The SEC thinks companies need to work out problems with investors on their own

Companies need to work out problems with investors on their own.

In a speech Thursday to the Society of Corporate Secretaries and Governance Professionals, SEC Chair Mary Jo White addressed several proxy-related issues, and hinted towards potential regulatory action in the near future.

White also called on corporate officials to work to establish better relationships with their investors on their own.

"I ask you, as I share with you my views on these topics, to also consider what you could and should be doing in each of these areas," White said.

"As I have said on other occasions, companies should seek to engage in a constructive dialogue with their shareholders and work to facilitate constructive solutions to issues they raise."

Another issue White discussed was the proxy balloting process, which the SEC held a roundtable discussion on in February.

When voting for corporate directors, shareholders typically have two options: to vote for the entire slate proposed by company management, or vote for the entire slate proposed by another investor.

Shareholders usually cannot pick and choose candidates from both slates, unless they attend the vote in person.

To further complicate the process, each slate has its own ballot, and shareholders vote by filling out the ballot sent out by a certain slate. This often confuses voters and makes them unaware of the full field of candidates.

Investors have called on the SEC to help attack both these issues by mandating "universal ballots." Just as in any other election, shareholders would receive ballots with all potential directors' names and freely pick individuals from any slate they want.

White said:

If a company's or proponent's nominees gave their consent to appear on the other side's proxy card, then all shareholders would have the full range of voting options available to them. I realize that putting this into practice may have its challenges and that companies could choose different ways of making it work. But it could be beneficial for your shareholders. And we would welcome hearing about your experiences as we consider rule-making in this area. Providing shareholders with the same voting rights that they would have if they were present at the meeting and eliminating procedural obstacles should be a shared goal of both companies and shareholders.

White also addressed issues such as the unavailability of preliminary voting information, the continued governance of "unelected directors," and the inclusion of shareholder proposals.

Though she is working on the issues brought up to the SEC by companies and their investors, White made it clear that she doesn't always want the SEC to play arbitrator.