On August 25, 2010, Cravath prepared for its clients a memo entitled “SEC Adopts Proxy Access,” which provides a high-level overview of the key features of the proxy access rules adopted by the SEC in a 3-2 vote earlier that day. Put simply, proxy access will enable certain shareholders of a public company to use the company’s proxy card, at the company’s expense, to nominate candidates chosen by those shareholders for election to the company’s board of directors. Proxy access has been a priority for Mary Schapiro since she became the chairman of the SEC in January 2009, and the rules adopted by the SEC on August 25 have set up a framework for proxy access whereby shareholders, or groups of shareholders, who have owned at least 3% of a company’s voting stock for at least three years will be able to nominate candidates representing up to 25% of the company’s board members. The rules will become effective 60 days after publication in the Federal Register, which we anticipate will happen before Labor Day, and will generally be in effect for the upcoming 2011 proxy season.
Please click here to read the memo.