Further to our report in yesterday’s Society Alert, at its open meeting today, the SEC adopted a final rule on universal proxy cards that requires the use by management and shareholders soliciting proxy votes for their own candidates in contested elections to use proxy cards listing the names of all duly-
nominated director candidates for all shareholder meetings with contested director elections held after August 31, 2022. The rule also requires the inclusion on proxy cards of “against” and “abstain” voting options for all director elections (including uncontested elections) where permitted by state law for all shareholder meetings involving director elections after August 31, 2022.
In her dissenting statement, SEC Commissioner Hester Peirce indicated that she supports the notion of universal proxy but could not support this rule based on concerns about the potential for abuse by activist shareholders and advancement of special interests, which she believes could have been alleviated in the drafting of the rule. For example, both Commissioners Peirce and Roisman (noted below) would have made access to the proxy card contingent on satisfaction of certain eligibility criteria to demonstrate a meaningful commitment to or stake in the company.
As previously reported, the SEC reopened the comment period on its 2016 universal proxy card proposal in April 2021 (we reported on here). The Society filed a comment letter on the initial proposal in January 2017, another comment letter in November 2018 in conjunction with the SEC’s Roundtable on the Proxy Process, and a third comment letter in response to the recent re-release.
See also the SEC’s release and Fact Sheet; these supporting statements from SEC Commissioner Allison Herren Lee, Caroline Crenshaw, and Elad Roisman (with some reservations); and additional resources on our Universal Proxy page.