Washington, D.C., April 14, 2003 — The Securities and Exchange Commission today announced that it has directed the Division of Corporation Finance to examine current proxy regulations and develop possible changes to those regulations to improve corporate democracy. In addition, the Commission today unanimously decided to let stand, rather than review, the determination of the Division of Corporation Finance regarding the American Federation of State, County and Municipal Employees' Pension Plan (AFSCME) proposal to Citigroup Inc. related to the nomination of candidates for director.
"The current rules concerning shareholder proposals and director elections are clear and we are enforcing them as such, but the time has come for a thorough review of the proxy rules and regulations to ensure that they are serving the best interests of today's investors, while at the same time, fostering sound corporate governance and transparent business practices," said Chairman William Donaldson.
The Commission has directed the Division of Corporation Finance to formulate possible changes in the proxy rules and regulations and their interpretations regarding procedures for the election of corporate directors. This review will address shareholder proposals, the nomination process, elections of directors, the solicitation of proxies for director elections, contests for corporate control, and the disclosure and other requirements imposed on large shareholders and groups of shareholders. As part of this process, the Commission has asked the Division to consult with all interested parties, including representatives of pension funds, shareholder advocacy groups, and representatives from the business and legal communities. The Commission has requested that the Division provide its recommendations to the Commission by July 15 of this year.
The AFSCME proposal called for Citigroup to permit shareholders or groups of shareholders holding 3% or more of the company's stock to nominate candidates for director in the company's proxy material. After review of a request from Citigroup, the Division of Corporate Finance determined that existing Rule 14a-8 under the Securities Exchange Act of 1934 did not require Citigroup to include AFSCME's proposal in its proxy materials.