Voglio sapere a riguardo di…

Federal Register / Vol. 86, No. 228 / Wednesday, December 1, 2021 / Rules and Regulations
lotter on DSK11XQN23PROD with RULES2

meeting anniversary date.362 By contrast, we estimate that in fewer than 10% of contests in this sample did the registrant file a definitive proxy statement earlier than 60 days before the meeting anniversary date.363
An earlier deadline, such as 90 days prior to the anniversary of the prior years meeting, would reduce the risk, relative to the final amendments, of the potential confusion or costs related to notice being received after nonuniversal registrant proxy cards have already been disseminated. However, the risk that registrants will have distributed their proxy cards prior to the 60-day deadline seems relatively low, and an earlier deadline may further preclude late-breaking contests beyond those prevented by the required deadline. For example, when considering a deadline of no later than 90 calendar days as opposed to 60
calendar days, as in the final rule prior to the anniversary of the previous years annual meeting date, we found that in a significant percentage of contested elections initiated in years 20172020, the dissident communicated or announced its intent to pursue a proxy contest or filed its preliminary proxy statement between 60 and 90 days prior to the meeting anniversary date. Some of these contests may have been permitted under a 60-day deadline but excluded in the case of a 90-day deadline.364
Additionally, an earlier deadline for registrants would increase the likelihood that some registrants may have to finalize their nominees earlier than they would otherwise. For example, we estimate that in approximately 52% of contested elections initiated in years 20172020, the registrant filed its preliminary proxy statement between 80 and 50 days before the meeting anniversary date.365
A further alternative would be to require universal proxies in cases where 362 Based on data from Factsets SharkRepellent database and staff analysis of EDGAR filings.
363 Id.
364 Staff estimates that in 25% of contested elections initiated in years 20172020, the dissident communicated or announced its intent to pursue a proxy contest between 60 and 90 days prior to the meeting, and that in 30% of contested elections initiated in years 20172020, the dissident filed a preliminary proxy statement between 60 and 90
days prior to the meeting. See supra Section IV.B.2.b. Neither the date on which intent to pursue a contest is initially communicated/announced nor that on which a preliminary proxy statement is filed need correspond to the date on which notice could have been provided in these contests, though they may provide some indication of the universe of contests that might have been affected by a particular notice deadline.
365 Based on data from Factsets SharkRepellent database and staff analysis of EDGAR filings.

VerDate Sep<11>2014

19:03 Nov 30, 2021

Jkt 256001

the dissident provides notice to the registrant, and not require them in cases where the dissident does not meet the notice deadline. Under this alternative, the dissident would be permitted to initiate a late-breaking proxy contest but, because of the risk of confusion if proxies have already been disseminated, would not trigger the use of universal proxies, while other contests in which notice was provided would require universal proxies. This alternative may raise similar concerns to those discussed above with respect to the optional use of universal proxies, in that there would still be some elections without universal proxies, and the dissident could strategically time its actions to avoid triggering universal proxies when it believes there is an advantage to doing so.
One commenter claimed that registrants typically re-evaluate their contemplated slate after receiving advance notice of a contest, often leading to recruitment of new nominees, and that such important decisions will not be possible within 10 days.366 As an alternative that would address this comment, we have also considered not requiring registrants to provide notice to dissidents of their nominees. In this case, dissidents would generally become aware of the registrant nominees when the registrant files its preliminary proxy statement, which is required to be filed at least 10 calendar days prior to the date the registrants definitive proxy statement is first sent to shareholders, and would have to finalize their own proxy cards thereafter. This alternative would avoid imposing a new notice obligation on registrants, and may reduce the risk that such an obligation could marginally reduce the quality of registrant nominees in some cases.
However, requiring that notice be provided by both parties to the contest would limit the possibility that registrants may gain a strategic advantage by learning about and being able to react to the dissidents slate of nominees significantly earlier than when the dissident may be informed of the registrants slate.
Minimum Solicitation Requirement for Dissidents As discussed above, we have raised the threshold from the proposed majority of the voting power to 67% of the voting power in response to commenters concerns that setting the threshold at the majority of the voting power would insufficiently deter the potential for freeriding of dissident nominees on the registrants proxy 366 See
PO 00000

letter from Society dated Jan. 10, 2017.

Frm 00043

Fmt 4701

Sfmt 4700

68371

card.367 As discussed in more detail above,368 because the vast majority of typical proxy contests will not be affected by this increase in solicitation requirement, and in the infrequent cases in which there may be an effect this requirement will impose minor incremental costs to dissidents, we maintain our assessment from the Proposing Release that the solicitation requirement will not have significant effects on the costs of typical proxy contests.369
Nevertheless, we expect that the solicitation requirement in the final amendments will impose a cost on any dissidents that may try to capitalize on the ability to introduce the names of alternative candidates on the registrants proxy card by running a nominal proxy contest, in which minimal resources are spent on solicitation. As discussed above, in addition to the existing cost of pursuing a nominal proxy contest, we estimate that, using the least expensive approach, it will cost on average between $5,300 and $9,800 depending on the size of the registrant to meet the minimum solicitation requirement through an intermediary.370 Under the proposed threshold of a majority of the voting power, the equivalent estimated range would instead be approximately $5,100 to $6,200, depending of the size of the registrant.371 Thus, raising the threshold to 67% from a majority of the voting power will increase the cost of nominal contests somewhat across the board, but especially for dissidents targeting larger registrants. Therefore, the additional cost required to comply with the minimum solicitation requirement, beyond current expenditures in contests, is likely to represent a relatively larger incremental cost in the case of nominal contests relative to the baseline. We expect that the minimum solicitation requirement to some degree may deter dissidents from initiating nominal contests, as discussed in Section IV.C.4.b above.
In the Proposing Release we considered the alternative of requiring universal proxies without imposing any minimum solicitation requirement on 367 See
supra Section II.D.3.
supra Section IV.C.2.a.
369 See supra Section IV.C.2.b.
370 Id.
371 See supra note 273 for estimation details. The lower estimated costs compared to the 67%
threshold case is due to fewer accounts needed to be solicited and a reduction in the estimated number of nominees causing lower nominee coordination fees. Note that the estimated costs are bounded from below at $5,000, which is the minimum intermediary unit fee per NYSE Rule 451.
368 See
E:FRFM01DER2.SGM

01DER2