US - The Securities and Exchange Commission yesterday approved new proxy rules that give shareholders more say over who sits on corporate boards.
The new rules give shareholders who have held at least 3% of shares for three years include board nominees on proxy materials. In implementing this, the SEC is making use of new powers given to it by the recent Dodd-Frank Wall Street Reform and Consumer Protection Act to make rule changes regarding proxy materials.
SEC chairman Mary Schapiro (pictured) said: "As a matter of fairness and accountability, long-term significant shareholders should have a means of nominating candidates to the boards of the companies that they own.
"Nominating a director candidate is not the same as electing a candidate to the board. I have great faith in the collective wisdom of shareholders to determine which competing candidates will best fulfill the responsibilities of serving as a director. The critical point is that shareholders have the ability to make this choice."
The move was widely applauded by the investors community, but some agreed the increased powers were to be used with caution.
In a statement, California State Teacher's Retirement System chief executive officer Jack Ehnes said: "While we applaud SEC Chair Mary Shapiro for the leadership and vision that resulted in this ruling, we understand that proxy access is to be used sparingly and only after other means of dialog and negotiations have been exhausted."
Ehnes called this a step forward in providing boards greater independence from management.
The Council of Institutional Investors called the move "groundbreaking".
Ann Yerger, the Council's executive director, said: "Access to the proxy will invigorate board elections and make boards more responsive to shareowners and more vigilant in their oversight of companies."
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