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Sarbanes-Oxley News & Developments
SEC Seeks Overhaul for Board ElectionsOutside investors could acquire a greater influence.
> > The new chairman of the SEC, Willaim H.Donaldson, said Tuesday that the SEC will make it easier for shareholders of a company to elect a limited number of independent directors.
The proposals could mark the most importnat changes in the role played by outside investors in the governance of publicly traded corporations in decades. The new rules could take effect in 2005.
The changes would for the first time make it possible for other candidates to appear on the ballot sent to shareholders by the company. But the effort will still be difficult, and most directors would continue to be selected the old-fashion way.
The decision by the commission follows the confluence of two powerful trends, 1) the wave of corporate corruption cases and 2) the rising power of institutional investors.
Union leaders, pension funds and other large institutional invsestors have been seeking a greater voice in corporate boardrooms, and the proposal made on Tuesday was applauded by several of them, including John Sweeney, the head of the AFL-CIO.
The chief executives of some large corporations have lobbied against the rules, saying they would lead to greater disharmony in boardrooms. The Business Roundtable, an association of chief executives, opposed earlier versions of the proposals. The BUsiness Roundtable expressed support for some of the recommendations and said further work was needed on others.
Donaldson said the proposals would make boards more responsive to shareholder concerns and help put an end to what he called - the imperial CEO -.
Source: Silicon Valley article
Published:2003-07-18
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