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Dissenting Statement at Open Meeting on Universal Proxy

Commissioner Michael S. Piwowar

Oct. 26, 2016

Thank you, Chair White. 

Several months ago, Chairman Scott Garrett of the House Subcommittee on Capital Markets and Government Sponsored Enterprises raised questions about how the Commission has been prioritizing its resources.[1]  As he noted, the universal proxy initiative has been pushed for years by special interest groups and it would increase the likelihood of proxy fights at public companies, thereby distracting management and employees from carrying out their core mission.[2] 

The ultimate losers in these fights will be the public shareholders of these companies.  As today’s release itself notes, a universal proxy may empower specific groups of shareholders, who may use their increased influence to advance their own special interests at the expense of other shareholders.[3]

In particular, today’s universal proxy proposal will be to the detriment of retail investors.  Under the proposed rules, a dissident would only be required to solicit holders of shares representing a majority of the voting power of shares entitled to vote on the election of directors.  Because dissidents would not be required to solicit all shareholders, many shareholders will not receive the dissident’s proxy card, nor will they receive the dissident’s proxy statement.  And as the data indicates, the vast majority of these neglected shareholders are likely to be retail investors.[4]

More importantly, these shareholders will not receive the important disclosures about the dissident’s nominees contained in the dissident’s proxy statement. 

I find the proposed solution to not receiving the dissident’s proxy statement to be interesting.  The company’s proxy statement would simply advise that the dissident’s disclosures can be found on the Commission’s website.  Investors would need to navigate our Electronic Data Gathering and Retrieval (“EDGAR”) public interface for electronic retrieval.  If investors desire paper copies, they must print them out at their own expense.  There is no obligation on the company or the dissident to provide paper copies free of charge.

Two weeks ago, we discussed paper delivery requirements in connection with mutual fund shareholder reports.[5]  The fact that the majority of the Commission is willing to satisfy important voting information solely by electronic means in the case of universal proxy suggests that we should also be willing to proceed with electronic delivery in other contexts, especially when those other contexts include preserving a free paper delivery option.  Thus, I look to moving forward on adopting Rule 30e-3 under the Investment Company Act in the very near future.

In closing, while I want to join my fellow commissioners in thanking the staff for their work on the universal proxy proposal, I cannot support today’s proposal.  However, in light of the second item on our agenda – the adoption of the intrastate offering and small business capital formation rules – there is at least one action at today’s meeting that I can support.  I have no questions on this proposal.  Thank you.


[1] 162 Cong. Rec. H4500 (daily ed. July 7, 2016) (statement of Rep. Garrett).

[2] Id.

[3] Proposing Release at 135-36, n. 279 and related text.

[4] Id at 142-43, n. 292 and related text.

[5] Michael S. Piwowar, “Statement at Open Meeting on Investment Company Liquidity Risk Management Programs, Investment Company Swing Pricing, and Investment Company Reporting Modernization Releases” (Oct. 13, 2016), available at

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