SEC proposes boosting power of shareholders
WASHINGTON - Federal regulators yesterday proposed making it easier for shareholders to nominate directors for ballots of public companies, a change that could give shareholders more say over compensation packages and risk controls.
The Securities and Exchange Commission voted to open the proposal to public comment. The plan would allow groups who own a certain percentage of a company's stock to put their nominees for director on the annual proxy ballot that is sent to all shareholders. The change has been pushed by investors and governance advocates.
The proposal would require different minimum levels of stock ownership according to the size of the company: 1 percent for the 700 biggest companies, and 3 or 5 percent for smaller ones. The shareholders would need to have held the stock for at least a year.
Under the current system, dissident investors must wage costly proxy fights and appeal to shareholders at their own expense if they seek new directors on a company's board or a bylaw change. The economic crisis "has led many to raise serious questions and concerns about the accountability and responsiveness of some companies and boards of directors," said SEC chairwoman Mary Schapiro.