IAC Recommends Further Proxy Plumbing Improvements

On September 5, 2019, the Investor Advisory Committee of the SEC issued a written statement to the SEC recommending four “short-term” improvements to the following areas of proxy plumbing: (i) end-to-end confirmation; (ii) reconciling ownership and voting information; (iii) shareholder identity and share lending; and (iv) adopting the universal proxy rule. The Committee had previously recommended that the SEC adopt the universal proxy system for contested elections back in 2013, which resulted in the SEC proposing rules to require their use in 2016. The proposed rule was never acted on after it received significant corporate opposition based on concerns that universal proxies might increase proxy contests by favoring dissidents. However, the Committee notes that such opposition has diminished significantly after evidence has emerged that a universal proxy does not in fact favor dissidents. This recommendation comes a few months after the Rice brothers took control of EQT Corporation in a proxy contest involving the first successful use of a universal proxy card for a control slate of directors in the U.S. The full text of the Committee’s recommendations is available here.