In an address before the Practicing Law Institute in New York yesterday, SEC Chairman Mary Schapiro announced that the Commission staff will be looking into the proxy process even further with the "goal of enhancing the system through which shareholders exercise their franchise." The Commission's proposals regarding nomination of directors by shareholders, or "proxy access," have received much attention from the press, industry and the public, generating more than 500 comment letters. Schapiro assured her audience that the Commission takes, "the comment process very seriously and I believe the final product resulting from that process will be better as a result of the comments that we receive." The Chairman state that her goal for finalizing the "proxy access" reforms is early 2010, in time for the 2011 proxy season.
In addition to the well publicized "proxy access" reforms, Chairman Schapiro also announced initiatives to enhance the information provided in proxies, and simplify and expand the e-proxy process "to permit issuers and other soliciting persons to more effectively use the notice and access model." She also described plans for "the elimination of broker discretionary voting for uncontested elections of directors at shareholder meetings," and proxy mechanics. In particular, the Commission is interested in "overvoting," where a brokers' customers may cast more votes than the broker is entitled to vote on their behalf, and "empty voting," where holders of shares "vote shares even though they lack the full economic interest that goes along with share ownership."
Schapiro stated that, int the short term, the reforms of voting mechanics would take the form of a concept release, rather than a rule proposal, in order for the Commission and its staff to have the opportunity to hear from the widest range of commenters on alternative approaches and potential problems.
The full text of Chairman Schapiro's November 4 address is available at: http://www.sec.gov/news/speech/2009/spch110409mls.htm