NACD CEO Peter Gleason Comments On SEC Vote On Universal Proxy
WASHINGTON, DC (November 17, 2021) – The National Association of Corporate Directors (NACD) today issued the following statement from president and CEO Peter Gleason on the U.S. Securities and Exchange Commission (SEC) vote on two matters that are important to directors of public companies.
NACD commends the SEC for continuing its efforts to meet its threefold mission of investor protection, market efficiency, and capital formation, and we have a few words of caution. The first vote was for a final rule on universal proxies. In a vote of 4–1, Commissioner Peirce dissenting, the Commission voted to mandate universal proxies for director elections. Universal proxies are voting cards that enable shareholders to mix and match votes for directors, choosing from among both candidates proposed by the current board and candidates proposed by dissidents in contested elections. Now shareholders will no longer have to choose between slates but can vote for individuals as they wish. In our 2017 comment letter when this rule was originally proposed, we noted that candidate slates provided by boards and their nominating committees are based on considerations of the full board’s composition. We reiterated this concern in a recent blog post. Now that universal proxies are a mandate, we encourage boards to communicate more about their nominees, not only as individuals, but also as a group, so that boards continue to have a balance of qualifications. Boards should focus regularly on whether their composition—and therefore their slate—reflects the shifting needs of the business.
The second SEC vote today was to approve the release of a newly proposed rule on proxy voting advice that if passed would eliminate several provisions of an existing 2020 rule on proxy advisors. The vote for this newly proposed rule (amending the 2020 rule) was 3–2, with Commissioners Peirce and Roisman dissenting. The original 2020 rule focused on eliminating conflicts of interest and increasing transparency and accuracy. These are values that NACD has always espoused. We followed the 2020 rule closely (as this blog post shows); furthermore, we know from our membership that there was support for it in the corporate director community. We share the concerns of both Commissioner Peirce and Commissioner Roisman about these proposed amendments to the 2020 rule, and plan to comment on the proposed 2021 rule soon in greater detail.
The National Association of Corporate Directors (NACD) empowers more than 22,000 directors to lead with confidence in the boardroom. As the recognized authority on leading boardroom practices, NACD helps boards strengthen investor trust and public confidence by ensuring that today’s directors are well prepared for tomorrow’s challenges. World-class boards join NACD to elevate performance, gain foresight, and instill confidence. Fostering collaboration among directors, investors, and corporate governance stakeholders, NACD has been setting the standard for responsible board leadership for more than 40 years. To learn more about NACD, visit www.nacdonline.org.