Nazareth Cautions Against Moving Forward With SEC Vote on Proxy Access Proposals

Securities and Exchange Commissioner Annette Nazareth, the only remaining Democrat on the Commission, has joined a growing chorus of voices who have said it would be unwise for the SEC to decide whether or not to allow shareholders a greater say in the compositions of boards of directors, Jeremy Grant of Financial Times reported today.

The issue on proxy access has evolved into one of the most contentious in recent years for the SEC, and the Commission has floated two opposing proposals on whether or not shareholders should be allowed to propose amendments to a certain company’s bylaws, subsequently allowing them to choose who could be elected to the board.

One of the two proposals would allow proxy access if a shareholder has held five percent or more of a company’s shares for more than 12 months, while the other clarifies that the SEC could allow companies to exclude such bylaw amendments, FT reported.

In opposing the move to vote, Nazareth joins a group who share her concerns that include Congressman Barney Frank (D-MA). Frank, chair of the House Financial Services Committee, recently said it would be unwise for the SEC to decide on shareholder rights with limited democratic presence on the five-commissioner panel after Roel Campos resigned last month; Nazareth shortly after announced her plans to follow suit, though she has yet to determine when.  Both have voted in favor of the five-percent proposal.

“Under the circumstances, this seems a particularly inopportune time for the commission to be considering issues of this magnitude and divisiveness,” Nazareth told a meeting of the International Corporate Governance Network, according to FT.

Regardless, SEC Chairman Christopher Cox said last week that he has every intention of moving forward, as  the panel’s current Republican-dominant status is independent of whether or not a vote can be made, and would like to see a decision made in time for the next proxy season.