Arthur McMahon, a Business & Finance partner in Taft's Cincinnati office, has just published an overview of two recent proposals to come before the SEC. The following excerpt introduces these developments:
The recent financial crisis, which many influential people attribute to a systemic failure of corporate governance, has given new impetus to the drive for a wide, federal, expansion of shareholder rights and substantive corporate governance requirements, and in recent days two concrete proposals have come from Congress and the Securities and Exchange Commission.
First, on May 19, 2009, New York Senator Charles Schumer introduced the “Shareholder Bill of Rights Act of 2009,” which would, among other things, require public companies to give shareholders access to company proxy materials for director nominations; abolish classified boards for all public companies; require all public companies to have a separate, independent chairperson and an independent “risk committee” of the board of directors; and require advisory shareholder “say on pay” votes on senior executive compensation and severance pay. Second, in an open meeting on May 20, 2009, the SEC announced and solicited public comment on proposed rule changes that would amend the federal proxy rules to give shareholders access to company proxy materials for director nominations and certain election-related proposals. In a related development, the New York Stock Exchange has proposed and is awaiting SEC approval of long-delayed rules that would eliminate brokers’ discretionary voting in uncontested director elections.