Preparing for the 2012 Proxy Season

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As the directors and officers of public companies know, the rules and regulations governing proxy materials are dynamic and continually changing. In the past year, for instance, one proxy access rule has been vacated and another has been implemented. This is a summary of the changes in the past year that may affect companies’ 2012 proxy materials.

The Mandatory Proxy Access Rule Vacated (Rule 14a-11).

In the Summer 2011, the SEC’s year-old but yet-to-be-implemented Rule 14a-11 was invalidated by the US Court of Appeals, DC Circuit. The SEC decided that, while it may revisit the issue in the future, it would not appeal the ruling. This means that the issue of mandatory proxy access has been shelved for now. The mandatory proxy access rule would have allowed shareholders or groups of shareholders holding at least 3% of the voting power of a company’s securities (who must have also held their shares for at least three years) to force the company to include that group’s nominees for directors in their proxy materials.

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