On September 15, 2011, the Securities and Exchange Commission (“SEC”) issued an effectiveness order confirming that the existing stay of the amendments to Rule 14a-8(i)(8) had expired. As amended, Rule 14a-8 permits shareholders to influence the director election process by requiring public companies to include in their proxy materials shareholder proposals that would amend, or request an amendment to, a company’s governing documents regarding director nomination procedures. These amendments effectively provide shareholders with a private ordering mechanism for adopting proxy access procedures, starting with the upcoming 2012 proxy season.

In August 2010, the SEC adopted the controversial Rule 14a-11, which would have allowed shareholders access to a company’s proxy materials. The D.C. Circuit ultimately vacated this rule, and the SEC has decided not to appeal that decision. The SEC has decided to move forward with Rule 14a-8, however, which narrows the “election exclusion” to allow companies to only exclude those shareholder proposals that:

• would disqualify a nominee who is standing for election;
• would remove a director from office before his or her term expired;
• question the competence, business judgment or character of one or more nominees of directors;
• seek to include a specific individual in the company’s proxy materials for election to the board; or
• otherwise could affect the outcome of the upcoming election of directors.

Rule 14a-8 requires submission of shareholder proposals no later than 120 calendar days before the anniversary of the date on which the company’s proxy materials for the prior year were released to the shareholders or, if the date of the annual meeting has changed from the prior year by more than 30 days, a reasonable time before the company begins to print and send its proxy materials. For most calendar-year companies, this deadline will fall in November or December 2011. Reports are mixed as to whether companies should expect a large number of these types of proposals, so the ultimate effect of these amendments remains to be seen.