Update on the Ever-developing Landscape of Shareholder Proposals

September 1, 2011

By Securities Group

On September 15, 2011, the Securities and Exchange Commission (SEC) issued a final rule to adopt amendments to the proxy access rules for shareholder proposals in Rule 14a-8, which was discussed in our September 2011 issue of FredNEWS: Corporate & Securities. In a related action, on September 27, 2011, the SEC published an amended Form 8-K that includes a new Item 5.08 requiring, in certain circumstances, companies to disclose applicable deadlines for shareholders to submit proxy access proposals. On November 17, 2011, Institutional Shareholder Services, Inc. (ISS) published its 2012 Corporate Governance Policy Updates and Process Executive Summary, which refined how it will address proxy access, among other policy changes.

SEC Adopts New Form 8-K Relating to Proxy Access Proposals

SEC Rule 14a-8 describes the SEC’s requirements for shareholders of a public company to propose procedures to permit nomination of directors under the company’s organizational documents or applicable state or foreign law. These procedures include the filing on Schedule 14N of a notice of the shareholder’s desire to include one or more proposals in the company’s proxy materials. If the company did not hold an annual shareholders meeting in the previous year, or if the meeting date changed by more than 30 days from the previous year, Item 5.08 of Form 8-K requires the company to provide the date on which a shareholder must submit the Schedule 14N. The Form 8-K with the Item 5.08 information must be filed within four business days after the company determines the anticipated annual meeting date.

Going forward, companies subject to shareholder proxy access procedures under their organizational documents or applicable state or foreign law should monitor their annual meeting dates to ensure that timely Form 8-K filings are made, if necessary.

ISS Shareholder Proposal Policy for the 2012 Proxy Season

ISS has indicated it will continue to take a case-by-case approach in evaluating shareholder and management proposals. It will consider company-specific factors and proposal-specific factors, including: (1) the ownership thresholds proposed in the resolution (i.e., percentage and duration); (2) the maximum proportion of directors that shareholders may nominate each year; and (3) the method of determining which nominations should appear on the ballot if multiple shareholders submit nominations. ISS analysts will begin applying the updated policy to all publicly traded companies with shareholder meetings on or after February 1, 2012. For more information on the ISS policy updates (including changes in the methodology for evaluating pay-for-performance, treatment of low shareholder support for management’s say-on-pay proposals, treatment of say-on-frequency periods that were supported by less than a majority of shareholders, and support of political spending proposals), visit ISS’ Web site (http://www.issgovernance.com) under its Policy Gateway.