Investment

U.S. SEC allows investors to cherry-pick candidates in contested corporate elections

Published

3 years ago

November 17, 2021

The U.S. Securities and Exchange Commission (SEC) on Wednesday agreed to give investors who vote by proxy more freedom to choose their candidates during contested corporate board elections, as the agency’s Democratic leadership seeks to bolster shareholder rights.

Until now, shareholders who voted remotely in contested elections had to choose from a full slate of board directors nominated by the management or a competing set of nominees provided by an activist investor.

The five-commissioner panel voted 4-1 to adopt the new rule.

Unlike in countries such as Canada and Australia, investors in the United States could not mix and match from these competing lists unless they sent a representative to vote in person at the annual meeting. The vast majority of corporate votes are cast remotely.

In 2016, two weeks before the election of former President Donald Trump, the securities regulator proposed an Obama-era reform that would have given shareholders in companies more freedom to vote for their preferred candidates during contested board elections.

It was later shelved by the agency’s then Republican leadership, which cited a preference to loosening rules that it said deterred firms from going public.

Wednesday’s rule requires “universal” proxy cards listing all duly nominated director candidates, effectively allowing shareholders to mix and match.

Investor advocates say the former system allowed corporate management to skew elections by proposing ballots with limited candidates whom they prefer. Other candidates submitted by investors are often relegated to separate ballots.

Business groups approve the status quo, calling it efficient and warning that a universal proxy card could lead to over-voting, more frequent disqualification of defective ballots and even shareholder confusion.

The new rule will put investors voting in person on an equal footing with those voting by proxy, said SEC Chair Gary Gensler.

“It makes sense that shareholders should be able to see all the candidates in one place, just as they would in person. This is an important aspect of shareholder democracy,” he added.

Advocates welcomed the SEC’s decision.

“This should be called the investor choice rule,” said Amy Borrus, who leads the Washington-based Council of Institutional Investors. “This small but significant reform ensures that investors voting by proxy card – as the vast majority of institutional and individual investors do – can vote for whichever combination of director nominees they think best serves their interests.”

Elad Roisman, a Republican commissioner, voted in favor of the measure but said he would have preferred that the rule require those launching a proxy contest to meet certain eligibility criteria, such as thresholds of ownership in the target company or holding periods for the company’s stock.

“Such criteria would demonstrate that a dissident has an economic stake or investment interest in the target company.”

ADDITIONAL PROXY ADVISER MEASURE

The U.S. markets regulator also voted to propose a measure that requires enhanced disclosure and voting options in all corporate director elections.

Subject to public consultation before it can be adopted, the proposal would rescind a Trump era rule that sought to restrict proxy advisory firms, which recommend to investors how to vote and cast ballots on behalf of some asset managers.

This SEC proposal would undo, among other previous restrictions, a condition that required proxy advisory firms to make their advice available to companies that are the subject of their advice at or before the meeting.

On Wednesday, industry groups like the National Association of Manufacturers said they were “extremely concerned” that the SEC proposed revisions to a 2020 proxy rule “absent of any new information about its impact on the market.”

The powerful U.S. Chamber of Commerce criticized the move as a sign the agency “is not serious about rooting out and eliminating misinformation and conflicts of interest in the proxy process.”

(Reporting by Katanga Johnson in Washington; Editing by Dan Grebler and Matthew Lewis)

Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

3 days ago

November 6, 2024

Anne Joseph

NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

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Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

3 weeks ago

October 16, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

4 weeks ago

October 11, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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