A victory for shareholder rights?

The Securities and Exchange Commission has unveiled a potentially historic proposal. Issued in early October, the measure would give shareholders access to the company proxy if one of two triggers occurs: a simple majority vote in favor of access, or 35 percent of votes on a management board candidate are marked "withhold." Once access is gained, shareholders with at least a 5 percent stake can nominate candidates in the next election.

As outlined in these pages in October, the sides in the debate are clearly drawn. The pro-management camp, led by the Business Roundtable, says the proposal could prevent management from appointing board candidates with needed expertise and might throw corporations onto the mercies of corporate raiders and special interest groups.

Shareholder advocates say that independence rules in the proposal would prevent them from nominating anyone they've ever worked with. What's more, they add, the two-step process forces owners of stock to suffer for too long. "We would just be getting to nominating new directors for the Enron board two years after the first scandal erupted," said Sean Harrigan, president of Calpers.

Nell Minow of The Corporate Library, the online resource on corporate governance, summed it up this way: "Nobody knows what to predict about the future, but I thought the rule made both sides equally unhappy--and that's a good sign." A 60-day comment period on the proposal expires Dec. 22.