Monday, May 23, 2011
The United Brotherhood of Carpenters and Joiners of America filed a petition with the SEC to initiate a rulemaking to amend Rule 14a-4(b)(2)3 (Requirements as to proxy) to eliminate the "withhold authority" vote on proxy forms used for the election of corporate directors. According to the petition,
the "withhold authority" vote," or so-called "withhold" vote, established decades ago to "provide greater opportunities for shareholders to exercise their right of suffrage ... ," has outlived its intended purpose. The widespread adoption of a majority vote standard in director elections provides shareholders a valid opposition vote ("against") that has a "legal effect" in determining whether a nominee is elected. The symbolic "withhold" vote, a vestige of a plurality vote standard era, is not a valid vote option under any vote standard and its continued use contributes to confusing and misleading proxy communications that threaten the integrity of director elections.