SEC rule may change board influence

TEXT OF STORY

BOB MOON: The Securities and Exchange Commission is likely to adopt a new rule today to make it easier for some stockholders to replace directors on corporate boards. Supporters say it will improve the way companies are run.

But Marketplace’s John Dimsdale reports not everyone sees it that way.

JOHN DIMSDALE: Shareholders elect Boards of Directors. But the names on the ballot are approved by the company. Adding an independent nominee is practically impossible. Now the SEC appears ready to give large, institutional stockholders the right to list their nominees on the same ballot.

STEPHEN DAVIS: This is all about accountability.

Stephen Davis with the Yale School of Management says the financial crisis revealed that many boards rubber-stamped corporate managers who took on too much risk and paid themselves too much.

DAVIS: If you’ve got a company that’s really in trouble you want to be able to give the owners of the company the right to name other people that might take the company in a different direction.

Businesses, though, think the SEC rule would mean too much government interference.

The Chamber of Commerce’s David Hirschmann says regulators are picking winners and losers.

DAVID HIRSCHMANN: The question is whether those minority shareholders should have a special leverage over the board, special access that average shareholders don’t get.

The SEC’s right to impose such a rule had been in question, but Congress gave it the authority in its recent regulatory overhaul.

In Washington, I’m John Dimsdale for Marketplace.