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U.S. Securities and Exchange Commission

Speech by SEC Commissioner:
Statement at SEC Open Meeting on Facilitating Shareholder Director Nominations


Commissioner Elisse B. Walter

U.S. Securities and Exchange Commission

Washington, D.C.
May 20, 2009

I too would like to offer my thanks to all of the staff across the Commission for their outstanding work on the proxy access proposals before us today. My thanks go especially to Brian Breheny, Lily Brown, Tamara Brightwell, and Eduardo Aleman. I very much appreciate the answers you have provided to all of my questions and the time you have spent with me and my counsel. Most of all, I’d like to thank you for putting up with my passion with respect to this issue. I fear that there were times when I reverted to my former self and tried to rejoin the Division’s staff. Thank you for your graciousness and patience.

I’d like to start by citing someone not frequently (or perhaps never) mentioned at SEC Commission meetings — Victor Hugo. “There is nothing more powerful than an idea whose time has come.” While, in my opinion, today’s proxy access proposal is an idea whose time is long overdue, the time has come and I am proud to be here for this moment.

To me, the fundamental question presented by the issue of proxy access is: Should shareholders have a real say in determining who will oversee management of the companies that they own? I believe strongly that the answer is yes. Shareholders elect directors, who oversee management, but our proxy rules have frustrated shareholders in carrying out that function — a concern expressed over 70 years ago in the House Report related to passage of the Securities Exchange Act.1 In 1934, Congress gave the Commission “power to control the conditions under which proxies may be solicited.”2 Today we propose to exercise our authority to squarely address those impediments to shareholder franchise rights.

And, our focus on proxy access today is particularly timely. We should never forget that the Commission is the investor’s advocate and the only federal regulator that serves that function. I do not disagree with Commissioner Casey — we have discussed this issue repeatedly over the last decade. But, recent events have reinforced the need for change. Given the erosion of investor confidence in our markets throughout this financial crisis, the Commission has a responsibility to consider and address investor concerns about the accountability and responsiveness of some corporate boards of directors. I believe that proxy access is critically important to restoring investor trust in our markets.

Today’s proposal combines direct proxy access and the shareholder proposal process to offer significant, long-term shareholders different options to accessing the company’s proxy statement. Philosophically we should act broadly to remove impediments. We have, however, in each of these options, set a number of parameters — to balance shareholders’ vital interests in director elections against the potential costs and disruption to companies subject to the proposed new rules. I look forward to hearing from commenters whether they agree with the parameters we’ve set.

I’d like to reiterate the Chairman’s call for thoughtful comments, which we will, as always, consider carefully. It is fair to say that the Release contains a myriad of questions. Please take them seriously. We really want to hear from all of you. By understanding the advantages and disadvantages of these parameters, the Commission will be in a better position to make an informed judgment and adopt rules that provide meaningful proxy access for shareholders. I look forward to the day, in the not too distant future, when we sit here with an adopting release in front of us.

I am happy to support the staff’s recommendation, and I have just a few questions.

1 H. R. Rep. No. 1383, 73d Cong., 2d Sess., 13 (1934).

2 Id. at 14.



Modified: 05/20/2009