On July 22, 2011, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit vacated Rule 14a-11 under the Securities Exchange Act, the U.S. Securities and Exchange Commission's (Commission) "proxy access" rule adopted in August 2010. The rule would have made it easier for investors to get their own nominees onto public company boards by requiring companies to include such nominees on the corporate proxy ballot in certain circumstances.
In September 2010, the U.S. Chamber of Commerce and the Business Roundtable sued to overturn Rule 14a-11. In response to the litigation, in October 2010, the Commission stayed Rule 14a-11 and amendments to Rule 14a-8 that would require a company to include in its proxy statement a shareholder proposal that seeks proxy access.
In vacating Rule 14a-11, the court found that the Commission acted "arbitrarily and capriciously" in not appropriately considering the economic impacts of the rule. The court was critical of the Commission, noting that "the Commission inconsistently and opportunistically framed the costs and benefits of the rule; failed adequately to quantify the certain costs or to explain why those costs could not be quantified; neglected to support its predictive judgments; contradicted itself; and failed to respond to substantial problems raised by commenters."
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