Thursday, June 25, 2015

Institutions Ask for New Rules, Guidance on Vote Transparency

By Mark S. Nelson, J.D.

The Council of Institutional Investors (CII) is asking the SEC to undertake rulemaking and to issue guidance to make the proxy process more transparent. Glenn Davis, CII’s director of research, made the request to Keith F. Higgin, director of the SEC’s Division of Corporation finance in a recent letter.

On the rulemaking front, the CII wants more fulsome disclosures of proxy results in companies’ Forms 8-K. Specifically, the CII recommended adding five new disclosures to Item 5.07 of Form 8-K to make clear to investors what the voting requirements were, the percentage of support each nominee or item received, whether a nominee was elected or unelected, and whether an item passed or failed. The CII also said the vote option terms should be keyed to the proxy card.

The CII noted that companies already possess much of this information and adding it to their Forms 8-K would not be burdensome. The CII also said a few companies already provide this data voluntarily.

Moreover, the CII asked the SEC to provide guidance on two related topics. First, the organization wants more clarity regarding proxy statement disclosures on ballot items and voting options. The CII also wants guidance regarding how proposals are described on proxy cards.

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