(Editor’s Note: This post comes to us from Jie Cai and Ralph Walkling of Drexel University.)

In our forthcoming Journal of Financial and Quantitative Analysis paper, Shareholders’ Say on Pay: Does it Create Value?, we investigate whether allowing shareholder votes on executive compensation increases shareholder wealth. We perform three experiments to examine this issue. In our primary experiment, we examine the market reaction to the passage of the House of Representatives “Say on Pay Bill”, which was passed on April 20, 2007 by a 2-1 margin. In our second experiment, we examine the shareholder sponsored say-on-pay proposals targeting individual companies. In our third experiment, we ask whether shareholder votes are related to excess CEO compensation when they are asked to approve equity-based compensation plans.

Our primary experiment examines the stock price reaction of 1,270 of the largest corporations in the United States on the day the bill passed the House. The passage of the Say-on-Pay Bill might not be surprising to the market since Democrats were in control of the House. However, its 2-1 margin (269 positive votes vs. 134 votes against) was a surprise, as well as the fact that 55 Republican Congressmen also supported the Bill. We find a more favorable market reaction to the bill for firms that overpay their CEOs and for firms that have low pay-for-performance. Additionally, we find that the positive stock price reaction is more pronounced for firms with relatively weak, but not the weakest governance. These firms are likely to benefit from better compensation design if they implement such improvements under shareholder pressure. Conversely, firms with the weakest governance may not respond to advisory shareholder votes at all. Finally, market reaction is more favorable for firms that have higher activist shareholder ownership as well as firms that have previously responded to shareholder dissatisfaction as expressed in director elections.

In our second experiment, we use a sample of 113 say-on-pay shareholder proposals between 2006 and 2008 to examine shareholder-sponsored say-on-pay proposals targeting individual companies. We find that the companies targeted are not ones likely to benefit from say-on-pay. On average, the CEOs of these firms are not overpaid. Moreover, targeted firms have similar performance and governance as typical firms. Activist shareholders appear to target large firms. In addition, most of these proposals are sponsored by labor unions with very small stock holdings in the companies targeted. The stock prices of targeted firms react negatively to the announcement of union-initiated proposals and these proposals receive lower support from other shareholders. Finally, when shareholders vote down these proposals, the stock prices of targeted firms react positively, and the reaction is higher when more shareholders vote against the proposals.

In our third experiment, we examine shareholder votes concerning management proposals for approval of incentive compensation (mostly equity-based compensation plans). Using a sample of 2,511 management-sponsored compensation proposals voted on at 1,853 shareholder meetings during the 2003-2008 period, we find that shareholder support for such proposals is lower when abnormal CEO compensation is high and CEO pay-for-performance sensitivity is low.

Taken together, our evidence suggests that say-on-pay may benefit firms with questionable compensation practices but can hurt firms targeted by special interests. Thus, with say-on-pay it is not the case that one size fits all. The full paper is available for download here.

In light of the intense current debate regarding the SEC’s proposed proxy access reforms, the Harvard Law School Program on Corporate Covernance this week hosted a roundtable on the proposed reforms. The Roundtable brought together prominent participants in the debate – representing a range of perspectives and experiences – for a day of discussion on the subject.

The two morning sessions, chaired by Professor Robert Clark, focused on the question of whether the SEC should provide an access regime, or whether it should leave the adoption of access arrangements, if any, to private ordering on a company-by-company basis. The third session, chaired by Professor Howell Jackson, focused on on how a proxy access regime should be designed, assuming the SEC were to adopt such an access regime. The final session, chaired by Professor Lucian Bebchuk, went beyond proxy access and focused on whether there are any further changes to the arrangements governing corporate elections that should be considered.

The Program on Corporate Governance will be issuing a transcript of the Roundtable’s proceedings later on; a link to the transcript will be posted on the Forum.

…continue reading: Harvard’s Proxy Access Roundtable

(Editor’s Note: This post comes to us from Paul Fischer of Pennsylvania State University, Jeffrey Gramlich of the University of Southern Maine and Copenhagen Business School, Brian Miller of Indiana University, and Hal White of the University of Michigan.)

In our forthcoming Journal of Accounting and Economics paper Investor Perceptions of Board Performance: Evidence from Uncontested Director Elections, we investigate whether uncontested elections serve as meaningful polls reflecting investor perceptions of board performance. Our paper is motivated in part by the general perception that many director elections are meaningless charades of shareholder democracy due to the lack of contested elections, coupled with the widespread use of plurality voting rules.

