Will Democracy Invade the Boardroom?

by Philip Mattera for Dirt Diggers Digest, September 3, 2009.

Life has been tough for the Securities and Exchange Commission, what with the power grab at its expense by the Federal Reserve and new revelations that its investigators acted like Keystone Kops when looking into tips about the suspicious behavior of Bernie Madoff. Now the SEC has the opportunity to do some good. The question is whether it has the nerve to stand up to powerful corporate interests.

In May the SEC voted to propose rule changes that would enable shareholders to nominate directors for corporate boards. The Commission issued a 250-page description of the proposed changes in June and asked for public comments. A decision is expected this fall.

The process of selecting board candidates makes a mockery of the idea of corporate democracy. Except in those rare instances when a takeover effort leads to a proxy fight, potential directors are chosen by management and run unopposed. This helps ensure that the ranks of outside (non-executive) directors, who are supposed to function as watchdogs, are filled with agreeable souls…(contine reading)

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