Securities and Exchange Commission Chair Mary Jo White told lawmakers on Tuesday the agency would not try anew to craft rules to make it easier for shareholders to nominate corporate directors but that she was closely watching activists' attempts to do just that.
At a congressional hearing, several U.S. House of Representatives Democrats asked White to resurrect SEC efforts to adopt "proxy access" rules, but White said she had "no intention" of doing so after a U.S. appeals court tossed out several years ago.
However, she said the SEC is closely tracking the flurry of activity this proxy season, in which activists have had success convincing some companies to change their bylaws to permit proxy access, or to permit shareholder resolutions on the topic to appear on corporate ballots.
Companies such as General Electric and Bank of America have changed their bylaws voluntarily to permit proxy access, while others like Citigroup have let proxy access proposals appear for consideration on corporate ballots.
The decision by companies to embrace proxy access rule change matches the policies of some big asset managers including TIAA-CREF, which recently asked 100 companies to make the change.
Momentum for the issue kicked into high gear last fall, when New York City Comptroller Scott Stringer filed 75 shareholder proposals on proxy access for companies whose stock is owned by New York City's pension funds.
Former SEC Chair Mary Schapiro several years ago made proxy access reforms one of her top priorities, and adopted a rule that would have applied more broadly for shareholders at all public companies.
The U.S. Chamber of Commerce and the Business Roundtable, however, convinced a U.S. appeals court to toss the rule on the grounds the SEC had failed to conduct a proper economic analysis of the rule's impacts.
As a result of that ruling, shareholders can only obtain bylaw changes on proxy access in a piecemeal fashion by filing resolutions on a company-by-company basis to request changes.
The most vocal questioner on the House of Representatives financial services panel Tuesday was Massachusetts Democrat Michael Capuano, who accused the SEC of standing idly by and not taking more steps to help shareholders.
"Why doesn't the SEC stand with the shareholders?" he asked. "You should be pushing harder," he added.
"I think that the shareholder proposal process is working very effectively," White responded. "We are very closely monitoring that to see where it goes by way of private ordering."
