The Arrival of Access

Wow.  The Commission adopted access, a multiple decade struggle.  The release is here.  This is only a beginning but it is a profound shift in this country's approach to corporate governance.  Access is in effect a recognition that the use of "independent" directors nominated by management does not work adequately to protect the interests of shareholders. 

Because management vets the "independent" directors and because "independent" directors have an economic incentive to remain on the board (the payment of fees), there is always an argument that they are not truly independent and more likely to look out for the interests of management rather than shareholders.

This changes with access and the increased election of directors nominated by shareholders.   If these directors want to remain on the board, they have to act in the best interests of shareholders rather than management.

Access will be used only gradually and few access candidates will win in the beginning.  But over time, directors will know that if they are not sufficiently solicitous towards the views of shareholders, they will engender an access challenge and will potentially lose their position.  They have suddenly been given an incentive to act in the best interests of shareholders.

For a more detailed discussion of the promise of access, go here.