Governance: treasury's Snow criticizes shareholder access concept.

The controversial Securities and Exchange Commission (SEC) proposal to give shareholders limited ability to nominate directors to corporate boards, already in limbo, has an influential foe: Treasury Secretary John Snow.

The proposal "is more likely to backfire and do damage" than improve corporate governance, Snow said in remarks in late May. He emphasized that the Sarbanes-Oxley Act has already ratcheted up pressure on board members to live up to their fiduciary responsibilities.

"Integrity has been put back in the system. There are no more half-hour audit committee meetings," Snow said. As a result, he said, the SEC's proposed Rule 14a-11 is unnecessary and could result in more problems for companies trying to move away from the intense focus on short-term numbers.

"The sort of proposal that's pending could be commandeered by those who aren't interested in the long-term health of the company," Snow said.

The so-called "shareholder access" issue has proven to be contentious, drawing more than 16,000 comment letters since the rule was proposed in 2003. Industry experts have called the proposal "dead."

Several House Democrats, led by Reps. Barney Frank (D-Mass.) and John Dingell (D-Mich.), have criticized the SEC for issuing a decision in February that allowed Halliburton Co., Qwest Communications International Inc. and Verizon Communications Inc. to exclude director nominee proposals from annual meetings.

Outgoing SEC Chairman William Donaldson said in a letter this spring that the agency remains "committed" to continuing to look for a way to address the concerns raised by corporations and shareholder groups. But newly nominated SEC Chairman Christopher Cox may have other ideas.