The Buzz with Proxy-Access

The buzz within the investor relations world hit an all-time high this week following the “delay” of the highly anticipated proxy-access provision, a regulation that was set to become effective on November 15.

The provision, which allows shareholders owning at least three percent of a publicly traded company for three consecutive years to nominate board members on corporate ballots, is one of roughly 100 or so rules to be implemented under the Dodd-Frank Act, discussed earlier on this blog.

The delay in implementation was the result of a suit brought by The U.S. Chamber of Commerce and Business Roundtable, an association of U.S. CEOs, calling the provision a “giant step backwards for average investors.”

Others are still pushing for proxy-access reform. The American Stock Transfer & Trust Co. and other transfer agents recently launched a Web site called to rally support.

Regardless of whether new proxy-access rules are enacted — it is currently under judicial review — companies should still take this time to review practices and prepare.

At minimum, companies should be actively monitoring and engaging with significant shareholders, a point that is echoed in a recent Harvard Law School Forum about engaging with shareholders. Among the recommendations include monitoring the company’s investor base and shareholder filings, updating changes to advance notice, director qualification by-laws and corporate governance policies as well as reviewing the size and makeup of the board.

The next big hot button issue on the SEC calendar is the provision for Say-on-Pay. If the delay in proxy-access is any indication on how the Say-on-Pay provision will proceed, it could be quite some time before all 100 provisions of the Dodd-Frank Act are complete.

Matt Sheldon,

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