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August 25, 2011
Investors Urge SEC to Pursue Proxy Access
    by Robert Kropp

The Council of Institutional Investors describes proxy access as its "number one priority" in a letter to the Commission.

When the US Court of Appeals in Washington DC struck down the Securities and Exchange Commission's (SEC) rule on proxy access last month, Ann Yerger, executive director of the Council of Institutional Investors (CII), stated in a press release, "The court's decision is deeply disappointing to long-term shareowners."

Yerger continued, "We will continue to advocate for proxy access and will encourage the SEC to promptly address the court's concerns."

According to CII, proxy access, which would permit shareowners who have owned at least three percent of a company for at least three years to have their nominees for boards of directors included in corporate proxy materials, "would invigorate board elections and make boards more responsive to shareowners and more vigilant in their oversight of companies."

In the Court's decision, Judge Douglas Ginsburg wrote that the Commission "has not sufficiently supported its conclusion that increasing the potential for election of directors nominated by shareholders will result in improved board and company performance and shareholder value."

CII followed up on Yerger's promise late last week, when Jeff Mahoney, General Counsel of the association, wrote in a letter to the SEC, "The panel's decision does not merely delay the implementation of a critically important rule designed to benefit long-term investors and the markets; it also imposes unnecessary costs on the Commission by requiring it to consider anew issues it already fully and reasonably examined."

"So long as the agency considers the relevant factors and articulates a reasoned basis for its decision—a standard plainly met by the final rule—the agency's determination should not be disturbed," Mahoney wrote.

Describing the Court's decision as "a failure to abide by the standards applicable to judicial review of agency determinations," the letter continued, "Proxy access remains the number one priority of the Council and the fourteen amici, and we are confident that the issues identified by the Court can be fully and successfully resolved."

The SEC is reportedly considering an appeal of the Court's decision. CII's letter stated, "We strongly support the filing of a petition for en banc rehearing of the case. If, however, in the alternative, the decision of the Commission is not to file a petition for rehearing, but rather to reissue the final rule after addressing the concerns raised by the Court, we stand ready to lend our resources to assist in that effort."


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