US - The Securities and Exchange Commission has been urged not to proceed with a vote which could stop shareholders from being able to influence the membership of company boards.
The California Public Employees’ Retirement System (CalPERS) has labelled SEC proposals, which would preclude shareholders from placing director election proposals on corporate ballots, as “anti-investor”.
Dennis Johnson, senior portfolio manager, corporate governance at CalPERS, told the US Senate Committee on Banking, Housing and Urban Affairs, that the right to participate in the governance of corporations it owned was a fundamental aspect of corporate law, and an invaluable tool to help it preserve and enhance investments made for plan participants.
He said the SEC proposal would overturn a court ruling last year, which gave shareholders the right to access the company proxy to nominate board candidates.
He said: “Such unprecedented anti-investor action by the SEC would deny shareholders the right to protect their interests by ensuring fair director elections and director accountability to the owners of the company.”
Last month, the California State Teachers’ Retirement System (CalSTRS) described SEC’s proposed rules as “counterproductive”.
In a letter to the SEC, Jack Ehnes, CalSTRS chief executive officer, said the proposals revealed an agency that had thrown overboard its mission to serve investors and had instead adopted a policy of promoting the interests of corporate management at the expense of shareholders.
It urged the SEC to reject the proposed rules summarily and offer new recommendations that would boost shareholder democracy to strengthen the value of the company.
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