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U.S. Chamber Counters SEC Proposal: Changes to Voting Rules Bad for Shareholders, Companies
WASHINGTON, D.C. - The United States Chamber of Commerce today submitted comments to the Securities and Exchange Commission strongly opposing a proposal that would give certain minority shareholders access to corporate proxy materials in order to nominate their own board candidates.
"Investing power in special-interest investors will breed misdirection and dissention," said Thomas Donohue, Chamber President and CEO. "The replacement of independent boards advancing the interests of all shareholders with special-interest directors beholden to their own social and political agendas will hurt the investors and workers the proposal is designed to protect."
Giving some shareholders access to company proxies would be costly and disruptive and would weaken the functioning of boards to the detriment of all shareholders, according to the Chamber's comment letter.
"Most shareholder nominees will be advanced by the types of activist shareholders that traditionally have used the shareholder proposal mechanism for the promotion of parochial interests or political or social issues having little to do with the company's business," wrote Donohue.
The Chamber's letter also noted that the SEC does not have the authority to regulate proxy materials, which are subject to state law requirements.
"Shareholders already wield the ultimate power - the power of the purse," said Donohue. "When investors buy or sell a stock, they exert an enormous influence on corporate managers."
The Chamber also urged changes to the proposed rule to avoid serious damage to the election process and the rights of all shareholders, should the SEC decide to go forward, including a delayed start date and increased eligibility requirements for director nominees.
The U.S. Chamber of Commerce is the world's largest business federation representing more than three million businesses and organizations of every size, sector and region.
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Editors Note: http://www.uschamber.com/issues/letters/2003/031219shareholderaccess.htmA copy of the Chamber's comments is available online.