As a State of California employee, and one who will eventually use CalPERS for my retirement, I fully support the stated intent of the Commission to facilitate the corporate proxy process so that it enables shareowners ''to control the corporation as effectively as they might have by attending a shareholder meeting.'' Unfortunately, proposal S7-17-07 runs entirely contrary to this intent and should be dropped.
With regard to proposal S7-16-07, the SEC's approach assumes that every proponent of an access proposal intends to also nominate candidates, when that is not the case. Why is the SEC proposing shareowners must own 5% of the company…an outrageously high amount? What's next? Will the SEC soon propose a different threshold for environmental or social resolutions?
Proxy access is similar to many other mechanisms that may eventually lead to changing directors, such as majority vote, cumulative voting, repeal classified board, redeem or vote on poison pill, or the reimbursement for proxy expenses. All raise the risk of an increase in the number of election contests.
The SEC should allow market-driven innovation to continue, either by postponing any action on Rule 14a-8(i)(8) or by affirming its 1976 interpretation, which allowed such resolutions.
With regard to increased disclosures, they are not appropriate for simply sponsoring a resolution. Proponents of such resolutions should continue to be exempt from additional disclosures if they are not nominating a candidate for the board. With regard to shareowner forums, I support establishing a safe harbor from liability for such forums. However, I strongly oppose the substitution of such forums for binding or nonbinding proposals under the existing process.
With regard to the SEC's "opt-out" question, I oppose allowing companies to bar nonbinding resolutions from the proxy. An opt-out option would further the distance between management and owners, especially at companies where such relations are already strained, since these would be the most likely to opt-out. Confrontation would increase, as would lawsuits and binding bylaw resolutions.