Recent court rulings have thrust the SEC into the controversy over shareholder nominations of directors for election to the board, an area of corporate governance of publicly traded companies that has been particularly active in recent years. On one side is the traditional business community that believes a company’s operation and supervision should be left to its management and directors. On the other side are those who consider directors of public companies to be too complacent and compliant with senior executives. Professor James Fanto's expert commentary on shareholder nominations of directors analyzes two conflicting SEC proposals in this area, one denying shareholders access to a company’s proxy statement for any election-related proposal, and one that facilitates shareholder activism. Professor Fanto writes:
The question of the day is what will be the interim rule: the SEC’s broad position, pre-AFSCME, denying shareholders’ access to a company’s proxy statement for any election-related proposal or the AFSCME decision, which facilitates shareholder activism. And interim rules or positions have a tendency to become permanent. The problem for the SEC is that there is no easy answer in this highly politically charged debate.
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