We construct approval measures using director vote tallies for a sample of S&P 500 firms from 2000-2004, and find evidence consistent with these measures reflecting investor perceptions of board performance. In particular, we examine the relation between the approval measures and the stock price response to a change in the most focal member of the board, the CEO. We find that higher (lower) approval is associated with lower (higher) stock price reactions to subsequent announcements of management turnovers. We also show that the approval measures predict uncertain future events expected to be associated with board performance. Specifically, we find that firms with low board approval are associated with a higher likelihood of CEO turnover, greater board turnover, lower CEO compensation, fewer and better received acquisitions, and more and better received divestitures subsequent to the vote.

We also assess whether the approval measures are incrementally informative to traditional metrics of board performance, such as stock returns and return on assets. In particular, we find that the information content in the vote approval measures is largely unaffected by the inclusion of controls for traditional metrics of board performance. Hence, the vote approval metrics are uniquely meaningful measures of board performance. As such, our approval measures can be used to complement existing governance measures, such as the Gompers, Ishii, and Metrick (2003) index, which focus primarily on governance structures as opposed to the performance of the individuals operating within those structures. Overall, our findings suggest uncontested votes do reflect investor perceptions in spite of a number of countervailing forces, including the lack of diligent voting by all shareholders.

The full paper is available for download here.

(Editor’s Note: This post comes is based on a Davis Polk & Wardwell LLP client memorandum by Phillip R. Mills, Francis S. Currie, Linda Chatman Thomsen, Ning Chiu and Robert L.D. Colby)

A broad cross section of commenters is encouraging the Securities and Exchange Commission (the “SEC”) to take a cautious approach with its latest proposal to allow shareholders to solicit votes for their director candidates through corporate proxy statements. [1]

The SEC received over 520 comment letters to date recommending a host of modifications to its proposal for uniform mandatory proxy access. Some commenters, including members of the investor community, have expressed concerns about the desirability of any uniform mandatory proxy access rule. Significant investor constituencies have also expressed concern about a possible compromise being advocated by companies and their representatives: deferring adoption of a uniform mandatory proxy access rule and instead allowing shareholders to propose bylaw amendments permitting proxy access through the existing shareholder proposal process. That compromise does have institutional investor support, however, with one leading investor recommending raising the ownership threshold for shareholder proxy access bylaw amendments to 5%.

In 2003 and 2007, the SEC proposed different rules to give shareholders greater access to a company’s annual proxy materials to nominate candidates for election as directors. In response to those rule proposals and investor concerns, states and corporations have taken steps to allow for proxy access and expanded shareholder influence in director elections. In addition to greater adoption of majority voting standards, states such as Delaware have recently adopted laws specifically permitting proxy access and proxy solicitation expense reimbursement bylaws. In response to a perceived need for greater director accountability arising out of the recent financial crisis, the SEC released its latest proposal that would mandate a uniform federal access right to a company’s proxy materials for shareholders who meet minimum holding period and ownership threshold criteria.

…continue reading: SEC Urged to Defer Adopting Proxy Access Rules

(Editor’s Note: This post comes to us from Roy J. Katzovicz of Pershing Square Capital Management, L.P.)

Our experience with concentrated, long-term investments in large, public companies has taught us that the overwhelming majority of corporate directors are smart, diligent, and capable business people trying the best they can to faithfully discharge their fiduciary duties. They do not, however, always get it right.

Something is broken in corporate America. Particularly over the last decade, prudent risk management took a back seat to the quest for short term profits. Now we are all suffering the consequences. There is, however, reason for optimism. A number of tectonic trends in corporate governance appear to be converging, and a subtle rebalancing of power between management, their boards of directors and shareholders appears likely. We think that is a good thing.

Engaged shareholders with meaningful stakes in the companies in which they invest have the potential to regulate corporate conduct through private and market behavior. The existing tools of shareholder engagement, however, have not proven to be sufficient or optimally suited for that task. We believe that the SEC’s proposal to require public companies to include shareholder nominees in corporate proxy materials goes a long way toward better equipping shareholders to be more effective monitors of corporate behavior and, as a result, another force for good corporate governance.

