Voglio sapere a riguardo di…

Federal Register / Vol. 86, No. 228 / Wednesday, December 1, 2021 / Rules and Regulations mechanisms such as takeovers.333
Relatedly, two commenters argued that adoption could impede private ordering and frustrate recent efforts by issuers and their shareholders to adopt proxy access bylaws.334 We cannot rule out this possibility, but if shareholders view a universal proxy system as such a close substitute to proxy access bylaws that they would disband efforts to pass proxy access bylaws at registrants, it is not apparent that it would come at a loss to shareholders. By contrast, another commenter did not expect such substitution, arguing that a universal proxy requirement would not change the equation for those who may use proxy access bylaws in the future because, in their view, universal proxy simply improves the process when there is a proxy contest with competing proxy cards.335
Alternatively, an increase in the incidence or perceived threat of proxy contests could be magnified by complementary mechanisms whose effectiveness and therefore usage may increase such as by activists being more likely to acquire blockholdings in an environment in which proxy contests are more frequent. Such interactions may have significant effects on the overall economic effects of the final amendments. However, because so many different governance mechanisms are closely interrelated, it is difficult to predict the extent and impact of such interactions.
5. Specific Implementation Choices In this section, we discuss, to the extent possible, any costs and benefits specifically attributable to individual aspects of the final amendments. We also discuss significant implementation alternatives and their benefits and costs compared to the amendments.
a. The Short Slate and Bona Fide Nominee Rules
lotter on DSK11XQN23PROD with RULES2

Elimination of the Short Slate Rule For registrants other than funds, we are eliminating the short slate rule in Rule 14a4d4, which currently permits a dissident seeking to elect a minority of the board and running a slate of nominees that is less than the number of directors being elected to round out its slate by soliciting authority to also vote for certain registrant nominees. The elimination of 333 We note that proxy contests may be a complementary mechanism for certain types of takeovers. In particular, proxy contests can facilitate some hostile takeovers by removing directors who oppose the transaction in question. See Mulherin &
Poulsen Study, at 309.
334 See letters from CCMC; CGCIV.
335 See letter from CII dated Dec. 28, 2016.

VerDate Sep<11>2014

19:03 Nov 30, 2021

Jkt 256001

the short slate rule will potentially impose costs on certain dissidents.
Under the existing proxy rules, dissidents qualifying to use the short slate rule can select the set of registrant nominees that they prefer to round out their slate. Eliminating this rule, and requiring a universal proxy, will take away this choice on the part of the dissident, reducing any related strategic advantage that the dissident may expect to gain, and will instead allow shareholders voting on the dissident proxy card to select the registrant nominees, if any, that they prefer.
We have considered whether, as an alternative to the final amendments, the proxy rules should instead be revised to treat contests that do not involve a potential change in the majority of the board differently from contests in which control of the board is at stake, as in the current short slate rule and as previously recommended by some observers.336 For example, we have considered an alternative approach that would not require the use of universal proxies in contests that may involve a potential change in a majority of the board. When a dissident is seeking a majority of seats on the board, electing a mixed board where a minority of seats would be held by dissident nominees may be inconsistent with the intentions and goals of both the dissident and the registrant. Not requiring universal proxy cards in such cases could reduce the likelihood of electing a mixed board when such an outcome is undesirable to both parties to the contest and could be disruptive. However, under this alternative, shareholders would continue to have more limited voting options when voting by proxy than when voting in person in contests that involve a potential change in a majority of the board. Furthermore, the risk of electing a mixed board when it would be disruptive or contrary to the goals of both parties to the contest could also be mitigated through disclosure emphasizing the importance of achieving or retaining majority control of the board and clarifying the willingness of each nominee to serve in the case control is not achieved.
336 In 2013, the IAC recommended that the Commission consider providing proxy contestants with the option to provide universal proxies in connection with short slate director nominations.
At that time, the IAC did not make such a recommendation in the case of elections in which majority control of the board is at stake. See Recommendations of the Investor Advisory Committee Regarding SEC Rulemaking to Explore Universal Proxy Ballots Jul. 25, 2013, available at https www.sec.gov/spotlight/investor-advisorycommittee-2012/universal-proxy-recommendation072613.pdf IAC 2013 Recommendation, at 2.

PO 00000

Frm 00039

Fmt 4701

Sfmt 4700

68367

Modification of the Bona Fide Nominee Rule We are amending the definition of a bona fide nominee under Rule 14a 4d4 for registrants other than funds to include all director nominees that have consented to being named in any proxy statement, whether that of the registrant or that of a dissident, relating to the registrants next meeting of shareholders at which directors are to be elected.
The final amendment to the definition of a bona fide nominee will remove the impediment imposed by the current rule to including other parties nominees on ones own proxy card. We believe that this amendment will, in and of itself, likely impose no direct cost on parties to contested elections because it would not require parties to change their slates of nominees or their proxy materials.
However, revising Rule 14a4d4 is a prerequisite to any rule that would allow or require universal proxies. As such, all of the other costs and benefits discussed above, the details of which depend on the other implementation choices in the final rule, are conditional on this amendment. Additionally, revising Rule 14a4d4 alone, without the other amendments we are adopting, would permit the optional use of universal proxies, an alternative we discuss below.
Solicitations Without a Competing Slate Under existing rules, a party may solicit proxies without presenting a competing slate, such as when soliciting proxies against some or all of the registrant nominees a vote no campaign or when soliciting proxies in favor of one or more proposals on matters other than the current election of directors. The final amendment to the bona fide nominee rule would permit, but not require, proponents conducting solicitations without a competing slate to also solicit authority with respect to some or all registrant nominees in their proxy statements and proxy cards.
Because the registrant in a contest without competing slates does not need to include the proponents proposals on its own card, shareholders who are positively inclined to the proponents proposals and solicited by the proponent may be more likely to use the proponents card if they are also offered the ability to vote on the election of some or all of the director nominees.
As a result, the change to the bona fide nominee rule may result in somewhat increased support for proponents in solicitations without a competing slate.
This potential increase in support may increase proponents incentives to
E:FRFM01DER2.SGM

01DER2