"Tyranny," "incompetence" and "rubber stamping" are just some of the words characterizing the state of corporate governance that have appeared in recent posts on the Securities and Exchange Commission's website, in response to a proposed "proxy access rule" that would change the way directors are nominated to company boards.
In a nutshell, the proxy access rule, or Rule 14a-11, would make it possible for certain shareholders to include the names of opposing candidates on a company's proxy ballot. In theory, shareholders of public companies already elect the board of directors. In practice, however, a company's management often nominates a single slate of candidates that runs unopposed. Although shareholders have the right in some cases to nominate opposing candidates at the annual shareholder meeting, the nominations are essentially meaningless by then, because the majority of shareholders have already voted using a proxy ballot sent out in advance of the gathering.
But after the recent economic meltdown and trillions of dollars in shareholder losses, many Americans are questioning whether boards have been doing their job.
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