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On November 28, 2007, the Securities and Exchange Commission voted to adopt an amendment to Rule 14a-8(i)(8), codifying the commission’s long-standing interpretation that a company may exclude from its proxy materials shareholder proposals relating to making or opposing a director nomination or to setting up a process that would allow shareholders to conduct an election contest in the future by requiring the company to include director nominations from shareholders in the company’s own proxy materials.
In their 2006 decision of AFSCME v. AIG, the Second Circuit declined to defer to the Commission’s interpretation of Rule 14a-8(i)(8), requiring AIG to include a proposal from AFSCME in its proxy materials that would amend AIG’s bylaws to allow shareholders to include nominations of individuals for election as directors in subsequent proxy materials. The SEC’s amendment codifies the position it has taken on an individual basis in no-action and interpretive letters. Chairman Cox further stated that the Commission could “re-open this discussion in 2008 to consider how to strengthen the proxy rules to better vindicate the fundamental state law rights of shareholders to elect directors.”
The question of shareholder access to proxy materials implicates important values on both sides of a continuing controversy. Permitting access to the company’s proxy materials would facilitate the right of shareholders to nominate and elect directors, while rendering infeasible the existing proxy rules’ requirement of full disclosure. Audio and video recorded on September 23, 2008.