August 19, 2009
This is a step in the right direction toward establishing a reasonable balance of power between shareholders and boards. Unfortunately, there is a loophole that appears to me to make the rule change almost meaningless. I am referring to the provision that if the "company's charter/bylaws" prohibit nominations from shareholders then the company is exempt from the rule. The practical effect is that every board will ram through new bylaws to exempt the company from the rule.
I also oppose the provision that state law can prohibit imposition of this rule. This opens the door to companies persuading states to change their laws to exempt themselves. Since this is clearly an issue of interstate commerce, state laws should not be allowed to undermine this rule.