TheCorporateCounsel.net

May 11, 2004

Rampant Rumors about Shareholder Access

The mainstream media continues to run articles containing rumors of where the SEC is heading with its shareholder access proposal. On Friday, the NY Times ran a controversial Floyd Norris column indicating, among other rumors, that the withheld vote trigger would be racheted up to 50% in exchange for not counting broker non-votes.

And yesterday, the WSJ ran an article indicating that the SEC was going to drop its 1% opt-in trigger in exchange for speeding up the ability for investors to force a contested election (but didn’t provide details as to what this latter trade-off really was). The article also noted that the SEC was considering the BRT’s suggestion to allow companies to implement a “cure” after a triggering event (i.e. remove one or more directors that received high withheld votes).

Despite these media musings, I would wager that the SEC is at least a few months from adopting their final rules in this area (hey, the World Series of Poker started last night, I gotta bet something…).

These articles come on the heels of the MBNA Corp. annual meeting last week at which a TIAA-CREF shareholder proposal received a majority vote regarding the appointment of additional directors without personal or financial ties to senior management/founders. Two MBNA directors received more than a 40% withheld vote due to their ties to management. Interestingly, both of those directors are lawyers – and MBNA just appointed two other lawyers to vacant seats on the board, Mary Boies and former SEC Commissioner Laura Unger (my old boss racking up her third board seat) – so that nearly half of MBNA’s directors are lawyers (4 out of 9)!

The SEC’s Shell Company Proposal

The SEC has been jawboning about perceived abuses of shell companies for some time. So last month’s proposal to prohibit the use of Form S-8 by shell companies should not be a surprise. Still, some of us represent clients that engage in these transactions and the question remains, what now? Learn more in my interview with David Kaufman on the SEC’s Shell Company Proposal.