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SEC Open Meeting on Proxy Access

July 14, 2010

In an open meeting today, the Securities and Exchange Commission today voted unanimously to issue a concept release seeking public comment on the U.S. proxy system and asking whether rule revisions should be considered to promote greater efficiency and transparency. SEC Chairwoman Mary Schapiro introduced the topic.

With more than 600 billion shares are voted at more than 13,000 shareholder meetings each year, the currently existing U.S. proxy voting system is an integral element of the nation’s corporate governance system. Lacking any systematic review or reform in 30 years, the current proxy voting system does not adequately reflect the realities of corporate governance in the 21st century. It can lead to bad business practices and unreasonable shareholder outcomes.

Elements of the concept release will address the accuracy and transparency of the voting process, the manner in which shareholders and corporations communicate, and the relationship between voting power and economic interest. More specifically, topics covered in the release will include:

  • Over-voting and under-voting of shares
  • Vote confirmation
  • Proxy voting in the context of securities lending
  • Proxy distribution fees
  • Issuers’ ability to communicate with beneficial owners of securities
  • Removing barriers or disincentives to retail investor voting participation
  • Data-tagging proxy-related materials
  • The phenomenon of “empty voting”
  • The role of proxy advisory firms

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