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This article is part of the bi-weekly Corporate Counsel Report Newsletter, republished here courtesy of the Lexis Securities Mosaic editorial team.
On October 26, the Securities and Exchange Commission voted to propose amendments to the federal proxy rules. The amendments would require companies to give shareholders universal proxy cards that would list all management and dissident nominees to corporate boards of directors. Currently, corporations and shareholder activists presenting dissident candidates issue separate proxy-voting ballots, each with their own list of nominees. Pursuant to the current procedure, shareholders vote via one card or the other but are unable to vote for a combination of nominees from both cards, and only shareholders who are actually voting in person at annual meetings have cards listing all nominees. The SEC's proposal to allow universal proxy cards would make it easier for investors to split their votes, picking some nominees backed by activist investors and others favored by management. According to the Wall Street Journal, those in support of the universal proxy cards proposal suggest that the current procedure favors companies, as shareholders who do not vote in person are forced to select between a list of candidates backed by management or another list composed of dissidents. According to Reuters, executives against the proposal are concerned that universal proxy cards could open their boards to disruptive activist campaigns. SEC Chair Mary Jo White commented that the "changes will promote fundamental fairness and efficiency in the voting process and support shareholder rights."
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Written by Miriam Robin, a Current Awareness Editor at LexisNexis and a freelance writer for the New York Law Journal. Prior to that, she was a Manager of Marketing & Communications at iHeartMedia, a Senior Communications Writer at Paul Hastings LLP, a Communications Analyst at Sullivan & Cromwell LLP, and a Copywriter at Macy’s. Miriam received her J.D. from St. John’s Law School and her B.A. from Queens College.