Social Investment Forum Welcomes Federal Proxy Access Rule
WASHINGTON--Following more than three decades of debate, the U.S. Securities and Exchange Commission (SEC) in a three-two vote along party lines enacted the United States' first federal proxy access rule today, granting shareholders the right to nominate directors and have those nominees appear in companies' printed proxy statements sent to all shareholders.
The Social Investment Forum (SIF) and its members are applauding the action taken today by the SEC and especially Chairman Mary Schapiro for her strong leadership on this important issue, as well as the SEC staff for their tireless work on proxy access.
“The Social Investment Forum and its members have been advocating for a federal proxy access rule since our founding in 1981,” said Lisa Woll, CEO of the Social Investment Forum. “Universal proxy access is a fundamental shareholder right enjoyed in most developed nations around the world, so we are very happy to see the United States achieve parity on this critical market mechanism.”
Woll added: “The recent financial crisis underscored the need for greater accountability in America's boardroom. Congress and President Obama understood this urgent need, too, and included clear authority for the SEC to take action on proxy access in the Dodd-Frank Wall Street Reform and Consumer Protection Act. So, we are delighted that the SEC took swift action on proxy access following passage of financial reform legislation.”
The final rule reflects extensive SEC research on ownership norms in the United States and other critical issues related to proxy access, including three public roundtables on the topic since 2003. The SEC published a draft rule on proxy access on June 10, 2009, which received more than 600 public comments, including from SIF and many of its members.
The final rule requires that a shareholder or a shareholder group hold at least 3 percent of the shares in an issuer for at least three years to exercise this right and limits the total number of shareholder nominees in any election to no more than 25 percent of the total number of board members.
Woll said: “The SEC's final rule takes a thoughtful, balanced approach to ensure that proxy access is aligned with long-term shareholder interests and places a much-needed check on corporate management, while keeping those with short-term or takeover interests out of the equation.”
The Social Investment Forum (http://www.socialinvest.org) advances investment practices that consider environmental, social and corporate governance criteria to generate long-term competitive financial returns and positive societal impact. The Social Investment Forum is the U.S. membership association for professionals, firms, institutions and organizations engaged in socially responsible and sustainable investing (SRI). SIF members support SRI through such strategies as portfolio selection analysis, shareholder advocacy and community investing.