United States: SEC Proposes Universal Proxy Cards In Contested Elections

On October 26, 2016, the SEC proposed amendments to the proxy rules that would require the use of universal proxies in all non-exempt solicitations in contested elections of directors. The focus of the SEC proposal is to require the inclusion of the names of both registrant and dissident nominees on a universal proxy card in order to more closely resemble how shareholders can vote in person to elect directors at shareholder meetings. The SEC also proposed amendments to proxy card and proxy statement disclosure requirements to more clearly specify applicable voting options and standards in all director elections.

Rationale for the Proposal

A shareholder voting in person at a shareholder meeting may select among all of the duly nominated director candidates, including director candidates nominated by shareholders, and vote for any combination of candidates. Shareholders voting by proxy, however, are currently limited to choosing among candidates nominated by the person soliciting the proxy. The SEC is proposing changes that would allow a shareholder voting by proxy to select among director nominees in a contested election in the same way that the choice could be made by personally attending the meeting at which directors are to be elected. The SEC release mentions that in some close elections proxy solicitors and parties to the contest have made arrangements enabling large shareholders to split their votes by providing in-person representatives at the meeting or other means.

Current State of Play

A shareholder that attends a shareholder meeting in person can typically cast a ballot that includes the names of all duly nominated directors. In a contested election process, the registrant's director nominees and the dissident's full or short slate are typically presented on two different proxy cards. The bona fide nominee rule, Rule 14a-4(d)(1), prohibits a proxy from including any person who has not consented to be named in the related proxy statement and to serve if elected. For a variety of reasons, registrant and dissident nominees usually do not consent to be named in the other party's proxy statement, which means that the options for a shareholder voting by proxy differ from those available to a shareholder attending the meeting in person. Submitting two separate proxy cards is no solution because they cannot both be valid under state law as the later filed proxy card controls.

Rule 14a-4(d), the short slate rule, currently mitigates this issue to a limited extent. The rule permits a dissident to indicate on its proxy card that it will use its proxy authority to vote for registrant nominees other than those named on the card. The shareholder has an opportunity to write in names of other registrant nominees for whom it withholds voting authority. However, this rule is available only for contests in which the dissident seeks to elect a minority of the board.

Summary of Proposed Changes

To align the in person and by proxy options for investors in contested elections, the SEC is proposing the following changes:

  • Mandatory Universal Proxy Cards. The proposal would require the use of universal proxy cards in non-exempt solicitations for contested elections. The proxy card would be required to include the names of all duly nominated candidates for election to the board. Use of a universal proxy card would not be mandatory when a proponent is not nominating its own candidates, such as in a "vote no" campaign or solicitation of votes for a governance proposal. However, the change to the consent required of a bona fide nominee, referred to below, would allow such a proponent to include the names of some or all of the registrant nominees on the proponent's proxy card.
  • Dissident Advance Notice to Registrant. The proposal would require dissidents to provide notice of intent to solicit proxies in support of alternate nominees and the names of those nominees to the registrant no later than 60 calendar days prior to the anniversary of the previous year's annual meeting date.
  • Registrant Advance Notice to Dissident. The proposal would require registrants to provide dissidents with notice of the names of registrant nominees no later than 50 calendar days prior to the anniversary of the previous year's annual meeting date.
  • Minimum Solicitation by Dissidents. The proposal would require dissidents to solicit holders of shares representing at least of a majority of the voting power of shares entitled to vote in the election of directors. This feature attempts to address concerns that the universal proxy card requirement would allow dissidents to "free ride" on the company's solicitation efforts without expending any of their own resources to solicit proxies for their nominees.
  • Filing Deadline for Dissidents. The proposed rules would require the dissident to file its definitive proxy statement by the later of 25 calendar days prior to the meeting or five calendar days after the registrant files its definitive proxy statement. The rule is designed to ensure that shareholders who receive a universal proxy card will have access to information about all nominees sufficiently in advance of the meeting. If a dissident fails to comply with the rule, it would not be permitted to continue with its solicitation. Because the registrant may disseminate the universal proxy card before it knows that a dissident is not proceeding with its solicitation, it would be required to disclose how it intends to treat proxy authority granted in favor of dissident nominees in the event the solicitation is abandoned.
  • Omnibus Consent of Nominees. Rule 14a-4(d)(1) would be amended to provide that consent to being named in any proxy statement relating to a meeting of shareholders would make a director a bona fide nominee, rather than requiring consent to inclusion in a particular proxy statement.
  • Elimination of Short Slate Rule. The proposal would eliminate the short slate rule in light of the new amendments.
  • Requirements for Universal Proxy Cards. Among other things, the universal proxy card would be required to indicate, in bold face type whether it is solicited on behalf of the registrant's board of directors or a third party, and must clearly distinguish between registrant nominees, dissident nominees and, if applicable, proxy access nominees.

In February 2016 at the SEC Speaks PLI Conference, Michele Anderson of the SEC Staff described a review of proxy statements in which the Staff found a variety of problems. These included proxy cards allowing a shareholder to vote "against" instead of "withhold" with a plurality voting standard and proxies describing a "plurality plus resignation" policy as "majority voting." The proposed rules address these concerns that proxy cards in director elections may not appropriately reflect the voting standards under applicable state law and company bylaws. The proposed rules would mandate the inclusion of an "against" voting option on the form of proxy used in elections where such a vote would be given legal effect. In addition, the proxy statement would be required to expressly include disclosure about the treatment and effect of a "withhold" vote. The proposal also solicits comment about whether the "withhold" option should be replaced with an "abstain" option in the case of a plurality voting standard so that shareholders understand their withhold vote has no impact on the outcome of the election.


The proposal attempts to take a balanced approach with the goal of providing shareholders who vote by proxy the same options as shareholders who vote in person at a meeting in non-exempt contested elections of directors. Companies should evaluate whether they think the proposals would create undue confusion or provide an unfair advantage to dissidents by including their nominees on registrant proxy cards. These concerns should be balanced against features in the proposals that require dissidents to comply with new requirements, including notice, minimum solicitation and proxy deadline requirements. Companies should also consider whether the ability of other proponents (e.g., shareholder proponents not engaged in contesting the election of directors) to include some or all of the registrant's nominees on their proxy cards creates any similar concerns. Lastly, companies should review their approach to characterizing voting options in proxy statements and proxy cards to determine if it is consistent with the proposed changes.    

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.