February 23, 2010

SEC Finally Adopts E-Proxy Rules: Early Adoption Permitted?

As noted in this press release, the SEC issued an adopting release yesterday to tweak the e-proxy rules it proposed last October (it was adopted via the SEC’s seriatim process like the proposal was made). The new rules become effective 30 days after being published in the Federal Register.

As calendar year-end companies are in the midst of the proxy season, it’s hard to tell if they will take advantage of the new rules this time around – particularly because there is no discussion in the adopting release regarding transition issues (ie. whether companies can adopt early on a voluntary basis). Many members have already asked me whether they can rely on the new rules early – I don’t know the answer.

Here is my math if companies aren’t permitted to rely on the rule changes early: the SEC gets the adopting release published in the Federal Register within a week and the new rules become effective in late March or early April – then with notice and access requiring 42-45 days (as the SEC didn’t reduce the number of advance notice days to 30 from 40 as proposed and Broadridge needs a few days to process a mailing) in advance of the meeting, companies with annual meetings in mid-May or later would be able to use the new rules. I will follow-up on this blog soon once we know more specifics…

Learn the latest practice pointers on e-proxy – and the factors to consider about how and whether to use it – in the transcript of our recent webcast: “How to Implement E-Proxy in Year Three.”

The SEC’s New “Plain English” Spotlight on Proxy Matters: My Ten Cents

Yesterday, the SEC also made a big splash about a new “Spotlight” page for investors about how they can vote – as well as issued this investor alert on the topic. This is a fine small step – but it’s really small potatoes as I doubt many investors will get motivated by the SEC’s educational content to cast their votes (as few investors are ever likely to come across the content).

I think the SEC should be taking steps that will have a much greater impact on voter participation. Starting with improving the usability of proxy cards, voting instructions – and the communications that go along with them. Most communications are laden with legalese and use 200 words when 20 will suffice – a critical mistake when using e-mail to get someone to act. Check out my blog entry today for more on my beef here. And I know many corporates are unhappy that they still aren’t permitted to send a proxy card or voting phone number in their e-proxy notice mailings…

All the Rage: Tender Offers

Tune in tomorrow for the webcast – “All the Rage: Tenders Offers” – to hear Alex Gendzier of Jones Day, Josh Korff and Christian Nagler of Kirkland & Ellis and Jim Moloney of Gibson Dunn discuss the latest dynamics – and processes – of conducting tender offers, particularly debt ones…

– Broc Romanek