SEC Proposes Rules to Adopt Universal Proxy Cards in Contested Director Elections

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At an open meeting held on October 26, 2016, the Securities and Exchange Commission (SEC) voted two to one to propose amendments for the mandatory use of universal proxy cards and additional voting options and disclosure regarding voting standards in director elections. Under current proxy rules, in a contested election, two separate proxy cards are used to vote: one card provided by the registrant for management’s slate of directors and a separate card provided by the dissident investor waging the contest for the dissident investor’s slate of directors. Shareholders voting via proxy must use one proxy card or the other. A shareholder voting in a contested election must attend the shareholder meeting in person if it wants to vote for individual directors from each slate. A universal proxy card or ballot would eliminate this discrepancy between in-person and proxy voting by allowing shareholders to vote by proxy for a combination of management and dissident nominees.

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