U.S. Chamber Urges SEC to Abandon Proposal
WASHINGTON, D.C. - The United States Chamber of Commerce urged the Securities and Exchange Commission (SEC) to abandon a proposal that would give certain minority shareholders access to corporate proxy materials in order to nominate their own board candidates.
"There is no way to modify the current proposal to protect independent boards from being co-opted by special-interest directors with their own social and political agendas," said Thomas Donohue, Chamber President and CEO, in testimony prepared for today's SEC hearing. "If the Commission proceeds with this proposal, we will challenge it in court."
The Securities and Exchange Commission proposed a new rule in December 2003 that would require the inclusion of shareholder nominees for election as director in companies' proxy material under certain circumstances. The Chamber countered that the SEC did not have the authority to regulate proxy materials, which are subject to state law requirements, in a letter to the Commission late last year.
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, by breeding misdirection and dissention, according to the Chamber's testimony today.
"There have been more corporate governance reforms in the last two years than in the prior four decades," said Donohue. "Companies have made sweeping changes to strengthen corporate governance and we need to let the impact of these reforms be absorbed before embarking on a new round of regulation and rule changes.
"We share the Commission's goal of good corporate governance, but this proposal is not good governance and will have unintended consequences that will stifle business innovation, decrease productivity and inhibit economic growth," concluded Donohue.
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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