We've talked a bit about how hard it is for dissident shareholders to prevail at annual meetings. It may get easier soon because the SEC has agreed to scrap an old rule that basically guaranteed management would always prevail. Because of that rule, there was no reason to be surprised the Citi announced that all directors had won re-election and every reason to be shocked that Ken Lewis was canned as chairman of Bank of America.

The archaic, 72-year-old rule allows brokerages to vote on behalf of clients if they do not receive voting instructions from the clients 10 days before a vote. Most shareholders don't respond, and brokerages almost always vote with management. According to the Financial Times, in the case of Citigroup, many believe that were it not for the rule at least two directors--Michael Armstrong, head of audit and risk committees as the credit crunch got underway, and John Deutch--would have been voted out. Brokers accounted for 46 percent of the total vote. 

For more:
- here's the FT article

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