We Talk, You Listen: Should Shareholders' Voices Be Heard or Stifled When Nominating Directors? How the Proposed Shareholder Director Nomination Rule Will Contribute to Restoring Proper Corporate Governance

Abstract

This comment will argue for the passage of the proposed Security Holder Director Nomination Rule, which will provide investors with a means of confronting the inefficient proxy solicitation system currently in place. It will first discuss corporate governance in the current environment of publicly held companies and why it is important. Three groups of people are involved in corporate governance, and their interaction is a concern that the proposed rule addresses. The SEC and other institutions have recently passed several laws that attempt to solve flaws in the corporate governance process. Next, the current proxy solicitation process will be presented, detailing the methods in which shareholders can nominate candidates and the disadvantages of each method.

This comment will further describe the path to reform that led to the proposal of the rule. It will next describe the proxy environment in the postproposal era. This comment will further discuss the specific arguments in favor of and against the passage of the proposed rule. It will subsequently explain why the proposed rule has not yet been passed. Finally, the conclusion will discuss the short-term and long-term effects of the rule, should it be passed.