The U.S. Securities and Exchange Commission proposed on Wednesday to give shareholders greater power to nominate corporate board directors, a process now tightly controlled by company management.
Amid a push by investor groups for greater accountability by corporate America, the SEC voted 3-2 to propose two approaches aimed at giving shareholders an easier way to influence the composition of the board -- an issue also known as proxy access.
One approach would let shareholders who own 1 percent to 5 percent of a company's stock for at least one year nominate directors.
This approach would be linked to the company's size, with shareholders required to hold at least 1 percent in a large company, 3 percent in a midsize company and at least 5 percent in a small company.
The other approach would amend a federal rule that sets guidelines for whether a company's management can exclude shareholder proposals from the proxy. The SEC would let shareholders put forth proposals to amend bylaws that could allow them to nominate directors.
The latter approach would effectively overturn a 2007 SEC decision that allows companies to exclude shareholder proposals for director nominations from corporate ballots.
(Reporting by Rachelle Younglai; Editing by Tim Dobbyn)