SEC eyes changes to shareholder voting system
Securities regulators on Wednesday weighed whether to change voting in corporate elections, amid calls from companies and some investors to fix a system they consider antiquated.
The Securities and Exchange Commission asked the public to comment on changes to the voting system, including whether companies need more information about the identity of their shareholders.
There are more than 13,000 meetings a year where shareholders can vote in person, via the Internet or by phone, or by mailing in a proxy form.
But much has changed since the last time the SEC reviewed shareholder voting, including advances in technology, changes in proxy distribution services and stock ownership.
"To result in effective governance, the transmission of this communication must be and must be perceived to be timely, accurate, unbiased, and fair," SEC Chairman Mary Schapiro said at a public agency meeting.
The SEC issued a discussion paper to examine the accuracy and transparency of the voting process, shareholder participation and the relationship between voting power and economic interest.
The agency is exploring whether rules are needed for proxy advisory firms and how to get more shareholders to participate in the governance of their companies.
Schapiro has said she wants to give shareholders more say in how companies are governed. The SEC has already adopted rules that would bar broker-dealers from voting for corporate directors on behalf of their clients unless told to do so.
Schapiro has also said she soon wants to adopt rules giving shareholders "proxy access" or an easier and cheaper way to nominate corporate board directors.
"Proxy access" has emerged as a priority for activist investors, who want to have some influence on the composition of the board.
Business groups want to have the ability to better track shareholder votes and disseminate shareholder material. Companies want to be able to obtain full lists of their shareholders in order to make it easier to find those who fail to vote.
Institutional investors are pushing for the creation of an audit trail system to show shareholders their votes were correctly cast and counted.
The SEC's discussion paper, also known as a concept release, will be open for a 90-day comment period. A concept release is sometimes the first step in the rule-making process, but does not always lead to new rules.
[Source: By Rachelle Younglai, Reuters, Washington, 14Jul10]
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