NACD Comment Letter on Proxy Disclosure and Solicitation Enhancements
On September 15, 2009, NACD filed a comment letter with the Securities and Exchange Commission regarding recent proposals for additional disclosures on proxy statements. NACD believes the proposal, if enacted, will have a significant impact on the director community.
While NACD has advocated for greater transparency surrounding board decisions, the disclosures should be voluntary. Mandatory disclosure only adds to the size and complexity of filings while not necessarily providing a clear understanding of practices and policies to shareholders.
Click here to view the comment letter.
NACD Comment Letter on Proxy Access
On August 17, 2009, NACD sent the Securities and Exchange Commission a comment letter on a proposed new rule on Facilitating Shareholder Director Nominations—also called “proxy access.”
Click here to see the comment letter.
Past Letters and Actions
This was the fourth in a series of letters we have written to the SEC on this topic. In the fall of 2003, the SEC first proposed a proxy access rule and asked for comment. See http://sec.gov/rules/proposed/34-48626.htm.
In response, NACD sent three comment letters:
- In our third comment letter (March 26, 2004), we proposed a precursor of majority voting. We said that “cards should be clearly marked for Yes, No, and Abstain.” We also said that beyond the current disclosures, proxy statements should also clearly disclose relationships that director candidates have with incumbent directors and with members of management. Finally, we proposed that the SEC consider ways to benchmark the progress being made by board nominating committees. See http://sec.gov/rules/proposed/s71903/nacd032604.pdf.
Then, importantly, NACD kept its membership informed about developments relating to director nominations, as well as board-shareholder communications. We launched or joined a number of initiatives, including, most recently, the Shareholder Communications Coalition (shareholdercoalition.com), which seeks proxy system reforms in a number of areas in order to improve company and board communications with beneficial owners.
2009 Proxy Access Survey and Comment Letter
Before submitting our comment letter on proxy access, we surveyed our members for input on a number of key questions. Survey responses support some form of direct access to the proxy by shareholders for the purpose of nominating directors. But responses also endorsed certain conditions to ensure that this access comes from shareholders who have held a significant amount of stock for a significant period of time, and who are willing to consult with the board’s nominating/governance committee in a meaningful way.
NACD does not support broadening access to the proxy through changes to Rule 14a-11. As our comment letter states, such changes would mandate a one-size-fits-all approach to a governance matter that should be up to individual companies and their shareholders. In our letter, we focused on proposed changes to Rule 14-a-8 instead. These changes would enable private ordering by allowing shareholders to submit proposals to amend company bylaws pertaining to director nominations.
We urged the Commission and all of its constituents to consider the merits of a revision to Rule 14a-8 as the “first and most important step in improving board composition, a worthy goal we all share.”
Click here to see the comment letter.
Click here to see survey responses.
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