WASHINGTON—Shareholders won greater clout to place directors on corporate boards Wednesday, marking the latest victory for the “shareholder rights” movement that has gradually chipped away power from top executives running U.S. corporations.
But a party-line split vote at the Securities and Exchange Commission, and a denunciation of the new rule by a Republican commissioner who suggested it is illegal, points to new skirmishes ahead. Public companies, including some of the country’s largest, also hope to strike down the rule, which they say will be used to distract management and advance special-interest agendas.
For now, shareholders will have greater sway over who is eligible for election to a corporate board. Those powers mean that investors, including hedge funds, pension funds and unions, could eventually have greater influence over the strategic and financial choices of U.S. companies.
In a decision years in the making, the SEC voted 3-2 in favor of the “proxy access” rule, which requires companies to include the names of all board nominees, even those not backed by the company, directly on the standard corporate ballots distributed before shareholder annual meetings. To win the right to nominate, an investor or group of investors must own at least 3% of a company’s stock and have held the shares for a minimum of three years.
Full Story: SEC Makes Ousting Directors Easier – WSJ.com
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