We applaud this initiative and view it as a market-based solution in that the government is now trying to empower market actors to manage risk rather than trying to achieve the same goal through direct government intervention into the day-to-day affairs of corporations.

…continue reading: Proxy Access and the Balance of Power in Corporate Governance

(Editor’s Note: This post comes to us from Scott Fenn of Proxy Governance Inc.)

Recent data compiled by PROXY Governance, Inc. show a significant increase in the percentage of director nominees who received high percentages of shareholder votes cast in opposition in director elections during the 2009 proxy season. Although the vast majority of director nominees continue to be elected with little opposition, for companies with director election results available through August 2009, 9.8 percent of unopposed director nominees had at least 20 percent of shares voted against them or withheld, up from 5.5 percent in 2008. This trend was apparent at other threshold levels as well, with the percentage of directors having at least 40 percent of shares voted in opposition doubling from 1.0 percent in 2008 to 2.1 percent in 2009, and the percentage of directors failing to attain majority support tripling from 0.2 percent in 2008 to 0.6 percent in 2009. (See Table 1)

While declines in stock prices and the financial crisis no doubt played a role in the apparent increase in shareholder discontent with directors during 2009, compensation and corporate governance concerns also appear to have been primary drivers behind the increasing number of shares voted in opposition to directors. Of all director nominees who had more than 20 percent of shares withheld or voted against them in board elections, more than 57 percent served on compensation committees. Governance concerns – ranging from ignoring a majority vote on a shareholder proposal to adopting or renewing a poison pill without shareholder approval – also appear to have played a role in the high opposition votes at many companies.

Despite fewer organized “Vote No” campaigns against directors in 2009 – where a group of shareholders mount a public campaign to oust specific directors – at least 84 directors at 48 companies failed to attain majority support from shareholders through August 2009 at more than 2,400 companies where director voting results were available. Most of these 48 companies still use plurality voting, so the practical impact on most of the directors will be limited. Southwestern Energy Co., Pride International Inc., Cablevision Systems Corp., Pulte Homes Inc., Southwest Airlines Co., Massey Energy Co. and Kansas City Southern were among the larger companies where at least one director failed to achieve a majority vote. A list of the 48 companies where such votes have occurred so far in 2009 is shown in Table 2.

High profile “Vote No” campaigns aimed at unseating directors at financial firms such as Bank of America Corp. and Citigroup Inc. had mixed results – while the directors targeted in such campaigns were re-elected, several targeted directors at Bank of America later resigned, including the bank’s lead director.

The level of opposition to director candidates is likely to increase further next year as a number of existing and proposed regulatory changes related to proxy voting in director elections come into play. Beginning in 2010, under a rule change adopted by the New York Stock Exchange and approved by the Securities and Exchange Commission, discretionary voting by brokers of shares where they have not received voting instructions from shareowners will no longer be allowed in director elections. Because uninstructed broker votes can account for up to 20 percent of the vote at many companies, and are routinely voted with management’s recommendations, the new rule could result in many more directors failing to achieve majority support. For example, out of the universe of more than 2,400 companies, 284 director nominees were elected with less than 60 percent support of the shares cast and 473 nominees were elected with less than 65 percent support of the shares cast. Many of these directors might not have received majority support without the benefit of broker discretionary votes.

In addition to the impact of the rule change on broker discretionary voting, various bills are pending in Congress that would mandate annual elections for all directors and/or a majority voting system for all companies in uncontested elections. Annual elections would put many more directors up to a shareholder vote each year, potentially resulting in a greater total number of directors failing to achieve majority votes. Legislation mandating majority voting, while it might not impact the number of votes in opposition to directors, would certainly change the impact of those votes. Finally, the SEC has proposed a proxy access rule granting large shareholders access to the corporate proxy for purposes of nominating directors which, if implemented, could also have a significant impact on the director election process.

(Editor’s Note: This post is based on a Governance & Proxy Review Update.)

(Update:  This post has been updated below to reflect information provided in a subsequent Governance & Proxy Review Update.)

This post is by my colleagues Domenick de Robertis and Reid Pearson.

In response to the recent decision by the SEC to approve the elimination of broker discretionary voting authority on the election of directors at annual meetings after January 1, 2010, NYSE Rule 452 is front and center on the minds of many in the proxy and governance arena.

The amendment to Rule 452 will be the end of the “stuffing of the ballot box” for the election of directors that some shareholders have long complained about. The question now is to what extent will the change impact the ability of corporations to get their directors re-elected each year? In addition, what should corporations and their advisors be thinking about?

