December 27, 2016
Universal Proxy Comments Regarding File Number S7- 24-16 by Mr. Lance Fair Child
Today I will be providing my commentary on proposed amendments to the Federal Proxy rules required for universal proxies in all non-exempt solicitations in connection with contested elections of directors other than those involving RIC (Registered investment companies) and BDC (Business Development Companies).
This proposal is requesting the requirement of universal proxies that would have to include the names of both the registrant and the dissident nominees and thus allowing shareholders to vote by proxy in a manner that would more accurately reflect and mimic a real life vote in a shareholder meeting.
So for example if my name is Lance Fair Child and my firm Fair-Child Associates is a large shareholder in XYZ company and we would like to make a proxy vote but none of our entities are considered a RIC or a BDC we may have a universal proxy that includes the name of our proxy say Jonathon Doe either our firm Fair-Child and Associates or Lance Fair Child and that would be stated on the proxy at the time of the shareholder meeting. With the other requests for further disclosure requirements which would clearly specify the voting options and voting standards in all director elections which is not something that we would be opposed to.
State laws authorize and allow the use of proxies for shareholder voting purposes without the actual shareholder needing to attend the meeting. This is important to note because for a shareholder to attend a meeting during earnings season may be nearly impossible if they have a large diversity of equities. Those who solicit authority to vote do not need to currently disclose but of course they must still comply with the federal proxy rules pursuant to section 14 of the Exchange Act. Which authorizes the Commission to establish rules and regulations governing the solicitation of any proxy or consent or authorization in respect of any security registered pursuant to Section 12 of the Exchange Act.
One of the current issues at hand with the proxy voting is contesting a vote. Voting in an election cant be replicating the vote cast if the shareholder voted live and in person as opposed to through a proxy because voting for directors have different choices. The benefit goes to those who can appear in person.
The Fair-Child and associates team agrees with the SEC proposed changes on allowing shareholders to achieve the same status in person at a shareholder meeting. It is of great importance when Shareholders are choosing between different candidates in a contested election. If after the 2016 Political election between Donald Trump and Hilary Clinton we all learned that the power and ability to cast our votes in any contest whether it be for shareholders or for presidency that its of the utmost importance to share your opinion and do your part to make a difference. Be it for shareholders or for the citizens of your country. One issue that may arise is the cost and burdensome to travel to submit a vote without a proxy. Say I live in Portland, Oregon and want to travel to make a vote at a Disney shareholder meeting in Orlando, Florida. The expenses and time as well as lodging in Orlando or the Central Florida region would eat up capital as opposed to just using a proxy.
The proposed requirement to use universal proxies in non-exempt soliciting of contested elections where a group or firm is soliciting proxies to support a director should adhere to universal proxies in these instances only.
Request for Comment 7:
With regards to the request for comment. If the Securities and Exchange Commission changes the consent required of a bona fide nominee as proposed there shouldnt be a reason for the short slate rule but a modification within reason to update with the latest standards and changes in voting is expected. The dissident exposing or showing the registrants nominees for whom it will not vote. We should modify the short slate to enable a dissident soliciting in support but their name should be shown on the dissidents card. One issue we may see with large shareholders using a proxy vote is a trust or LLC may be set up to further disguise or to keep the shareholders personal information private as privacy is always an issue we must keep in mind.
Request for Comment 8:
Yes we should consider modifying the short slate rule to enable a dissident soliciting support of a slate that would constitute a minority of the board to round out its slate by soliciting authority to vote for the dissidents choice of registrant nominees whose names are included on the dissidents card instead of the prior or current system acting for an approved authority to vote for those who are not yet named.
Request for Comment 9:
The short slate rule should be modified to make it available to dissidents who are soliciting authority to vote for slates of nominees that if theyre elected would end up consisting a majority of the board of directors. We must also inherently decide if this may arise a conflict of interest different than what may currently be the case or happening with our voting and proxy regulation and rules.
Request for Comment 10:
All registrants as well as dissidents should adhere to a modified rule and regulation that continues to evolve for what is in the best interest of the shareholders and the people. If a registrant chooses to nominate less than the total number of directors up for election to ensure that a dissident nominee is elected we should modify the short slate rule available to the registrant in this case and scenario. The question becomes would this tracking and following be a burden upon the designated regulation needed to track and follow to ensure compliance is being kept.
Request for Comment 11:
At this time our firm Fair-Child associates does not have additional modified version plans or suggestions beyond the commentary above and what we conclude below for a universal proxy system. A modified version of the short slate rule would effectively facilitate shareholders ability to vote by proxy for director nominees in person opposed to through a proxy. It would be more burdensome for shareholders to attend in person and thus a proxy is an efficient solution for the masses.
Lance Fair Child's Final Assesment on Proposed Securities Exchange Commission proposed Rule Change File Number S7- 24-16
Overall the proposed amendments to the Universal Proxy changes seem to be within good intention s and to improve the overall benefit of shareholders and corporations. It is to lessen any manipulation and issues that may arise. At this time I Lance Fair Child do not intend to make any additional suggestions or changes towards these rules pertaining to which the proponent is not nominating its own candidates. Including the names of all registrant nominees will require more work and there may be those who register under entities created to retain privacy but it is for the overall benefit of shareholders.