Harvey Goldschmid, one of the SEC’s two Democratic commissioners, seems determined that the Securities and Exchange Commission pass some form of proxy access rule before he steps down later this year.
During a speech yesterday to the Council of Institutional Investors, according to Dow Jones, Goldschmid suggested that one year after a majority of shareholders had withheld votes for any board member, investors who hold at least 5 percent of a company’s total shares (other than those whose voting rights are exercised by their stockbrokers) should be able to propose their own slate of nominees.
In October 2003, the SEC had proposed a more complicated system that over a two-year period would have allowed certain shareholders — including some holding smaller positions than in Goldschmid’s proposal — to nominate directors to a company’s board. That proposal received widespread criticism from a number of groups, including the Business Roundtable and the U.S. Chamber of Commerce, which argued that it would give too much power to special interests. The business groups also asserted that the Sarbanes-Oxley Act should be given a chance to be fully implemented before additional rules are passed.
It has been widely reported that once again, the five-person commission is divided along party lines, with the two Democrats in favor of the proposal and the two Republicans opposed. Chairman William Donaldson, also a Republican, has been supportive of the proposed rules but was reportedly hoping to sway one of the naysayers before he was willing to call for a vote. However, under Donaldson a number of other controversial rules have passed by a 3-to-2 margin.
Goldschmid, who will return to teaching at Columbia University as early as this summer, told the meeting Monday that he is “hopeful” the agency will act before he leaves the SEC, according to Dow Jones.