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U.S. Securities and Exchange Commission

Agenda for Roundtable Discussions Regarding Proposals of Shareholders

May 25, 2007

9:00 a.m. Opening Remarks
Chairman Christopher Cox
9:10 a.m. Introduction of Issues
John W. White, Division of Corporation Finance
9:15 a.m. Panel One — Vindicating Fundamental State Law Rights
Panelists at the Commission’s May 7, 2007 Roundtable made two key points about the relationship between shareholders’ state law rights and the federal proxy rules:
  • Non-binding shareholder proposals are the creation of the federal proxy rules.
  • Some binding shareholder proposals — most significantly, proposals to amend the by-laws to permit shareholder nomination of directors — are not permissible under the federal proxy rules.
In light of these points, consider a proxy system based on the premise that because proposing and voting on by-law amendments are the core rights of shareholders under state law, they should be similarly advantaged under the proxy system. Should the federal proxy rules be revised to be more consistent with the state law rights of shareholders?
  • Substance: Should any matter that can be made binding under state law be permitted to be included in the company’s proxy statement? How should the Commission resolve disputes about state law questions? Should there be a materiality threshold for such proposals?
  • Eligibility: Should eligibility thresholds — holding period and minimum ownership requirements — be raised for binding proposals? Should there be a new requirement for a minimum level of collective action — i.e., require a certain number of shareholders, each holding a certain number of shares, to support a binding proposal before it is submitted to the company?
  • Disclosure: Should there be increased disclosure about the identity, interests and background of proponents of binding proposals, such as investment intent and conflicts of interest, among others, with Schedule 13D or Schedule 13G as a possible model? What other disclosures should be required? Of whom?
John W. White, Division of Corporation Finance Martin P. Dunn, Division of Corporation Finance
  1. Richard C. Ferlauto (AFSCME)
  2. Jonathan Gottsegen (The Home Depot, Inc.)
  3. David Hirschmann (U.S. Chamber of Commerce)
  4. Bess Joffe (Hermes Equity Ownership Services Ltd)
  5. William J. Mostyn III (Bank of America)
  6. Damon Silvers (AFL-CIO)
10:15 a.m. Break
10:30 a.m. Panel Two — Promoting Communication Between Shareholders and the Company
Some panelists at the May 7, 2007 Roundtable stated that non-binding proposals serve an important role in enabling shareholders to initiate a dialogue with management, advise management of shareholder views, and even effect change in company behavior. While the current proxy rules require some of these proposals to be included in the annual meeting proxy materials, it does not require the inclusion of others, and does not provide a means for shareholder interaction regarding these matters. Given the advances in telecommunications technology that have developed since Congress passed the Exchange Act in the New Deal, there may be more direct, efficient and transparent means for shareholders to communicate with the company other than through the federal proxy solicitation process.
Consider an Electronic Shareholder Forum that permits shareholders to promote and vote on non-binding proposals, that protects the anonymity of each participant, and that is restricted to registered security owners. This should be designed to encourage the development of more meaningful modes of shareholder dialogue and engagement. Such an Electronic Shareholder Forum could also include virtual, regularly scheduled investor meetings in which management takes calls from shareholders and answers them in real time, as they currently do with financial analysts on earnings webcasts.
What requirements should these electronic forums for shareholder dialogue satisfy? Would there be costs, or cost savings, from such an approach? What should be the Commission’s role, if any, in monitoring these company-specific modes or forums of shareholder dialogue? Will the current proxy rules need to be amended to ensure that participants in these other modes or forums are not deemed to be conducting a solicitation?
John W. White, Division of Corporation Finance
Martin P. Dunn, Division of Corporation Finance
  1. Gary Brouse (Interfaith Center on Corporate Responsibility)
  2. Evelyn Y. Davis (Highlights and Lowlights)
  3. Amy L. Goodman (Gibson, Dunn & Crutcher LLP)
  4. Nell Minow (The Corporate Library)
  5. William J. Mostyn III (Bank of America)
  6. Russell Read (CalPERS)
11:30 a.m. Break
11:45 a.m. Panel Three — Revisiting the Relationship Between State Law Rights and the Federal Proxy Rules
Would a Commission rule permitting binding proposals on by-law amendments to be included in the company’s proxy materials so long as certain requirements were met, and in which non-binding proposals could be addressed at the shareholders’ option, either in a company’s proxy statement or in an Electronic Shareholder Forum, better vindicate shareholder rights under state law than the current proxy system? Would such a system create a more appropriate balance between federal and state law? What would be the disadvantages of such a system? Would the benefits exceed any costs of this approach?
John W. White, Division of Corporation Finance
Martin P. Dunn, Division of Corporation Finance
  1. Jill E. Fisch (Fordham University School of Law)
  2. Stanley P. Gold (Shamrock Holdings, Inc.)
  3. Joseph A. Grundfest (Stanford Law School)
  4. Donald C. Langevoort (Georgetown University Law Center)
  5. Leo E. Strine, Jr. (Court of Chancery of the State of Delaware)
12:30 p.m. Break for day



Modified: 05/23/2007