Replies to post #6 on Investor Relations 101 (IR101)

[Tina]

Swedish Director-Election Rules Could Cross Atlantic
MarketWatch (04/16/09) Orol, Ronald D.

The Securities and Exchange Commission (SEC) is planning to roll out an extensive regulatory agenda for investors in the coming months, including a proposal to permit investors to nominate director candidates onto corporate boards. "I looked carefully how access [to shareholders] is granted in Europe and, in particular, the Scandinavian markets because they have an interesting model," said SEC Chairwoman Mary Schapiro to reporters on April 6. "We'll have something that is different than what the agency has looked at specifically before." In Sweden and Norway, board nomination committees are almost completely composed of the largest investors or their nominees, and the board, which typically consists of between seven and nine members, is chosen by the three- to five-member nomination committee. The CEO is usually the sole management official on the board, but he or she cannot chair the board. In Sweden there is only one non-shareholder--a board representative--on the nomination committee, while in Norway there are usually two to three shareholder members on the committee. In the United States, about 50 percent of all corporations install the CEO as chairman, while in most instances management selects the whole board, including nomination, audit, and compensation committees. If the SEC mandates that shareholders make up nomination committees in the United States, then the role U.S. mutual funds play in board elections would be transformed. "It would be a transformation not just in the board room but also in the areas of securities analysis," says Corporate Library founder Nell Minow. "Proxy voting for direction elections is a compliance issue today but with this approach it would be an investment strategy for the fund." Minow says that mutual funds and other institutional investors would probably have to reorganize their investment teams to include managers that could find talented board candidates with specialized oversight expertise if a Scandinavian approach is adopted.
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