Brian Quinn has a post raising two important questions about proxy access. First, is he right that it is a "laudable goal." Not in my humble opinion. See my book, Corporate Governance after the Financial Crisis
… because proxy access’ effect will be to increase the number of short slates, albeit to an uncertain extent, its impact on corporate governance likely will be analogous to that of cumulative voting. Both result in divided boards representing differing constituencies. Experience with cumulative voting suggests that adversarial relations between the majority block and the minority of shareholder nominees commonly dominate such divided boards.
The likely effects of proxy access therefore will not be better governance. It is more likely to be an increase in interpersonal conflict (as opposed to the more useful cognitive conflict). There probably will be a reduction in the trust-based relationships that are the foundation of effective board decision making. There may also be an increase in the use by the majority of pre-meeting caucuses and a reduction in information flows to the board as a whole. Not surprisingly, early research suggests that proxy access reduces shareholder wealth.
You'll need to buy the whole book for the detailed argument, of course.
In any case, on to the second question posed by Quinn's post: Why is a leading activist shareholder proponent of proxy access requesting boards to adopt a proxy access bylaw instead of simply using a Rule 14a-8 shareholder proposal to directly amend the bylaws? Indeed, I have often wondered why shareholder activists don't make more use of their power to initiate bylaw amendments.
