How the proxy rules discourage constructive engagement: regulatory barriers to electing a minority of directors

Article Abstract:

The SEC should change its rules on proxy contests to allow expert minority board representation. Minority representation would be a nonconfrontational way for shareholders to monitor corporate directors. However, SEC Rule 14a-4(d) prevents minority representation by enforcing the bona fide nominee regulation which forbids a party from seeking a proxy for director candidates unless the candidates expressly concur with the use of their names. Narrowing the rule to permit a candidate's name to be included on the proxy card of any soliciting party would allow minority representation.

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Disclosure, not censorship: the case for proxy reform

Article Abstract:

The SEC's 1991 proposal to relax the rules that encourage passivity among shareholders is entirely commendable. These rules inhibit discussion among shareholders prior to electing corporate directors and prevent financial institutions from offering voting advice. The SEC's proposed changes are: to do away with preclearance for all solicitation materials except the initial proxy statement and proxy card; to permit the use of preliminary proxy statements without a proxy card; and to permit disinterested parties such as financial institutions to counsel the shareholders.

Financial institutions

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Proxy reform as a single norm? Evidence related to cross-sectional variation in corporate governance

Article Abstract:

Broad-based proxy reform is unlikely to improve US corporate governance because the need for such reform will not be the same for all industries. The growing proxy reform movement seeks to change the rules governing the relations between corporate managers and shareholders. However, allowing market forces to determine to what extent companies adopt proxy reform is preferable to enacting legislation that requires all companies to change in the same way.

Corporate governance

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