7.29.2009 Meredith Cross, the SEC’s Director of the Division of Corporation Finance, testified before the Subcommittee on Securities, Insurance, and Investment of the U.S. Senate Committee on Banking, Housing, and Urban Affairs. The Director spoke on steps the SEC has taken where enhanced disclosure standards and other rule changes may further address the concerns of the investing public:
- Shareholder Director Nominations: The SEC approved for notice and comment proposals that are designed to help shareholders more effectively exercise their state law right to nominate directors. The SEC proposes to amend Rule 14a-8 under the Securities Exchange Act of 1934, which currently allows a company to exclude from its proxy materials a shareholder proposal that relates to a nomination or an election for membership on the company’s board or a procedure for such nomination or election.
- Proxy Disclosure Enhancements: The SEC voted to propose a series of rule amendments designed to improve proxy disclosures, thereby enabling shareholders to make more informed voting decisions. In its amendments, the SEC has proposed requiring disclosure about how the company incentivizes its employees—beyond the named executive officers—if its compensation policies may result in material risks to the company. The SEC’s recent proposals would also require expanded information about qualifications of director and director candidates, about board leadership structure and role in risk management, and about potential conflicts of interests of compensation consultants.
- Broker Discretionary Voting: The SEC approved changes to New York Stock Exchange Rule 452, which governs broker discretionary voting, to prohibit brokers from voting shares held in street name in director elections unless they have received specific voting instructions from their customers.
- Say-on-Pay for TARP Companies: The SEC proposed amendments to the proxy rules to set out the requirements for a say-on-pay vote at public companies that have received (and not repaid) financial assistance under the Troubled Asset Relief Program.
Click http://www.sec.gov/news/testimony/2009/ts072909mbc.htm to access Director Cross’s testimony.