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Corporate Governance Reform and Director Elections

By Daniel Fisher
February 03, 2007
The beginning of this decade featured a number of high-profile corporate scandals which have led to a sea change in the way public companies operate—best exemplifi ed by the disclosure and controls requirements of the Sarbanes-Oxley Act of 2002. However, those scandals have also led to a greater focus on the roles and responsibilities of Boards of Directors, and to a search by stockholder activists for reforms that would increase what they describe as “director accountability.” While no single reform has had a signifi cant impact to date, a number of changes that are currently in various stages of implementation could signifi cantly alter the way directors are elected at public companies, and thus the way such companies operate. These changes could both make it more difficult for incumbent directors to win re-election, and encourage, simplify and lower the cost of proxy contests by stockholder activists....