When I explain how directors are elected to the boards of US companies, the most common reaction I get is one of disbelief. Management nominates directors, and shareholders are allowed to vote "yes" or abstain, but they cannot vote "no" on the mailed-in election ballot. If 99 per cent of the voters abstain, management's proposal for directors still passes (although with obvious embarrassment). The message is clear: Directors, you are hired by management, not by shareholders.

Recently, however, the Securities and Exchange Commission proposed reforms to make it easier for shareholders to nominate directors (see box). The reforms have stirred strong opposition, pitching managers in control of large, publicly traded US corporations against investors who seek curbs on excessive managerial influence over the board.