‘Universal Proxy’ is Back on the SEC’s Agenda
On April 16, 2021, the SEC announced that it had voted to reopen the comment period on the so-called universal proxy rule, which has languished at the SEC since its initial proposal in 2016. As The Ticker has previously reported, the universal proxy rule would require parties in a contested director election to provide shareholders with a universal proxy card that includes the names of both management and dissident nominees, which would allow shareholders to vote by proxy for the combination of nominees of their choice.
Under existing rules, management’s director nominees are typically presented as one slate in a company’s proxy statement and proxy card, and the dissident’s full or partial slate of nominees is presented in another. As a result, whereas shareholders voting in person may vote for any combination of nominees, shareholders voting by proxy generally must submit their votes on either the company’s or the dissident’s proxy card and cannot choose a combination of nominees from both cards.
“This is an important step toward finalizing rules that will facilitate clarity and efficiency for shareholders voting in director elections,” said Acting SEC Chair Allison Herren Lee. “Reopening the comment period will allow the public to share additional views on the use of universal proxy cards in director elections, particularly in light of the corporate governance developments that have occurred since the Commission issued its proposal,” added John Coates, Acting Director of the SEC’s Division of Corporation Finance.
The public comment period will remain open for 30 days following publication of the release in the Federal Register.