US shareholders may choose directors

Shareholders in the United States may soon have the power to nominate directors to boards.

A new Securities and Exchange Commission proposal to empower shareholders will be voted on by public companies. A debate on whether federal proxy rules should block shareholders' right to nominate directors has raged for seven years.

Shareholders are allowed to nominate various candidates at the annual general meeting of most companies, but these are usually overshadowed by proxy votes cast ahead of the meeting.

The SEC proposes amendments to the rules that would allow shareholders to nominate directors ahead of the proxy vote.

The issue is timely, as economic conditions are starting to question the behaviour and performance of boards of directors.