Sunday, September 6, 2009
On Friday, The Dealbook helpfully linked to some of the comments submitted in response to the SEC's "shareholder access" proposal. There are lots of comments and they cover a wide variety of issues related to the access proposal. A general line of argument submitted by many is one, I think, that makes a lot of sense. While more shareholder access is good, the SEC's proposal may be moving too quickly.
OK, I know that's hard to imagine that an issue like this that has been floating around for years in one form or another is "moving too quickly", but Delaware just amended its code to permit shareholders to adopt bylaws requiring the corporation to include sharheolder nominees on the ballot and bylaws requiring reimbursement of shareholder expenses in connection with such nominations.
The comments from the Delaware Bar Association provide a nice summary of the issues related to DGCL 112 and 113 and the proposed rule 14a-11. As the comments from Wachtell and O'Melveny point out, after 2006 when Delaware adopted amendments permitting the adoption of majority voting proviions, there has been a flood of private ordering in that area. My sense is that while O'Melveny is neutral on that outcome, Wachtell is predictably less happy.
In any event, rather than move forward now on a "one-size-fits-all" shareholder access proposal, why not wait some more and see what the impact of the DGCL amendments is? The response by shareholders following the majority voting amendments has been significant. There's no reason to believe that there won't a similar response by shareholders in the wake of the 2009 DGCL amendments with respect to shareholder access - all that without additional moves by the SEC. If the SEC is serious about allowing shareholders more power, then it seems obvious that they should sit back and wait before adopting 14a-11.