* SEC meets Wednesday to vote on proxy access rule
* Small firms may get three-year delay in compliance
(Adds lawmaker letter, byline)
By Rachelle Younglai
WASHINGTON, Aug 24 U.S. securities regulators
are considering giving small companies a reprieve from plans to
make corporate boards more accountable to shareholders, a
person familiar with the Securities and Exchange Commission's
thinking said on Tuesday.
The SEC is hashing out a rule to give long-term
shareholders the ability to place a board nominee on the
company's proxy statement.
Giving shareholders access to the corporate proxy, or the
ability to nominate board directors, has long been sought by
big activist shareholders who want more say on how their
companies are run.
The business community opposes so-called proxy access for
fear that boards will be taken over by special interest groups
that do not have the company's best interests in mind.
According to the plan under consideration, shareholders
would have to hold at least 3 percent of the company's stock
for a minimum period of three years in order to nominate a
director, the source said.
Small companies could be given a three-year delay to comply
with the so-called "proxy access" rule, said the source.
The source requested anonymity because the plan is not
final and could change before the SEC meets on Wednesday to
decide whether to adopt it.
Over the past decade, two other SEC chairmen have tried to
adopt proxy access rules with no success. This time, the SEC
has backing from the Dodd-Frank financial regulation bill,
which affirms the agency's authority to adopt proxy access
The legislation will help protect the SEC from some
lawsuits. In the past, the business community has threatened to
sue the SEC, saying the agency does not have the power to adopt
Regardless, lawmakers mounted a last-ditch effort to thwart
the SEC's plans and reminded commissioners that the Dodd-Frank
bill does not mandate the SEC to pass a rule.
"At a time when capital formation and job creation are in
jeopardy, the commission should be particularly careful not to
impose unnecessary requirements on public companies," said 10
lawmakers in a letter to the SEC commissioners.
The letter, dated Aug. 9, was signed by senators including
Richard Shelby the top Republican on the Senate Banking
Committee, which oversees the SEC.
(Reporting by Rachelle Younglai; editing by John Wallace,