January 31, 2006
Shareholder Access to Proxy Materials
I have joined a letter to the SEC written by Lucian Bebchuk, Harvard Law School, and others asking that SEC tell AIG it cannot exclude a shareholder Rule 14a-8 proposal on corporate governance. A shareholder of AIG is attempting to amend the company's bylaws to allow shareholders to place candidates on the company's proxy in specified circumstances. There is much at stake here. Shareholders have the power to amend a company's bylaws to change the method of electing corporate directors. The Committee on Corporate Laws of the ABA has recently affirmed the right. Yet shareholders cannot force the matter to a vote unless one of them pays a million or so dollars to put a package of proxy solicitation materials together and mail them to all the other shareholders. The only way the right has any meaning is for shareholders to have access to the company's routinely mailed proxy solicitation materials. SEC Rule 14a-8 provides a method to do just that. The SEC must, however, interpret the Rule to allow shareholders to put election proposals in the company's materials. The SEC has conflicting precedents on the issue. Time to straighten the matter out -- for the better.
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