider rules related to "disclosure
about voting options and voting standards" on board elections, according
to a notice, which could prod companies to give more details about their
Just how much influence to give shareholders over corporate boards has
been a hot topic since the financial crisis, amid calls for directors to
take a more aggressive role.
The SEC has already made it easier for groups of small shareholders to
run their own candidate for corporate boards, known as "proxy access."
A proponent of a universal ballot has been the Council of Institutional
Investors, whose members include large pension funds and endowments.
[to top of second column]
U.S. Securities and Exchange Commission Chair Mary Jo White is
interviewed at the Reuters Financial Regulation Summit in
Washington, US May 17, 2016. REUTERS/Gary Cameron
letter to the SEC last year the group argued that a universal ballot would help
both companies and shareholders because each nominee would stand on their own
merit rather than be part of a slate put forward by the corporate or a
challenging activist firm.
Board candidates, the council wrote, would not be able to "hide in the
Meanwhile an opponent has been the U.S. Chamber of Commerce. In its own letter
to the SEC last year the business lobbying group argued a universal proxy rule
would facilitate proxy fights by individual shareholders who might be looking to
advance their own agendas rather than the good of the company.
"Promoting proxy contests should not be a goal of the SEC," the Chamber wrote.
(Reporting by Ross Kerber in Boston; Editing by Lisa Shumaker)
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