The Council of Institutional Investors opposes the SEC’s proposed first-filers approach for determining which shareholder nominees are included in a company’s proxy materials, according to a comment letter to the SEC from Jeff Mahoney, general counsel.
The council also opposes requiring that shareholder nominees be independent of the nominating shareholder group.
Mr. Mahoney was responding on behalf of the council to an SEC proposal to allow shareholders access to corporate proxy material to nominate directors.
Mr. Mahoney’s 72-page comment letter said the council “strongly supports” the proposed rule, but has some strong disagreements about some aspects.
For example, the “first-in” approach, allowing shareholder groups that file their nominations first to nominate the maximum number of directors allowed, “would likely cause a pointless and potentially harmful race to be the first to file. What matters most is not who is the fastest to nominate but what investor or group has the greatest stake in the director election and ultimately, the long-term performance of the company,” Mr. Mahoney wrote.
He wrote that the council would prefer that “the shareowner or shareowner group with the largest beneficial ownership would have the right to nominate the maximum number of director candidates allowed under the rule.”
Also, the CII “strongly opposes requiring shareowner-suggested nominees to be independent of the nominating shareowner or group,” Mr. Mahoney wrote. “Instead, the council recommends requiring companies and nominating shareowners to fully disclose all relationships between director candidates and the company, company executives, and in the case of candidates nominated by shareowners, the nominating shareowners.
Corporate concerns over “special interest” representation are exaggerated, his letter said.
The SEC comment period on the proposed rule ends Aug. 17.
