(Updates with more speech details, background on Whole Foods)
By Sarah N. Lynch
WASHINGTON, June 25 (Reuters) - The U.S. Securities and Exchange Commission is working to propose new rules to simplify the voting process for contested corporate board elections by permitting the use of so-called universal proxy ballots, SEC Chair Mary Jo White said on Thursday.
In remarks prepared for a speech in Chicago, White said she has directed staff to draft recommendations for new rules amid concerns that shareholders do not have a “sufficient range of choice” when voting in contested company elections.
Currently, only shareholders who physically attend annual meetings are allowed to split their ticket in contested elections and vote for a mix of candidates nominated by company management and by large shareholders.
If they vote by proxy, they can generally only support one slate - management’s or the one nominated by shareholders.
Shareholder advocates, as well as SEC Democratic Commissioner Kara Stein, have previously raised concerns about how this approach could limit shareholders and have called for rules to permit universal ballots so shareholders have more free choice.
Earlier this year, the SEC convened a group of experts to discuss the topic at a roundtable and explore possible solutions to bolster shareholder participation in corporate elections.
White said Thursday that while she is looking to proceed with rules on the subject, she also believes companies can still make progress without waiting for the SEC to act.
“Give meaningful consideration to using some form of a universal proxy ballot even though the proxy rules currently do not require it,” she said.
“If a company’s or proponent’s nominees gave their consent to appear on the other side’s proxy card, then all shareholders would have the full range of voting options available to them.”
White’s speech comes in a year when the agency has been scrutinizing corporate election regulatory issues more broadly.
In January, the SEC backpedaled on a staff ruling permitting natural and organic foods retailer Whole Foods Inc to exclude a shareholder proposal from its ballot on the grounds it was substantially similar to the company’s.
In announcing the turn-around, the SEC also said it would not weigh in on any disputes between shareholders and companies on dueling proposals until it could review its rules on the topic. [ID: nL1N0UW011]
White said Thursday that review is still ongoing.
She also discussed how the SEC could potentially develop future regulations governing when and how preliminary voting results could be disclosed, but she did not formally commit to proceeding with a rule.
Reporting by Sarah N. Lynch; Editing by Emily Stephenson, Bill Trott and Alan Crosby