U.S. business titans are a step closer to winning a long fightto overhaul corporate voting rules that they say subject them tounfair shareholder campaigns.

The Securities and Exchange Commission (SEC) on Tuesday proposedchanges that would rein in proxy advisory firms and make it easierfor companies to block submissions from newer stockholders whodon't own many shares. Several investor advocates, pension fundmanagers, and hedge funds have already signaled that they'reconcerned that changes the SEC is seeking comment on will weakenshareholder protections.

"It's time to move from debate in the abstract to constructiveengagement on actual proposals," SEC Chairman Jay Clayton said insupport of the proposals before commissioners approved releasingthem in two 3-2 votes. "We make that transition today. Our work inthis space will continue."

Key Details

• For shareholders who have been invested for less than threeyears, the changes would increase the value of stock theshareholders need to have before they can submit proposals,according to an SEC fact sheet on the rule.
• The agency also calls for increasing the level of supportshareholders need in order to resubmit a proposal that previouslyfailed.
• In addition, proxy advisory firms would generally be requiredto share recommendations twice with management before shareholderscould see them, according to an SEC official who was authorized tospeak on the matter.
• Advisory firms would have to give a company as long as fivedays to review their advice and comment on it, the person said.Advisers would then have to show a final version to companies aftermaking changes and allow managers two more days to prepare aresponse that would be delivered with the recommendation.
• The proposal would also require proxy advisory firms todisclose conflicts of interest and other material issues, accordingto the SEC.

Elad Roisman, one of two Republican commissioners who joinedpolitical independent Clayton in backing the proposals, said thechanges are meant to update rules to address how market dynamicshave changed. Commissioner Allison Lee, a Democrat who opposed theproposal along with independent Robert Jackson Jr., said themeasures would "suppress the exercise of shareholder rights."

Before the vote, Clayton said the SEC would soon propose changesto rules for corporate ballot cards and other aspects of proxyvoting.

The proposals will be released for a 60-day public commentperiod, and commissioners will have to hold a second vote in orderfor the rules to take effect.

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