Assessing the Risk

Since the July announcement of the change, The Altman Group has completed numerous analyses for corporate issuers projecting the voting impact from the amended NYSE Rule 452. We will share our findings in the next issue of the Governance & Proxy Review and answer some practical questions that a company should consider in preparing for what is likely to be the toughest proxy season in history.

Strategies to Consider When Counteracting the Loss in Broker Voting

Historical statistics show that approximately 25 to 35 percent of the retail shareholder base will respond by voting without being prompted. The variance in response rates is tied to a number of factors, such as stock price (higher apathy with lower priced stocks) and the distribution of shareholdings (are there a lot of odd-lot holders, for example).

As we pointed out in our comment letters to the SEC, (Comment Letter – March 27, 2009) (Comment Letter – May 23, 2007) (Comment Letter – July 14, 2006) small-cap issuers are likely to bear the brunt of the burden placed on Corporate America by this change. Any issuer with a heavy retail base is likely to incur additional solicitation costs. There is no magic bullet for getting retail holders to vote. Issuers will need to consider the costs, necessity and effectiveness of follow-up mailings and phone solicitation to unvoted holders.

…continue reading: Storm Clouds Gather over Director Elections

Executive pay is taking center stage in the governance reform debate, with significant attention given to a proposal to mandate an annual advisory shareholder vote on the executive compensation report, known as “say on pay,” following the example of United Kingdom (U.K.). I have recently completed two studies examining this proposal—the first considers the impact of “say on pay” in the U.K., and the second analyzes the effect of mechanisms currently available to U.S. investors to influence executive pay (i.e. shareholder proposals and vote-no campaigns).

In the first study, co-authored with David Maber of University of Southern California, Say on Pay Votes and CEO Compensation: Evidence from the UK, we perform two sets of tests. First, we examine UK firms’ responses to say on pay votes by analyzing the changes to compensation policies made by firms after facing high voting dissent against their remuneration report. We document that a significant number of these firms removed or modified provisions that investors viewed as “rewards for failure” (e.g., generous severance contracts, low performance hurdles, provisions allowing the retesting of performance conditions)—often in response to institutional investors’ explicit requests—and established a formal process for proactive consultation with their major shareholders going forward. These actions paid off, in that voting dissent at the subsequent annual meeting was substantially lower. We also find evidence of similar actions taken before the vote by a subset of firms that subsequently experienced low voting dissent, suggesting that the threat of a vote induced some firms to revise CEO pay practices ahead of the annual meeting.

Second, we examine the trend in CEO pay and its sensitivity to economic determinants before and after the introduction of say on pay for a large sample of UK firms. We find no evidence of a change in the level and growth rate of CEO pay—after controlling for firm performance, size and other factors. However, we find a significant increase in the sensitivity of CEO pay to poor performance. The increase is most pronounced in (i) firms with high voting dissent, and (ii) firms with an ”excessive” level of CEO pay (relative to the level predicted by its economic determinants) before the adoption of say on pay, regardless of the voting dissent. Interestingly, we do not find a more pronounced increase in firms with higher raw levels of CEO pay. These findings confirm the insights from our small-sample evidence of explicit changes to pay contracts and suggest the following: (i) UK investors used say on pay to push for greater accountability for poor performance; (ii) firms responded to adverse shareholder votes, in spite of their non-binding nature; (iii) (at least some) firms responded to the threat rather than the realization of an adverse vote; (iv) shareholders focused on firms with controversial CEO pay packages (as captured by high voting dissent or excessive CEO pay levels) rather than firms with high (but not abnormal) CEO pay levels.

