After years of hard work by organized labor, pension activists and, finally, friendly politicians, the SEC has bit the bullet to allow shareholders under (very) limited circumstances to spend their own money to participate in shareholder democracy!
I am being ironic but also accurate. Until now managers use corporate resources to help directors get elected: they control access to the proxy statement that accompanies the proxy card that shareholders inevitably submit back to management who then vote onto boards their hand picked director candidates.
Now however shareholders can piggy back on the proxy material sent out by management and use that material to nominate independent candidates for corporate boards.
Much like the market for corporate control it may well be that the mere threat of the rule will be enough to change corporate behavior – event studies galore will no doubt emerge soon!
The link below is to a law professors’ site that is debating the issue and here is a link to the rule itself on the SEC website.