Academic

Shareholder activists were no doubt disappointed with the SEC's recent decision to reject proxy access for shareholder nominated candidates.  However, the latest SEC rules facilitating communications among shareholders over the Internet could boost shareholders' power in important ways.   Indeed, the SEC's most recent rules on shareholder forums make it easier for shareholders to communicate using the Internet by exempting participation in such forums from most of the proxy rules so long as certain conditions are met.   The SEC hopes that the rules will promote greater use of Internet communications, and in so doing "better vindicate shareholders' state law rights."  Indeed, greater use of the Internet for shareholder forums not only should enable shareholders to more effectively communicate with one another, but also should allow shareholders to assess the sentiments of their fellow shareholders on a variety of policy issues including, of course, the relative effectiveness of officers and directors.  In this regard, electronic shareholder forums also may enhance shareholders' ability to wage voting campaigns.  Given the increased adoption of majority voting systems (according to Claudia Allen's most recent study, some 66% of S&P 500 companies and 57% of Fortune 500 companies have embraced some form of majority voting), the ability to wage more effective voting campaigns could have a significant influence on election outcomes.  Hence, while these rules certainly do not substitute for proxy access, they nevertheless could have a tremendous impact on shareholders' ability to impact corporate affairs.