US shareholders push for reform

Shareholders in U.S. companies are demanding more say in the election of boards of directors of the companies in which they hold shares.

These shareholders claim this power is necessary to hold boards responsible for their actions. Reform efforts at the federal level were stymied by the lobbying of business leaders who want to keep such power out of the hands of shareholders.

At present, regulations make it possible for a board member to be appointed with as little as one shareholder vote.

Convinced that the Securities and Exchange Commission will not move on rules changes, these activist investors have begun working for change on the state level. Change at that level may be slow in coming however.

The American Bar Association is planning on spending at least a year studying the issue before considering making any changes to its model set of rules governing corporations.

In turn, Delaware, where over half of the largest U.S. companies are incorporated, is planning on waiting to see what conclusions the ABA comes to before it acts.

Organizations like the U.S. Chamber of Commerce and the Business Roundtable are against the changes, but US state pension funds are being asked to support the initiative and some companies, including Caterpillar and Rayethon, are either talking compromise or planning resolutions on the issue at their annual meetings.

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