In the second study Shareholder Activism and CEO Pay, coauthored with Yonca Ertimur of Duke University and Volkan Muslu of the University of Texas at Dallas, we examine a comprehensive sample of 1,332 compensation-related shareholder activism events over the 1997-2007 period (134 vote-no campaigns and 1,198 shareholder proposals). We find that, in targeting firms, activists take both the ”predicted” and ”excess” components of CEO pay into consideration. In other words, activists (particularly institutional investors) appear sophisticated enough to identify excess CEO pay firms, but they also target firms with high (but not abnormal) levels of CEO pay, perhaps to bring greater visibility to their initiatives or because of concerns with social equity. Voting support for compensation-related proposals, in contrast, is higher in firms with excess CEO pay but not in firms with high (but not abnormal) CEO pay, suggesting that shareholder votes reflect a sophisticated understanding of CEO pay figures. Voting patterns depend on the type of shareholder proposal. In particular, proposals aimed at affecting the pay setting process (e.g., proposals requesting shareholder approval of certain compensation items)—which we label Rules of the Game proposals—receive the highest voting support, often resulting in majority votes. Support for proposals aimed at influencing the output of the pay setting process (e.g., proposals to use performance-based vesting conditions in equity grants)—which we label Pay Design proposals—is lower but has been increasing in recent years. Proposals directed at shaping the objective of the pay setting process (e.g., proposals to link executive pay to social criteria or to abolish incentive pay)—labeled Pay Philosophy proposals and mostly filed by individuals and religious funds—have consistently received little support. The rate of implementation for pay-related proposals is generally low (5.3%) but increases substantially for proposals receiving a majority vote (32.2%) most of which are Rules of the Game proposals. With respect to the overall effect on CEO pay, we document a $7.3 million reduction in excess CEO pay for firms targeted by vote-no campaigns, corresponding to a 38% decrease in CEO total pay. As for shareholder proposals, we find evidence of a moderating effect on CEO pay—a $2.3 million reduction—only in firms targeted by Pay Design proposals sponsored by institutional proponents in recent years.

What do these studies tell us about the potential impact of “say on pay” in the U.S.? While drawing policy implications requires caution, a few lessons can be learned. First, there is no indication that special interest groups pushing for radical changes have hijacked shareholder votes in the U.K. or the U.S.—a concern expressed by critics of say on pay. U.S. shareholders have systematically rejected proposals trying to micromanage executive pay and supported those that ask for a say on the pay process. Similarly, U.K. shareholders have shied away from opining on pay levels and focused instead on strengthening the link between pay and performance by imposing certain rules of the game (e.g., no retesting of performance conditions). Second, in both countries, investors use their voting power in a moderate and sophisticated manner, raising their voice only at few firms with controversial pay practices and suspiciously high pay levels. Fears that many firms would face massive chaos and revolts at annual meetings have not materialized. Third, while both in the U.S. and the U.K. boards do listen to shareholder votes, even if advisory, say on pay votes and vote-no campaigns are more effective in getting boards’ attention than shareholder proposals. A say on pay vote against the remuneration report (or votes withheld from a director) greater than 20% usually prompts a firm’s response. In contrast, shareholder proposals have a reasonable (but still low) chance to be implemented only if they win a majority vote. This difference is not surprising. Vote-no campaigns and say on pay directly question directors’ performance and, thus, affect their reputation. In addition, unlike shareholder proposals, they enable shareholders to express their general dissatisfaction with CEO pay rather than with a single problem and do not require an ex ante agreement on the solution. As such, they may force a broad dialogue between investors and boards on all aspects of CEO pay, without putting shareholders in the difficult position to micromanage specific and technically complex aspects of CEO pay through a 500-word “yes or no” proposal. The fourth lesson is that the U.K. experience with say on pay indicates that boards try to prevent an adverse voting outcome through ex ante consultation with institutional investors and that enhanced communication is crucial for boards to “interpret” the say on pay vote.

Overall, these factors suggest that concerns with say on pay may have been exaggerated. Say on pay may be as effective as vote-no campaigns in causing boards to listen and act, and with an added benefit. Specifically, say on pay may allow greater activism by those institutional investors concerned with CEO pay but reluctant to compromise their relation with boards by engaging in vote-no campaigns and voting against the re-election of otherwise valuable directors.

However, a number of caveats are in order, particularly in drawing inferences from the experience of a different country with its own governance environment. First, for say on pay to work investors must have something to say in the first place. In the U.K., institutional investors have developed and agreed upon (and continue to update) a set of guiding principles, or “best practices,” on executive remuneration, complementing the principles in the Combined Code. Under the U.K. “comply or explain” governance model, these best practices provide firms and shareholders with a clear benchmark against which to make assessments of pay practices. In addition, concentrated institutional ownership has led to a relatively high level of engagement which also allows for firm-specific adjustments of these best practices. It is not clear whether institutional investors in the US will take such a proactive role or outsource it to proxy voting services, which may be tempted to adopt “cheap” one-size-fits-all solutions, as cautioned by Jeffrey Gordon of Columbia Law School in a piece in the Harvard Journal on Legislation. In addition, higher concentration and stability of institutional ownership may make communication with boards easier in the U.K. Second, in the U.K. it is generally easier for investors to replace directors, thereby making directors more responsive to shareholder pressure (though the trend toward majority voting and proposed proxy access legislation may make the threat of replacement stronger in the U.S.). In view of these and other caveats, proposals to limit mandatory say on pay to large firms may be a sensible first step (after all, our studies show that most compensation-related activism is focused on the largest firms).

