SEC Issues Proxy Compliance And Disclosure Interpretations

On May 11, the SEC's Division of Corporation Finance issued 45 proxy C+DIs to replace previous proxy interpretations set forth in its Telephone Interpretations Manual and March 1999 Supplement. The vast majority of the C+DIs are reiterations of, or technical updates to, existing guidance. However, there are a number of new interpretations, including the following:

• Rule 14a-4(b)(1) states that a proxy may confer discretionary authority with respect to matters as to which a choice has not been specified by the security holder, so long as the form of proxy states in bold-faced type how the proxy holder will vote where no choice is specified. If action is to be taken with respect to the election of directors and the persons solicited have cumulative voting rights, a soliciting party can cumulate votes among director nominees by simply indicating this in bold-faced type on the proxy card, as long as state law grants the proxy holder the authority to exercise discretion