The Securities and Exchange Commission plans to propose new rules, perhaps early this summer, to increase shareholder participation in the proxy process, according to chairman Christopher Cox. The new rules might be in place in time for the 2008 annual meeting season.
An SEC spokesman said Cox made the remarks to reporters on Monday, following the commission’s roundtable on proxy matters and such issues as shareholder democracy. At the roundtable, academic experts, corporate and investor representatives, and two vice chancellors from the Delaware Court of Chancery, Stephen Lamb and Leo Strine Jr., discussed strengths and weaknesses in the current system.
According to the Associated Press, Cox told reporters that he expects the SEC to develop a proposal that addresses the ability of shareholders to nominate corporate directors and to place the names of those candidates on proxy ballots. In recent years, the commission has reviewed various ways to facilitate shareholder nomination of directors but has made little progress.
Last fall, a federal court ruling heightened pressure on the SEC to improve shareholder democracy. The ruling rejected the view held by the SEC staff that companies may exclude shareholders from considering election-related proposals, including those targeting shareholder access to corporate proxy ballots.
Monday’s public roundtable, held in Washington, D.C., was the first of three planned by the commission to address the proxy process. The roundtable examined the federal role in upholding shareholders’ state law rights, the purpose and effect of the federal proxy rules, and both non-binding and binding proposals under the proxy rules.