By Cydney Posner

The WSJ article today provides an update, based on congressional testimony yesterday by Chairman Christopher Cox, on the current status of the controversial issue of shareholder proposals related to the election of directors. You may recall that the SEC had proposed two alternative approaches to shareholder proposals under Rule 14a-8 relating to the election of directors. It appears that, at least for the interim, the SEC will adopt the proposal that confirms its current position and amends the Rule to provide clarification. Currently, the text of Rule 14a-8(i)(8) states only that a proposal may be excluded "[i]f the proposal relates to an election for membership on the company’s board of directors or analogous governing body." It appears that, to clarify the meaning of the exclusion, consistent with the SEC's interpretation, the SEC is likely to adopt the proposal to revise the exclusion to read: "If the proposal relates to a nomination or an election for membership on the company’s board of directors or analogous governing body or a procedure for such nomination or election." However, it appears that SEC will also go "back to the drawing board" to reconsider new compromise proposals regarding the broader issue of proxy access that may be more acceptable to all constituents.

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