By Bruce Meyerson
The Associated Press

If corporate executives are still so confident of their leadership skills, maybe it's time they finally allowed shareholders to say whether they agree.

Two powerful business lobbies are pressing the Securities and Exchange Commission to abandon its proposal to give shareholders the power for the first time, under limited circumstances, to nominate and elect officers to a company's board of directors.

The Business Roundtable, an association of 150 chief executives from major corporations, and the U.S. Chamber of Commerce, say those limited circumstances are an invitation for special interests such as labor unions, pension funds or environmental groups to "hijack" the board in pursuit of their own agendas.

Recently, officials from 10 states with a combined $700 billion in their public employee pension funds wrote a letter to SEC Chairman William Donaldson urging him "to reject the massive lobbying effort by corporate interests and reported political pressure from high officials of the Bush administration" against the proposal.

Now the Chamber of Commerce is threatening to sue if the proposed rules are adopted by the SEC, which is expected to make a final decision in the coming weeks or months.

The risk of abuse by minority shareholders is legitimate. But the alternative is to leave in place a uniquely undemocratic system that insulates the corporate establishment from direct dissent by the shareholders who own the company.

As the rules now stand, shareholder voting is completely symbolic. Board candidates are nominated by a committee of nonmanagement directors, and even if only one share is voted in favor, the nominee is elected. Similarly, shareholder proposals are hard to get on the ballot, and are treated only as a recommendation even if they win a majority of the votes.

The debate over this arrangement has raged since the early 1900s as ownership of the nation's companies was being passed from founders and major financial backers to their families, who hired managers to run them.

Under one of the changes now proposed by the SEC, shareholder nominations would be allowed if an investor or group of investors with 1 percent or more of a company's stock submits a proposal to open the ballot, and then more than half of all the company's shares are voted in favor of that proposal.

Then, only an investor or group of investors with at least 5 percent of the company's stock would be allowed to nominate a candidate who in turn would need to win a general election by all shareholders.

The Business Roundtable and the Chamber of Commerce argue that the sweeping reforms already brought on by the Sarbanes-Oxley Act in 2002 are more than adequate to protect investors.