SEC Approves New Proxy Rule, Shareholders to Elect Board
John Kelly 270004J7VQ email@example.com | | 0 Comments | 100 Visits
Brandishing new authority thanks to the Dodd-Frank Act, the SEC was quick to act on an agenda item that had been on the table for 30 years. Yesterday, the SEC approved a ‘Proxy Access’ rule that allows shareholders to place nominations for board member seats on the annual proxy ballot of public companies. The rule applies to shareholder groups who have owned greater than 3% of a public company’s stock for at least 3 years.
One thing that is certain, the new rule reflects the anger and backlash of shareholders who feel that boards of directors were not acting in the shareholders’ best interest when taking highly leveraged and risky positions that led to the 2008 financial meltdown. As Rick Stenberg pointed out in his recent blog, this indicates a clear trend toward increasing shareholder power and of companies and their boards ‘opening channels of communication with shareholders.’ As these channels are opened, an information architecture that provides full transparency into risk exposure and enables information sharing will help to fill the communication gap between the Board and shareholders.