The Future of Shareholder Democracy

Abstract

This Article seeks to ascertain the impact of the Securities and Exchange Commission's rejection in 2007 of a proxy access rule, a rule that would have required corporations to include shareholder-nominated candidates on the ballot. On the one hand, the SEC's rejection appears to be a stunning blow to the shareholders' rights campaign because many shareholders' rights advocates have long considered access to the corporate ballot as the "holy grail" of their campaign for increased shareholder power. On the other hand, some corporate experts maintain that characterizing proxy access as the indispensable ingredient for sufficient shareholder influence fails to appreciate the significance of recent developments such as the success of majority voting and the adoption of the e-proxy rules. Because these developments provide shareholders with alternative methods for influencing corporate affairs, some have even argued that they may make the issue of proxy access moot. However, this Article reveals the fallacies of such an argument and the importance of the continued pursuit of proxy access. Although other devices may prove useful, it is not likely that they will be as effective as proxy access in empowering shareholders.

Keywords: Future of Shareholder Democracy, Shareholder Democracy, Shareholders, Shareholders' Rights, E-Proxy, Shareholder Activism, Corporate Governance, Proxy Access, Voting Power, Federal Proxy System, Voting Right, Collective Action, Shareholder Competency, Special Interest Shareholders, Proxy Wars

JEL Classification: G34, K2, K20, K22, L20, M14