Last week, the SEC voted 2-1 regarding new (proposed) amendments to the proxy rules that would require the conflicting players in contested director elections to use a single, universal proxy card.
Currently, in contested “proxy fights” the issuer and the activist (dissident) separately mail proxy card to shareholders – and those individual cards list only their own director nominees.
And that’s the root of this underlying concern. Voting shareholders can only use either the issuer-provided proxy card or the activist-provided proxy card… but not both. They can’t split their vote between the two cards. They cannot vote for Director A on the issuer card and Director B on the dissident card.
Shareholders who physically attended the annual shareholder meeting can (in most cases) cross “party lines” and vote for candidates from either side of a contested election. In context to THIS November think #TrumpKaine or #ClintonPence. This proposal levels the ballot box.
The areas of the new proposal of most practical interest to Vintage (as a proxy production/printer) is the mailing deadlines of the cards and the design points. Per the SEC…”To help ensure that universal proxies clearly and fairly present information so that shareholders can effectively exercise their voting rights, the proposed rule would include the following presentation and formatting requirements for all universal proxy cards used in contested elections:
- The proxy card must clearly distinguish between registrant nominees, dissident nominees, and any proxy access nominees
- Within each group of nominees, the nominees must be listed in alphabetical order by last name on the proxy card
- The same font type, style and size must be used to present all nominees on the proxy card
- The proxy card must prominently disclose the maximum number of nominees for which authority to vote can be granted
- The proxy card must indicate in bold-face type whether or not it is solicited on behalf of the registrant’s board of directors or, if solicited on behalf of some other person, the identity of such person”
Click here to read the SEC’s full proposed amendments. As with most SEC proposals, the amendment is now open for a 60-day comment period. As you will read, the SEC has 105 question units ranging from the tactical vocabulary to presentation format
Currently, there is no consensus among lawmakers or proxy pundits as to whether this will increase or decrease the possibility of proxy fights or favor the issuer or the activist in those fights.