SEC Chair White Discusses Shareholder Voting

SEC Chair Mary Jo White spoke about shareholder activism, the shareholder proposal process and fee-shifting bylaws at the 27th Annual Corporate Law Institute of Tulane University Law School.

Chair White described her directive to SEC staff to review Exchange Act Rule 14a-8 regarding shareholder proposals and the interpretation of the term "directly conflicts." In light of that review, the Division of Corporation Finance decided not to express a view on the provision during the current proxy season. Chair White stated that while "any frustrated expectations are regrettable," her request "was driven by a deeper concern that the application of (i)(9), as originally interpreted by the staff, could result in unintended consequences and potential misuse of our process."

Additionally, Chair White discussed fee-shifting bylaws. She stated that she is "concerned" about any provision in the bylaws of a company that could "inappropriately stifle shareholders' ability to seek redress under federal securities laws." She described a recent recommendation by the Delaware Corporation Law Council that the Delaware General Corporation Law be amended to prohibit companies expressly from including fee-shifting bylaws for claims brought against officers and directors for violation of their state law duties. She explained that some have called on the SEC to intervene in this matter in some way, and noted that the staff is keeping a close eye on evolving developments.

See: Chair White's Speech.