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: Conglomerate

The SEC's New Proposal on Shareholder Director Nominations

By Gordon Smith, Christine, Hurt, Vic Fleischer, Fred Tung, Lisa Fairfax, David Zaring

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The SEC is proposing amendments to the proxy rules to allow for shareholder nominations of directors. Mary Shapiro's announcement speech is here. (text) NYT story here.

A broad description from Shapiro:

Under the proposal before us today, shareholders who otherwise have the right to nominate directors at a shareholder meeting will be able to have their nominees included in the company proxy ballot that is sent to all voters. Given the reality of how the proxy process works, this would turn what would otherwise be a somewhat illusory right to nominate into something that is real ? and has a real chance of holding boards of directors accountable to company owners.


I haven't seen the proposal, yet, but a Bloomberg story offers some intriguing details:

The U.S. Securities and Exchange Commission may let investors owning 1 percent of the biggest companies nominate directors on proxy statements....

SEC commissioners voted 3-2 [with Kathleen L. Casey and Troy A. Paredes dissenting] today to seek public comment on the proposal, which applies to companies with market values exceeding $700 million. Investors would have to own a larger proportion of shares to nominate directors at smaller companies.

Under the SEC?s proposal, shareholders would face limits on how many directors they could nominate. If a board had three members, shareholders could recommend one director. If a board had more than three members, then shareholders would be restricted to nominating 25 percent of the board.


I was not a fan of the previous proxy access proposal, but this one sounds more promising. I will follow up with some detailed analysis in later posts.

Full post as published by Conglomerate on May 20, 2009 (boomark / email).

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