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A Momentous Day for Investors Submitted by: Ted Allen, Publications

July 1 was a momentous day at the U.S. Securities and Exchange Commission as the commissioners approved a long-awaited board election reform and proposed a series of wide-ranging disclosure rules.

By a 3-2 vote, the SEC gave final approval to a New York Stock Exchange rule change to bar brokers from casting uninstructed client shares in uncontested director elections starting in 2010.

The rule approval was praised by advocates for institutional investors, which have lobbied for a ban on ?broker votes? for more than a decade. However, the SEC?s two Republican commissioners warned that the new rule could diminish the influence of retail shareholders, increase the number of directors who lose their seats each their year, and impose additional costs on issuers.

Also on July 1, the SEC unanimously voted to propose new rules that seek more information on compensation risks, other services performed by pay consultants, director qualifications, and board leadership structures. The disclosure proposals also include a new mandate that companies disclose proxy vote results in an 8-K filing within four business days of an annual meeting, instead of up to several months later in a quarterly filing. The commission also voted to issue draft rules that address the annual advisory vote on pay requirement that now applies to financial firms that receive support under the Troubled Asset Relief Program (TARP). Both rule proposals will be subject to a 60-day comment period, and SEC officials hope to have final rules in place before the 2010 proxy season.

Full post as published by Institutional Shareholder Services -- Corporate Governance Blog on July 02, 2009 (boomark / email).