Today, the Commission is adopting rule changes to provide shareholders with “proxy access.” New Exchange Act Rule 14a-11 creates for shareholders a minimum federal right of access to a company’s proxy materials to nominate directors. As amended, Exchange Act Rule 14a-8 will allow shareholders to include in a company’s proxy materials a proposal to amend the company’s bylaws to provide for proxy access, subject to a major exception. That is, shareholders are unable to opt out of the Rule 14a-11 access regime, even if they want to. The proxy access right the Commission is establishing under Rule 14a-11 is mandatory.

The Rule 14a-8 amendment facilitates shareholders in crafting what the shareholders believe to be an appropriate access regime for a particular company. I welcome the Rule 14a-8 amendment as a sensible step that empowers shareholders, respects the traditional role of states in regulating internal corporate affairs, and allows for efficient private ordering.

Unfortunately, the Commission has chosen to do more than amend Rule 14a-8. The Commission also is adopting Rule 14a-11, the mandates of which displace private ordering and state law and negate the import and effect of shareholder choice when it comes to determining the contours of proxy access. Neither theory nor data adequately substantiate the Commission’s imposition of the mandatory Rule 14a-11 proxy access right. Accordingly, I am not able to support the final rule before us and respectfully dissent. [1]

(more…)