INTERVIEW – Proxy access for all, U.S. SEC Commissioner says

February 9, 2010

By Rachelle Younglai

WASHINGTON, Feb 9 (Reuters) – All publicly traded companies should be required to give shareholders a way to influence the composition of their corporate boards, a top U.S. Securities and Exchange Commission official said on Tuesday.

Luis Aguilar, one of five officials who decides on federal securities rules, said companies should not be given the option to opt out of potential rules being considered by his agency.

“It’s a slippery slope,” SEC Commissioner Aguilar told Reuters in an interview. Aguilar said giving companies such an option could lead to other exemptions.

“I have concerns,” he said.

The agency is expected to adopt rules aimed at giving shareholders an easier and cheaper way to nominate board directors — an issue also known as proxy access.

Although shareholders can nominate directors, they can only do so by waging a proxy fight that many contend is costly and burdensome.

Business groups such as the U.S. Chamber of Commerce oppose proxy access, fearing that special interest groups that lack business acumen or long-term vision for running a company could take over the boards.


The SEC proposed giving shareholders owning 1 percent to 5 percent of a company’s shares the ability to nominate directors last year. Shareholders would have to own the shares for at least one year under the SEC’s proposal.

Ownership would be linked to a company’s size, with shareholders required to hold at least 1 percent of a large company, 3 percent of a midsize company and 5 percent of a small company.

The regulator, which has failed under previous chairmen to give shareholders greater power, also proposed allowing shareholders to amend company bylaws so they could nominate directors.

Business groups are ready to take the SEC to court over a proxy access rule. But a U.S. House of Representatives bill reaffirms the SEC’s authority to grant proxy access. A draft Senate bill does so as well.

Aguilar said he supported the agency’s proposal. There was speculation that the SEC could include a provision that would allow companies to opt out or opt in to proxy access rules.

Last week, SEC Chairman Mary Schapiro said she was “hopeful” the agency would adopt a proxy access rule. (Reporting by Rachelle Younglai, editing by Leslie Gevirtz)

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