State Pension Activists Want Revisions to SEC Proxy Proposals

December 19, 2003 ( - The National Coalition for Corporate Reform (NCCR) is urging the US Securities and Exchange Commission (SEC) to change a proposed rule aimed at granting shareholders more power to elect corporate boards.

The NCCR agrees that the proposed rule would allow investors to nominate directors and have those nominees placed on the proxy materials that public corporations send out to all stockholders, but at the same time the activists organization worries that the rule as proposed would create severe limitations on proxy access, according to a news release issued by the NNCR discussing the contents of the letter.

“We are gratified that the SEC has recognized the importance of opening companies’ proxy materials to shareholders and has chosen to publish its proposed rules. We view proxy access as a critically important corporate governance tool, particularly in light of the corporate scandals of recent years,” the letter, signed by New York State Comptroller Alan Hevesi , North Carolina State Treasurer Richard Moore, California Public Employees’ Retirement System (CalPERS) President Sean Harrigan , said.

However, the inclusion of “triggers,” or events that must occur at a company before shareholders can get access to proxies, concerns the NCCR.   “C ertain provisions of the proposed rules, such as the triggering events, are likely to deny or delay access to the proxies of those companies most in need of reform,” the letter said.

Yet, even if the triggers are going to be included, the NCCR says they should be modified.   Instead, the group said, there should be an additional trigger tied to specific events such as:

  • SEC enforcement actions
  • indictment of any executive or director on criminal charges directly related to his or her corporate duties
  • material restatements
  • delisting by a major stock exchange
  • significant share underperformance.

In the event of any of the above actions, proxy access would be triggered for a company’s next shareholder meeting, the group said.