It is proposed that the board of directors submits to shareholders’ vote more candidates than the number of seats to be filled.
A foremost shareholders’ right is to elect administrators. Currently, shareholders are limited to vote in favour or to withstand their vote for a candidate. Moreover, board of directors submit always the exact number of candidates for the seats to be filled. This type of electoral process induces newcomers to be more indebted to fellow directors than to shareholders who they should represent! The current electoral system unduly protects administrators from shareholders.
During the financial crisis of 2008-09, many shareholders questioned the efficiency of their board of directors, shareholders’ confidence in board members’ competency and capability to represent them being shaken. Similar concerns are at the base of the Security and Exchange Commission (USA) consultation on rules governing nomination and election of directors. Its objective is for shareholders to play a more active role in the nomination of directors.
Reviewing of proxy voting circular of the last ten years leads to the following remarks:
* Boards of directors do not change much over time
* They do not adequately mirror the diversity of their shareholders.
* They do not reflect shareholders’ expectations.
Nomination and election processes should favour members as close as possible to shareholders and having choices should lead to board members more in sync with shareholders’ will.
Shareholders must have, yearly, the opportunity to maintain current administrators or to replace them. The board should allow for a true choice by presenting for election more candidates than needed. The proxy voting circular should present, beyond the regulated information, the expected value added from each nominee. The board should refrain from favouring any nominee as the nomination process would have been completed with due diligence by the nomination committee of the board.