The Securities and Exchange Commission voted unanimously Wednesday to require companies to disclose how they select nominees for their boards of directors and tell shareholders how they can nominate their own candidates.
The new rule "represents a significant step in making the director nominating process more accessible to security holders by enhancing transparency of the process," SEC Chairman William H. Donaldson said.
Under the rule, companies must describe their nominating process, including "categories" of sources that make recommendations of nominees to show whether choices come from management, an outside search firm, investors or other groups.
Another proposal, still under SEC consideration, would let shareholders put their own director nominees on corporate proxy ballots if the dissidents can show that a company has ignored past shareholder initiatives. The SEC's period for public comment on that measure, which has been opposed by business groups and lauded by institutional investors, is set to end in December.