One of the ways in which
shareholders
may try to exercise control over company policies is by making shareholder proposals, which are recommendations their sponsors want to be placed on the proxy. Because the board largely controls the issues that are put to a vote many shareholder proposals never make it onto the ballot. But shareholder activists point out that even failed proposals can influence the board's decisions by alerting them about shareholder concerns and opinions.
Companies may exclude a shareholder proposal from the proxy for several reasons, including impropriety, illegality, irrelevance, conflicts with company proposals, and other reasons specified by the
SEC. Traditionally, the board has also been able to exclude shareholder nominees for directors, but the SEC has given initial approval to a proposed rule that would give shareholders the right to nominate board candidates on the proxy.
