Copyright 2015, 2017 Solutions by Design
Securities and Exchange Commission
I believe that the Commission's proposed rules regarding election of directors should be adopted as a bare minimum requirement to allow owners of a company to exercise control of their company.
I believe that the Commission should keep the following in mind:
The discussion about not permitting shareholders to effect a "change in control" illustrates the problems with the Commission and its current governance structure. If a third party is attempting to take over control of a company, little assistance from the Commissions rules is required. If, on the other hand, shareholders believe that the directors are not doing their fiduciary duty and are not running the company for the benefit of the shareholders, then of course the shareholders want and are entitled to a "change in control."
The discussion about not permitting the nomination of a person when the nomination would violate state or federal law, etc. is just plain absurd and unnecessary. Of course someone who is not legally permitted to hold an office can not hold the office. It almost appears that someone receives a commission on the ink used to print the Federal Register! And the concern that a nominee not be an "interested person" is likewise unreasonable. An "interested person" is most likely to understand polices that need to be changed and if such a person is willing to risk a career, what is wrong with such a person running for a seat on the board?
An additional issue that the Commission raises is the relationship of a potential nominee to a group of investors. The discussion suggests that would be a bad thing. In fact, the opposite is likely to be the case. Suppose that a group of state pension funds wants to nominate an employee of one of the funds as a director. Isn't such a person as likely or more likely than an other candidate to function in the interests of all shareholders?
Your concern about the possible number of shareholder nominations appears to be misplaced, but if you feel that a limit is necessary, then I propose that it should be twice the number of directors to be elected.
I think that a fair summary of the SEC’s discussion is that you are attempting to provide the appearance of greater shareholder access while insuring that entrenched management is not removed.