The SEC voted 3-2 to grant shareholders in publicly traded companies who have held at least 3 percent voting stock for three years continuously the right to nominate candidates for the board of directors at annual shareholders meetings. Companies are also required to include shareholder proposals in their proxy materials and pay for them to be mailed out.
According to the article, Hanks is concerned that the decision will enable shareholders with special interests to impose minority views on the company. "I think it's going to result in increased shareholder activism, particularly by shareholders with a short-term investment horizon. Most successful businesses are managed over the long term and short-term profit maximization tends to lead to distortions that are not good for the business, the stockholders or the employees, among others over the long term," he said.