Holders Gain Ground In Quest for Access to Ballots
By Kara Scannell
The Wall Street Journal
Tuesday, January 23, 2007
WASHINGTON -- Shareholder activists won a modest victory in
their efforts to win greater access to corporate ballots.
Yesterday, the Securities and Exchange Commission declined
to back Hewlett-Packard Co.'s attempt to block a closely
watched shareholder resolution.
A September ruling by the U.S. appeals court in New York
upended the long-held position of corporations to disallow
shareholder proposals that relate to elections of directors
on the ballot. The SEC had backed this view, saying that
elections were a matter of state law. But the court tossed
the issue to the SEC, saying the agency needed to clarify
Corporations had hoped the SEC would adopt a rule that would
make it difficult for shareholders to amend the bylaws of a
corporation to make it easier to put shareholder-backed
nominees on corporate ballots.
The SEC, though, has repeatedly punted on the issue,
reflecting disagreement among commissioners about how much
access to give shareholders. Yesterday, in declining to
weigh in on the H-P case, it said it had no opinion on the
matter and wouldn't take up the broader issue of shareholder
access later this month, as had been expected.
"I think it will allow the parties to work it out themselves
and also allow the commission to continue to study the
matter and see if we can't get more of a consensus on a
mechanism to improve shareholder access to the proxy," said
Roel Campos, a Democrat on the five-member commission.
In the meantime, shareholder groups are likely to take
advantage of the lack of guidance from the SEC. "It gives a
green light to shareholders to file other proposals and for
those that have been filed to move forward," said Richard
Ferlauto, director of pensions and benefits policy at the
American Federation of State, County and Municipal
Employees, which filed the resolution at H-P.
If H-P doesn't include the resolution in its proxy, Mr.
Ferlauto said he is "committed to litigation." H-P, which
has scheduled its annual meeting for March, declined to
comment on whether it would include the resolution in its
Business groups were disappointed in the SEC's failure to
act. "It's going to perpetuate uncertainty for companies in
how to deal with these proposals when they're filed in the
future," said Thomas Lehner, director of public policy at
the Business Roundtable.
contributed to this article.
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