SEC Chairwoman Mary Shapiro recently announced that the Commission's proposed changes to proxy access rules would not become final until sometime in 2010 – at the earliest. These rule changes, designed to give shareholders the ability to nominate their own board candidates, have been long awaited and are sorely needed. Chairwoman Shapiro reports that the delay has been caused by the overwhelming volume of comments to the proposed rules: "We have received hundreds of comments that we are reviewing to ensure that our rules are fair and appropriate."
Under the proposed rules, a public company would have to allow its shareholders the right to include their own board nominees in the company's proxy materials, assuming state law or the company's bylaws did not preclude this right. Shareholders would have to meet certain other criteria: they would have to meet minimum stock ownership requirements; they would have to have held the company's stock for a certain length of time and certify that they intend to remain holders; and they would have to guarantee that their nomination is not part of an effort to obtain corporate control. The typical institutional investor would meet this criteria easily, and we strongly favor the ability of such an investor to voice its preference for board nominees.
Unfortunately, the implementation delay eliminates any hope that proxy access rules will become final by the end of this year, as originally planned. Hopefully, the SEC will act quickly enough to have final rules in place by next spring's proxy season.
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