'Once more unto the breach': here we go again: the SEC re-storms the Harfleur of proxy access.

• Author: Kaback, Hoffer
• Position: Securities and Exchange Commission - Viewpoint essay

Set historically in the early 15th century, Act III of Henry V begins with Henry's exhortation to his soldiers to renew the attack upon the French town of Harfleur. The king urges his men "Once more unto the breach."

My 1998 interview with renowned dealmaker Sandy Weill--conducted with a public announcement of the momentous merger of Citicorp and Travelers Group imminent--ends with his saying "Here we go again" ("Sandy Weill, Pragmatic Dreamer," Spring 1998).

In the corporate governance world as of mid-August 2009, verily here we go again once more unto the breach--not to pursue a claim to the French crown or to forge a global financial supermarket, but to essay major modification of the structure and procedures of the proxy rules and of the election of directors.

The "we" here is the SEC. And the new-minted catchphrase, "Here we go again once more unto the breach"--jumping though it does o'er some 600 years--serves as a reminder that the Commission's presently proposed dramatic alteration to this terrain is the third time in the last six years that that agency has made such a foray.

In my column "Access Denied!" (Summer 2003), I analyzed the then-proposed SEC rule to permit shareholders to make nominations to the board and to have those nominees included in the company's proxy statement. Ultimately, it was not adopted.

In 2007's round two, the SEC went once more unto the breach by issuing for comment two mutually inconsistent Exchange Act releases, each proposing disparate approaches to board election procedures. (See " 'Access Denied!' Redux," Fourth Quarter 2007.) The Commission did not thereafter adopt new rules. I predicted then that, were the SEC to come out for round three, that future bell would not ring until 2010.

I was off by only a few months. On May 20, the SEC proposed a new incarnation of change to the proxy rules, to be effective for the upcoming 2010 proxy season.

In SEC Chairman Mary Schapiro's words, that action "represents nearly seven years of debate about whether the federal proxy rules should support--or stand in the way of--shareholders exercising their fundamental right to nominate directors."

Notice, first, how "support" is juxtaposed against "stand in the way of"; and, second, how the chairman melded the right to elect with a posited "fundamental right" to nominate. (A variation on this theme is analyzed in " 'Access Denied!' Redux")

Significantly, the Commission's May 20 press release explicitly tied the need for...