Bloomberg reports that the Securities and Exchange Commission (SEC) will consider a proposal to allow shareholders to nominate directors on proxy statements. At present, shareholders must distribute a separate ballot listing dissident nominees, which makes the process too expensive for most investors and means only large activist investors like Carl Icahn or Bill Ackman have the capital to wage proxy fights to get their nominees elected. Says SEC spokesman John Nester, “We are committed to considering new rules that would remove barriers so that shareholders are able to exercise their right to nominate directors.”
The proposal under consideration by the SEC would allow shareholders, or groups of investors, who have held a certain proportion of a company’s shares for one year nominate directors on the proxy. The threshold would be 1% for companies with market capitalizations greater than $700M, 3% for companies below $700M and 5% for companies below $75M.
Hat tip The Official Activist Investing Blog.