Proxy Access: A Sheep, or Wolf in Sheep's Clothing?

6 Pages Posted: 19 Sep 2010 Last revised: 3 Sep 2013

See all articles by David F. Larcker

David F. Larcker

Stanford University - Graduate School of Business

Brian Tayan

Stanford University - Graduate School of Business

Date Written: July 8, 2010

Abstract

At most companies, the board of directors has sole authority to nominate candidates for election to the board. In recent years, some governance experts have advocated rules lessening these restrictions and allowing shareholders greater access to nominate candidates.

Supporters of proxy access argue that, because directors are the representatives of shareholders, shareholders should have the right to nominate individuals to serve on their behalf. Opponents argue that shareholders lack firm-specific knowledge about the qualifications necessary to fill a board vacancy, and that proxy access will open the board to “special interests.”

We examine the issue. What impact will proxy access have on director elections? Will it improve or impair governance quality?

Topics, Issues and Controversies in Corporate Governance and Leadership: The Closer Look series is a collection of short case studies through which we explore topics, issues, and controversies in corporate governance. In each study, we take a targeted look at a specific issue that is relevant to the current debate on governance and explain why it is so important. Larcker and Tayan are co-authors of the book Corporate Governance Matters, and A Real Look at Real World Corporate Governance.

Keywords: proxy access, shareholder democracy, corporate governance

JEL Classification: G30, G34

Suggested Citation

Larcker, David F. and Tayan, Brian, Proxy Access: A Sheep, or Wolf in Sheep's Clothing? (July 8, 2010). Rock Center for Corporate Governance at Stanford University Closer Look Series: Topics, Issues and Controversies in Corporate Governance No. CGRP-06. Available at SSRN: https://ssrn.com/abstract=1678063

David F. Larcker (Contact Author)

Stanford University - Graduate School of Business ( email )

Graduate School of Business
518 Memorial Way
Stanford, CA 94305-5015
United States
650-725-6159 (Phone)

Brian Tayan

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

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