The U.S. Securities and Exchange Commission made changes to the federal proxy rules on Wednesday that require company boards to consider nominees of shareholders alongside managerial candidates on proxy materials for board elections.
Under the new rules, nominees who own at least 3 percent of a company continuously for three years prior to the proxy statements are eligible to be in the running for director.
SEC Chairwoman Mary Schapiro said: “As a matter of fairness and accountability, long-term significant shareholders should have a means of nominating candidates to the boards of companies that they own.”
The Dodd-Frank Wall Street Reform Act gave the SEC the authority to make new rules on shareholders’ access to proxy materials.
While the new rule requires companies to include investors’ nominees, “for individual investors it is still a pretty high hurdle to nominate a director,” said Charles Rotblut, a vice president at the American Association of Individual Investors.
Rotblut admitted, however, that “overall, it’s good for investors in that it gives them more say. At least it should make the boards more accountable.”