A final word of caution: in the heat of the reform debate, say on pay has often been used in the same sentence as excessive risk-taking to suggest that an advisory shareholder vote would lead to compensation packages that discourage excessive risk-taking. Such a statement is incorrect. Say on pay is a neutral tool that shareholders will use (if they decide to use it) to influence compensation practices in a way consistent with their objectives. The risk-taking profile desired by shareholders may very well differ from the level of risk-taking that regulators may deem optimal for the economy. Similarly, say on pay should not be expected to be a tool to deal with wealth inequality. After all, shareholders have long supported compensation packages that have encouraged risk-taking and resulted in higher compensation levels.

(Editor’s Note: An earlier post regarding a comment letter by seven major corporate law firms in opposition to the SEC’s proposed proxy access reform is available on the Forum here.  An earlier post regarding a comment letter by 80 professors of law, business, economics, or finance in support of the proposed proxy access reform is available here.)

Several contributors to the Harvard Law School Forum on Corporate Governance and Financial Regulation — including four HLS professors, five HBS professors, and one HLS/HBS professor — submitted to the SEC last week a comment letter generally supporting the SEC in proposing proxy access for large shareholders, but recommending several modifications to the proposed rule that would reduce the odds that the rule, as adopted, would have unexpected disruptive effects on firms or markets, or force on shareholders a governance system that a majority would oppose at any given firm. A copy of the comment letter filed with the SEC is available here.

I submitted to the SEC yesterday a comment letter on behalf of a bi-partisan group of eighty professors of law, business, economics, or finance in favor of facilitating shareholder director nominations. The submitting professors are affiliated with forty-seven universities around the United States, and they differ in their view on many corporate governance matters. However, they all support the SEC’s “proxy access” proposals to remove impediments to shareholders’ ability to nominate directors and to place proposals regarding nomination and election procedures on the corporate ballot. The submitting professors urge the SEC to adopt a final rule based on the SEC’s current proposals, and to do so without adopting modifications that could dilute the value of the rule to public investors.

A copy of the comment letter filed with the SEC is available here. Below is the text of the main part of the comment letter followed by the list of the eighty professors.

TEXT OF MAIN PART OF COMMENT LETTER:

This comment letter is submitted on behalf of a bi-partisan group of eighty professors of law, business, economics, or finance whose names appear below (the “Submitting Professors”). The Submitting Professors are affiliated with forty-seven universities around the United States. All of the Submitting Professors have research or professional interests relating to how publicly traded firms are run and how their affairs are governed by corporate and securities laws. The Submitting Professors welcome the opportunity to provide comments to the Securities and Exchange Commission (the “SEC”) on its proposed rule Facilitating Shareholder Director Nominations (the “Proposed Rule”).

There is substantial variance among the views of the Submitting Professors on many corporate governance matters. However, all of the Submitting Professors support the SEC’s proposals to remove impediments to the exercise of shareholders’ rights to nominate and elect directors and to enable shareholders to place proposals regarding nomination and election procedures on the corporate ballot. All of the Submitting Professors urge the SEC to adopt a final rule based on the SEC’s current proposals, and to do so without adopting modifications that could dilute the value of the rule to public investors. While all of the Submitting Professors share the views expressed in this paragraph, each individual professor may not endorse each and every statement below.

The ability of shareholders to replace directors is supposed to play a key role in the governance structure of public companies. However, shareholders seeking to replace directors face considerable impediments. One significant impediment to replacing directors is incumbents’ control of the company’s proxy card – the corporate ballot sent by the company at its expense to all shareholders. We believe that providing shareholders with rights to place director candidates on the company’s proxy card, as the SEC proposes doing, would improve director accountability.

…continue reading: Comment Letter of Eighty Professors of Law, Business, Economics, or Finance in Favor of Facilitating Shareholder Director Nominations