Before it even got started, the era of direct access to the proxy has fizzled. Recall that Dodd-Frank required companies to include board candidates on official "proxies" if they held at least 3 percent of the voting power in the stock for three years (accelerated filers were given a delayed phase-in).

The proposal was controversial from the start, and the corporate world cheered when an appellate court struck down the rule in July, arguing that the SEC did not properly consider the economic consequences of the law. We held that up as an example of the importance of the economic function at the SEC, which has been mired in controversy over its Chief Economist position. Some hoped that the agency would fight the ruling with some strong analysis, but in the end it appeared that such analysis--proving empirically the benefits of the rules against the costs--would be too much.

The agency announced recently that it will give up on the case, thus dealing a major blow to the many shareholder and corporate governance activists who have long championed the cause. But this may not be the end of the road. The SEC may well decide to start from scratch on mandatory access. Well before that, an amendment to the proxy access rule--one that was not challenged--allows private ordering through shareholder proposals. This aspect of the rule will go into effect on September 13, allowing investors to submit shareholder proposals to allow for proxy access on a company-by-company basis. That's hardly going to satisfy governance advocates, but it is something.

For more:
- here's the Reuters article

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