The Securities and Exchange Commission approved a rule making it easier for shareholders to replace directors — a highly controversial move that could shake up board elections at many U.S. companies, including depositories and mortgage firms.
The rule, approved on a 3-2 vote, would force companies to print the names of shareholder board nominees on corporate ballots if certain conditions are met.
Investors, or a group of investors, seeking to run a slate of board nominees must own at least 3% of the company's stock and have held their shares for a minimum of three years.
Currently, shareholders who want to oust directors must foot the bill for mailing separate ballots — a hurdle that is too costly and time-consuming for most.
Smaller companies are exempted from complying with the rule for three years.
