Je veux savoir à propos de…

Federal Register / Vol. 86, No. 228 / Wednesday, December 1, 2021 / Rules and Regulations registrants is approximately 31%. If we instead consider only Form 13F filers that each hold stock worth $10 million or more, the average percentage of outstanding shares held by these
institutions is 47% for S&P 500
registrants, 47% for S&P 400 registrants, 38% for S&P 600 registrants, and 19%
for non-S&P 1500 registrants. Overall, the estimates in Figure 2 suggest that a
68355

substantial portion of voting shares in registrants are held by institutions that have a significant financial interest.
This is particularly so for relatively larger registrants.

Figure 2: Average percentage of outstanding shares held by institutions Form 13F
filers with different levels of minimum financial interest, across registrants in different size categories.238
60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%
Holdings of $1 million Holdings of $2 million Holdings of $5 million Holdings of $10 million or more or more or more or more
I Non-S&P 1500

111 S&P 500 large cap
3. Other Methods To Seek Change in Board Representation
lotter on DSK11XQN23PROD with RULES2

As discussed in more detail in the Proposing Release,239 beyond proxy contests culminating at annual meetings, we note that under the baseline, there are a number of other methods shareholders currently can use to potentially affect changes to the composition of a board of directors.
Such shareholder interventions could be in the form of i making recommendations for director candidates directly to the nominating committee of the board,240 ii pursuing 238 Id. Financial interest is estimated as the market value of all shares held by the individual institution in a specific registrant. For the average percentage of outstanding shares, we only considered holdings for which institutions had voting authority in contested director elections.
239 See Section IV.B.3 of the Proposing Release.
240 See letter from NACD stating that NACD
actively encourages such shareholder participation on director nomination. Indeed, contested elections will likely become less common as boards continue to improve their work in creating optimal boards
VerDate Sep<11>2014

19:03 Nov 30, 2021

Jkt 256001

consent solicitations,241 iii pursuing exempt solicitations at the annual meeting, iv taking advantage of proxy access provisions in corporate bylaws to nominate a limited number of director candidates for inclusion in the registrants proxy statement, v withholding votes from or voting against directors in uncontested elections as well as waging formal vote no campaigns to encourage other and in communicating their methods for achieving them..
241 Consent solicitations may take the form of a two-step procedure where a dissident first obtains sufficient support from shareholders to call a special meeting or sufficient voting ownership to call a special meeting, and then puts to a vote, either by proxy or in person at the special meeting, a proposal to remove certain directors and elect certain other nominees. The criteria for how and when a special meeting can be called vary both by state law and corporate bylaws and governing documents e.g., certificate of incorporation.
Depending on state law and governing documents, a dissident may alternatively be able to perform a consent solicitation in one step, in which it seeks support for a proposal to remove certain directors and elect certain other nominees purely through written consent by shareholders.

PO 00000

Frm 00027

Fmt 4701

Sfmt 4700

shareholders to do so, or vi seeking a change in board composition by making nominations from the floor of a meeting, without soliciting proxies.
C. Discussion of Economic Effects The economic benefits and costs of the final amendments, including impacts on efficiency, competition, and capital formation, are discussed below.
We first address the effects of the changes to the proxy process together as a package, including both benefits and costs. In particular, we discuss the anticipated effects of the final amendments on shareholder voting and then consider anticipated effects with respect to the costs, outcomes, incidence, and perceived threat of contested elections at affected registrants. We then discuss the economic effects that can be attributed to specific implementation choices in the final amendments, to the extent possible, and the relative benefits and costs of the principal reasonable
E:FRFM01DER2.SGM

01DER2

ER01DE21.006

S&P 400 mid cap
S&P 600 small cap