SEC to give shareholders more say over directors?

May 20, 2009 | By Jim Kim

Is the time ripe for some big reforms that would give shareholders more power to nominate and ultimately vote in new corporate directors? Corporate boards have fared poorly in the court of public opinion as of late. The best example of that may be the Bank of America shareholder vote that stripped Ken Lewis of the chairman title. So the wind may be at the sails of activist hedge funds.

According to Reuters, one proposal would let investors who own sizable shares--1 percent for large companies up to 5 percent for small companies--nominate directors directly. Another proposal would allow investors to put forth proposals to amend bylaws that could allow them to nominate directors, overturning recent interpretation. The bottom line would be that proxy battles may be much less common. You can bet that some lobbies will fight this vigorously. Certainly, this is all a sign of the times.

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