SEC won’t issue shareholder access rules this year

WASHINGTON – Federal regulators won’t issue rules making it easier for shareholders to nominate directors of public companies until next year, meaning the change sought by investor advocates likely wouldn’t occur in time for next spring’s corporate elections season.

The Securities and Exchange Commission, split 3-2 along party lines with Democrats in the majority, proposed the rule change in May as it addressed one of the most contentious issues the agency has dealt with in years. SEC officials had planned to move to final approval sometime this year.

But SEC Chairman Mary Schapiro said in a statement Friday that “it is my hope to finalize the rules early in the new year.”

Experts say it wouldn’t be possible for companies to prepare for a changeover to new proxy rules in time for next spring’s meetings unless the SEC were to act by November. But additional work on the proposal appears to be needed before the SEC commissioners can vote on final action.

“I am committed to bringing final rules before the (commissioners) regarding the ability of shareholders to nominate directors,” Schapiro said in the statement. “We have received hundreds of comments that we are reviewing to ensure our rules are fair and appropriate.”

Under the current system, dissident investors must wage costly proxy fights and appeal to shareholders at their own expense if they seek new directors on a company’s board or a bylaw change.

The delay comes at a time of deepening investor anger in the wake of the financial crisis and recession and tales of extravagant compensation packages for executives – including at big financial firms that received billions in federal bailout funds.

Investors and governance advocates have been pushing for years for the change. It is bitterly opposed by business interests.