Securities regulators will meet on August 25 to consider giving shareholders more power to nominate company directors.
The Securities and Exchange Commission on Wednesday posted on its website an agenda for the meeting next week, in which it will consider whether to adopt the reforms, a contentious issue known as “proxy access.”
The debate over giving shareholders more say on boards has been protracted, with shareholder activists demanding more influence and business groups warning that reforms would give fringe stockholders too much influence.
The financial reform legislation signed into law last month affirmed the SEC’s authority to give shareholders “proxy access” or access to the corporate proxy document, which is controlled by management.
Such authority could blunt attempts to legally challenge any SEC action on the matter.
The SEC has proposed a tiered approach to give shareholders more power over the proxy process.
The approach would give shareholders owning 1 percent to 5 percent of a company’s shares the ability to nominate directors. Shareholders would have to own the shares for at least one year under the SEC’s proposal.
Ownership would be linked to a company’s size, with shareholders required to hold at least 1 percent of a large company, 3 percent of a midsize company and 5 percent of a small company.
The SEC, which has failed under previous chairmen to give shareholders greater power, also proposed allowing shareholders to amend company bylaws so they could nominate directors.
SEC Chairman Mary Schapiro has been an advocate for increasing shareholder rights.
Under her chairmanship, the agency has adopted rules that would bar broker-dealers from voting for corporate directors on behalf of their clients unless told to do so.
But the more high-profile fight has been over proxy access.
Although shareholders can nominate directors, they can only do so by waging a proxy fight, which many contend is costly and burdensome.
Business groups such as the U.S. Chamber of Commerce oppose proxy access, fearing that special interest groups that lack business acumen or long-term vision for running a company could take over the boards.
The SEC’s meeting notice is at http://sec.gov/news/openmeetings/2010/ssamtg082510.htm
