Proxy access: when shareholders nominate directors

THOUGH directors are elected by shareholders, the nominations for their election are usually made by the board of directors following an internal nomination process that often includes a nominating committee-led search for suitable candidates.

However, a view is emerging, especially in the US, that this process does not result in the best set of directors, and that some boards acting out of self-interest can entrench themselves.

US developments

In the US, companies mail proxy cards to investors ahead of shareholder meetings that usually list only the board's slate of nominees for board seats. This is now slowly changing.

In March, Bank of America announced amendments to its bylaws that would allow a group of up to 20 shareholders to nominate up to 20 per cent of its directors provided they have …