The upcoming 2013 proxy season will likely be impacted by new policies issued by proxy advisers, as well as shareholder activists taking advantage of previously adopted rules, rather than by recent legislative or rulemaking initiatives. In addition, aspects of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) continue to lurk in the background awaiting rulemaking initiatives by the US Securities and Exchange Commission (the “SEC”). Against this background, this Client Alert summarizes key issues that public companies should consider in preparing their Form 10-Ks and annual proxy statement disclosures, as well as in reviewing their corporate governance practices.
2012 Proxy Access Trends and Recent Guidance Issued Under Amended Rule 14a-8 -
2012 Proxy Access Trends -
On August 25, 2010, the SEC adopted changes to the federal proxy rules that ultimately became effective on September 20, 2011 and enable shareholders to submit proposals for inclusion in a company’s proxy statement, pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 (the “Exchange Act”), that seek to amend provisions in a company’s organizational documents regarding director nomination procedures (the “Private Ordering Rule”). The Private Ordering Rule was necessary because the SEC had adopted an amendment to Rule 14a-8(i)(8) in 2007 permitting companies to exclude from their proxy materials any proposal relating “to a nomination or an election for membership on the company’s board of directors… or a procedure for such nomination or election.” As a result, the 2013 proxy season is the second proxy season during which shareholders may submit proposals for inclusion in a company’s proxy statement seeking to amend provisions in a company’s organizational documents relating to proxy access for elections in general. Furthermore, while Rule 14a-8 proposals are generally precatory (i.e., non binding), the one exception is amendments to a company’s bylaws. As a result, starting in 2012, shareholders have had the opportunity to establish proxy access standards on a company-by company basis through the Rule 14a-8 process, whether on a precatory or binding basis.
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