Proxy access, a long debated governance measure, was directed at reducing shareholder costs in nominating directors. However, since it was first initiated, proxy access raised vigorous opposition, and more important, significant and wide skepticism that shareholders will ever use it to nominate directors.

This Article studies the first systemic implementation of proxy access and finds that while proxy access was rarely used to nominate directors, it was used indirectly — as a bargaining tool — to improve board diversity. Accordingly, the study finds that firms with a low number or low proportion of female directors, and firms with all-male boards, were significantly more likely to be targeted by the NYC Comptroller’s proxy access proposals.

While promoting diversity wasn’t one of the goals that proxy access was designed to achieve, the resulting effects might not be remote from those intended. Given that institutional investors are not likely to nominate directors, diversity might provide an alternative, pragmatic channel, to increase board independence, monitoring and accountability. 

Michal Barzuza, Proxy Access for Board Diversity, 99 Boston University Law Review, 1279–1299 (2019).