Who Pays for Minority Director Campaigns?

Last Updated Jun 30, 2008 5:46 PM EDT

dollar-sign.bmpLet's say your board is being challenged by dissident shareholders to bring in directors on a minority slate. Who should pay for it?

That's question that the U.S. Securities & Exchange Commission has asked the Delaware Supreme Court to answer. The SEC is doing so because about half of the public companies in the U.S. are registered in Delaware and a recent state constitutional change allows the state Supreme Court to weigh in on issues asked by the federal SEC.

The case involves a challenge by the American Federation of State, County and Municipal Employees (AFSCME) to present a minority slate of directors against software-maker CA. The union's pension fund wants CA to pay for its efforts, but CA has balked.
In turn, the SEC has used the new Delaware constitutional change for guidance.

This all might sound petty and convoluted, but how the Delaware Supreme Court advises could have big implications for CEOs and boards everywhere.