US SEC Does Not Plan to Vote on Proxy Access Rules in 2009

In June, the US Securities and Exchange Commission issued proposed rules to give shareholders direct access to company proxy statements to nominate candidates for director in certain circumstances, Release Nos. 33-9046; 34-60089. The comment period for the proxy access proposal has closed, with over 500 comments submitted.

SEC commissioners have publicly stated that the SEC will not vote on the proxy access proposals in 2009 in order to provide more time for the SEC to review and consider the many comments and questions generated by this proposal. This means that new proxy access rules are not likely to be in place for the 2010 proxy season.

In a speech given on October 2, 2009, SEC Commissioner Elisse B. Walter stated the following about the proxy access proposal:

As with all our rulemaking, we are committed to conscientiously and deliberately considering the comments and suggestions, which will — especially given the other items on our rulemaking agenda — take time. We are working diligently to make sure we understand all of the advantages and disadvantages of our proposed approach and the different parameters we set. And, at this stage in our review process, I have doubts that we will be in the position to make a truly informed judgment about these rules and be able to take final action in November (as some have speculated). Although I can't give you a definitive date, I expect we will likely move forward and consider an adopting release sometime in early 2010.

This means of course that final rules are not likely to be in place at the beginning of next year's “proxy season.” To me, that timing is not ideal; however, given the complexity of this issue, I believe it is critical that we take the time we need to produce the best final product. Excellence should triumph over speed.

The delay does not imply that the SEC is backing away from the concept of proxy access. In her speech, Commissioner Walter emphasized that she and her fellow commissioners are serious about the direct proxy access proposal. SEC Chairman Mary L. Schapiro has stated that, “it is my hope to finalize the rules early in the new year.” Therefore, it remains important for public companies to continue to monitor developments in this area, although at this point it does not appear to be necessary to plan for shareholder direct access to proxy statements for the 2010 proxy season.

For more detail about the scope of the SEC’s proxy access proposal, see our Securities Update dated July 6, 2009, titled “US SEC Proxy Access Proposal.”