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Tuesday, October 5, 2010

Board Impact of the SEC's Proxy Access Delay

On October 4, the SEC suspended its rules permitting certain shareholders to nominate directors on issuer proxy statements (proxy access), pending the outcome of a lawsuit by The Business Roundtable and Chamber of Commerce. Most pundits do not expect these nomination rules to be effective for 2011. This suspension, however, is not a Mulligan, a "do over" or any cause for celebration or relief. The other provisions of Dodd-Frank are still in place, and the importance of doing the work to deal with them (outlined in my September 8 blog below -- "Director Elections in 2011: Yours to Lose" and on my website here) remains undiminished. For example, SAY ON PAY is still in place for 2011. The six principles (TSR, OR/IR, BICS, KISS, CAT and C2C) are just as important to follow for Say on Pay as they are for shareholder nominations of director candidates. [Note, I have updated the July 27 blog "Director's Checklist of Corporate Governance Changes in Dodd Frank" below.] The postponement of this SEC rule that seemed to bother directors the most should be seen as an opportunity to have one more year to improve or fine tune shareholder relations -- especially with the feedback of the extent of your 2011 shareholder say on pay support -- before the nomination rule becomes effective.

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