We noted with interest a new development south of the border:
SEC Adopts New Measures to Facilitate Director Nominations by Shareholders
According to the text of the new rule (PDF here),
The new rules will require, under certain circumstances, a company’s proxy materials to provide shareholders with information about, and the ability to vote for, a shareholder’s, or group of shareholders’, nominees for director.
Here in Canada, shareholders have long had proxy access — but it hasn’t been used to nominate directors. (For more on that, see this blog entry by Lisa Fairfax: Some Canadian Perspective on Proxy Access.)
This seems to suggest that it’s at least open to question whether American shareholders will actually make use of the opportunity opened up by the new SEC rule. But then, why would there be so much support for the rule if it were truly unlikely to be used? According to another posting by Lisa Fairfax, it all comes down to differences in the rules about solicitation:
…my research suggests that the solicitation exemptions are critical for ensuring the viability of the proxy access rule. Indeed, in Canada, where there is a proxy access rule that goes virtually unused, corporate governance experts note that one of the reasons for the non-use is shareholders’ inability to solicit on behalf of their nominees outside of the limited information printed in the corporation’s proxy statement. In this regard, the fact that solicitation basically requires the filing of a separate proxy statement apparently makes the Canadian proxy access rule unattractive. By comparison, the fact that the new US rules enable shareholders to solicit without such a filing should make the US rules more attractive, and hence more likely to be utilized by shareholders.
Also worth noting: The closest thing we’ve seen to Canadian shareholders using proxy access to nominate directors is found in shareholder proposals that have occasionally been put forward to require nominating committees to nominate more nominees than there are vacancies on the board, effectively giving shareholders a degree of choice. To the best of our knowledge, however, such proposals have never actually been adopted.