William Donaldson, the Securities and Exchange chairman, endorsed recommendations to allow shareholders a greater say in the governance of corporate boards.
The recommendations would make it easier for shareholders to elect their own representatives to corporate boards of directors, according a Washington Post report. The SEC is hoping to issue its proposed rules for public comment at the end of September, with a final rule coming a few months afterwards.
The proposal would have companies send a ballot to shareholders listing the nominations proposed by both major shareholders as well as company management. Donaldson said the move would be "a correct shift, away from a dominance by corporate executives and back to the board."
Under the current system, shareholders can cast their ballot and nominate someone for a director's seat, but efforts such as these are often unlikely to succeed. Various investor advocates claim corporate scandals might have been avoided or uncovered earlier if directors had more ability to question management. The new rules will attempt to create a system in which "the board hires a chief executive, not the other way around," Donaldson said.
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