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SEC Plan Limits Investors' Role

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By CARRIE JOHNSON, The Washington Post

Published: November 29, 2007

Updated: 11/28/2007 11:22 pm

Companies will be able to scuttle investor attempts to nominate board members under a plan adopted Wednesday by a bitterly divided Securities and Exchange Commission.

The move drew an outcry from key lawmakers, unions and major retirement funds, which criticized SEC Chairman Christopher Cox, a Republican, for pushing the plan at a time when the agency is short one Democrat and another is on her way out the door.

The 3 to 1 vote, in which the SEC's lone remaining Democrat dissented, marked the single most controversial action in the two-year tenure of the agency's chairman.

At issue was how securities regulators would respond to a court decision last year that appeared to open the door and give investors more leeway to nominate board candidates. The SEC in July proposed two opposing rules: One would have offered large, long-term investor groups more power to select board nominees by requiring companies to include those nominees in their proxy ballots.

The other, approved Wednesday, gives companies the authority to reject summarily any investor proposal that suggests candidates for corporate boards. Companies would not be required to consider investor board nomination proposals or even include them on proxy statements for dissemination to other shareholders.

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