SEC Proposes Significant Proxy Rule Changes To Provide Shareholder Access To The Director Nomination Process

Article by Laurence S. Lese , Howell J. Reeves , David J. Kaufman and Heather N. King

On June 10, 2009, the U.S. Securities and Exchange Commission (the "SEC") issued Release No. 33-9046 (the "Release") proposing significant changes to its proxy rules that would grant certain shareholders the ability to have their own director nominees included in a company's proxy materials. The Release embodies the proposals approved by the SEC in May 2009 as discussed in our May 22, 2009 Alert.

The Release cites the current economic crisis and concerns about "whether boards are exercising appropriate oversight of management, whether boards are appropriately focused on shareholder interests, and whether boards need to be more accountable for their decisions regarding such issues as compensation structures and risk management" as catalysts for the SEC's decision to "revisit whether and how the federal proxy rules may be impeding the ability of shareholders to hold