DealLawyers.com Blog

On the heels of the SEC’s February roundtable on universal proxy ballots, CII sent this letter last week pressing the SEC to propose rules regarding universal proxies in contested director elections. This follows a January 2014 rulemaking petition from the SEC on the same topic. The new letter argues:

– The inability of investors to choose from among all individuals nominated from all parties limits shareowner choice and diminishes director accountability by precluding shareowners from choosing the best candidates amongst all of those who have been duly nominated. This limitation weakens the overall quality of corporate governance in the United States.

– Universal proxies would lessen investor confusion. The current proxy rules are the real source of complexity. The commission’s complex explanation of the steps a shareholder must take to vote for management nominees using a shareholder proponent’s proxy in a contest for a minority of the board proves this.

– Universal proxies would lower the substantial costs that investors currently face if they wish to exercise their full voting rights by picking and choosing among all the candidates who are duly nominated in a proxy contest. As for the costs to companies, experience in Canada shows that implementation of a universal ballot regime is cost effective.

– Whether universal proxies would favor shareowner-proponent nominees over company-nominees should be irrelevant. The more relevant question for the commission is whether universal proxies would provide investors, its primary constituents, with the ability to more fully exercise their fundamental right to vote for the election of directors in a proxy contest.

Meanwhile, in this letter, DuPont rejected Trian’s request to use a universal ballot. And check out this blog for some examples of what a universal ballot looks like…