Last week we sent a letter to the SEC expressing concerns with CalPERS’s plans to influence boards of directors should the SEC move toward a “proxy access” regime. Dubbed the Diverse Director Database (3D program), their plan is to recruit a pool of individuals who satisfy certain undisclosed criteria to be pressed into service as directors of American corporations in the event the SEC adopts this plan. It would effectively make boards accountable to special interest rather than to shareholders, and become yet another source of significant and non-transparent influence on the proxy voting system.

As the letter notes:

• While we believe that it is appropriate and beneficial for shareholders, particularly long-term shareholders, to be actively engaged with corporations, we do have serious concerns when shareholders advance interests unrelated to or adverse to the wellbeing of a company in a manner that lacks transparency to the corporation and to fellow shareholders.
• Directors, who are implicitly or explicitly beholden to an individual, or to a special interest group, may have a conflict of interest with the fiduciary standards that directors must adhere to.
• It is unclear what if any safeguards are in place under the 3D program to ensure that members in the pool of shadow directors adhere to their fiduciary responsibilities, if elected to the Board, and not act in the interest of a particular individual or a specific group.

The Chamber is urging the SEC to review its options for inspecting and regulating the 3D program and other similar programs.