SEC Proposals For Shareholder Access To Proxy Statement

The Securities and Exchange Commission (the "SEC") recently issued two alternative proposals on shareholder access to company proxy statements for director nominations. The SEC seeks comments by October 2, 2007.

Both proposals seek to codify an SEC response to the Second Circuit's decision in AFSCME v. AIG, 462 F.3d 121 (2d Cir. 2006). In AFSCME, the Second Circuit held that a company could not rely on the Rule 14a-8(i)(8) exclusion (the "Election Exclusion") to exclude a shareholder proposal that, if adopted, could have the effect of permitting shareholders to wage contested elections in the company's proxy materials at the expense of the company, and without the disclosures required by the SEC's proxy rules under the Securities Exchange Act of 1934 (the "Exchange Act"). The SEC believes that the AFSCME decision was incorrect based on the SEC's historical and current application of the Election Exclusion, and that the decision had the effect of denying the disclosure of material