By  on August 26, 2010

WASHINGTON — The Securities and Exchange Commission voted Wednesday to expand the ability of public companies’ minority shareholders to place their own candidates on proxy ballots along with company-backed candidates.

The SEC stipulated that “proxy access,” the ability to nominate a candidate, will only be available to shareholders or groups of shareholders that own at least 3 percent of company stock for at least three years prior to the nomination. Among other limits, the SEC specified that shareholders cannot borrow stock to meet the threshold.

Previously, shareholders interested in putting forward a candidate for the board had to send out their own ballots and then submit them to the company, a more cumbersome process.

The business community has historically opposed proxy access, citing concerns that shareholders seeking seats on the board could disrupt company operations, particularly if they were doing so to voice displeasure with company decisions.

The National Retail Federation had pushed the SEC to set a higher threshold for the amount of stock shareholders would be required to own in order to nominate candidates. In a letter to the SEC on Aug. 20, Matt Shay, NRF president and chief executive officer, said the association supported a 5 percent requirement as a “far more appropriate balance” than the 3 percent threshold implemented by the SEC. Shay also expressed concerns that proxy contests were “time consuming and disruptive.”

Richard Trumka, president of the AFL-CIO, backed the SEC’s decision, citing it as “an important and historic step in empowering long-term investors.”

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