Cheers and jeers for rule allowing shareowners to nominate directors
Rule amendments proposed yesterday by the Securities and Exchange Commission to give shareholders the right to nominate corporate directors are riling CEOs.
Rule amendments proposed yesterday by the Securities and Exchange Commission to give shareholders the right to nominate corporate directors are riling CEOs.
“This is an unprecedented pre-emption of state corporate law — the bedrock of corporate governance — that will turn the boards of more than 15,000 publicly traded companies into political bodies and threaten their ability to function,” John J. Castellani, president of the Business Roundtable, said in a statement.
The group is a Washington-based association of chief executives of major U.S. companies representing more than $5 trillion in annual revenue.
“As CEOs of the leading U.S. companies, we are concerned about these renewed attempts to allow special and disparate interests to sidetrack corporate boards, as well the inevitable effect these attempts will have on the ability of management and boards to focus on long-term value creation for shareholders and employees,” Mr. Castellani said.
By contrast, corporate governance activists lined up in support of the SEC proposal.
“We’ve been supportive of more proxy access for shareholders for many years,” said Carol Bowie, head of the governance institute at RiskMetrics Group, a New York-based firm that provides risk management and governance services and products.
“We consider the rule an important step in promoting the kind of board accountability that is important to shareholders,” she said. “As a safeguard, the candidates who are nominated would have to meet the hurdle of being elected.”
The SEC will begin a 60-day comment period once the proposed amendments are published.
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