SEC's Campos urges shareholder proxy access

By Kevin Drawbaugh

WASHINGTON (Reuters) - Giving shareholders more access to the proxy statement -- a long-cherished goal of investor activists -- should be the top priority of the U.S. Securities and Exchange Commission, SEC Commissioner Roel Campos said on Wednesday.

In remarks sure to rankle SEC colleagues more closely allied with the business community, Campos said: "The most important issue for the agency is to pass a rule that provides some type of meaningful shareholder access to the proxy."

Corporate interests have fought off past attempts to let shareholders put their own proposals on ballots sent to a company's investors in proxy statements.

These pamphlets are mailed annually to shareholders telling them about nominations for director seats, executive pay levels and other corporate information.

At the annual Reuters Regulation Summit in Washington, Campos said: "Investors aren't just asking, they're demanding it ... If we don't produce something in that realm in the first quarter of this year, or at least begin the process with a proposal, then I think we are hugely disappointing investors."

As Democrats now in control of Congress vow to legislate on shareholder rights, Campos' comments come at a time when the issue is again pressing in on the investor protection agency.

Shareholder rights vaulted to SEC center stage in September when the U.S. 2nd Circuit Court of Appeals overturned 16 years of SEC practice in which corporations had routinely been allowed to exclude certain shareholder proposals from proxies.

By excluding, company managers can effectively block shareholders from voting on such proposals due to the high cost of bringing the ideas to investors' attention in other ways.

SEC Commissioner Paul Atkins -- staunch opponent of a proxy access proposal three years ago that failed -- said at the Reuters Summit on Tuesday he hopes the commission will issue a reply to the court before the 2007 proxy season heats up.

On the court ruling, Campos said: "That has certainly brought this to the forefront and provided a catalyst."

The court that covers New York, Connecticut and Vermont ruled that companies may not exclude a narrowly defined type of proposal -- one to let shareholders consider ways to give themselves more say in how corporate directors are chosen.

The ruling came in a case involving the American Federation of State, County and Municipal Employees (AFSCME), a labor union, and U.S. insurer American International Group (AIG.N: Quote, Profile, Research, Stock Buzz).

The 2nd Circuit's decision stirred confusion in the corporate governance world. The SEC has twice been expected to clear up the matter, first in October and then in mid-December, but the agency both times has put off a decision.

The delays reflect an inability of the SEC's five commissioners to agree on an approach. Asked about the issue on Monday, SEC Chairman Christopher Cox said: "We're trying to get something done as quickly as possible."

Investor activists have seen the SEC's expected reply to the court as a way to resurrect efforts to give shareholders more proxy access -- an issue last debated in 2003-2004.  Continued...