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In May, the SEC proposed an amendment to the process that gives shareholders the right to insert proposals, and alternative director slates, onto corporate proxies (more here). Last weekend John Coates hepped me to the onslaught of comment letters that followed. He told me he'd signed a letter suggesting a slightly higher threshold than the 1% proposed by the SEC (Jay W. Lorsch et al, 8/13/09). He also told me that there was another letter from another group of law professors saying they thought 1% was just fine (Lucien Bebchuk et al, 8/17/09).

My first thought was that this sounded like a lot of fighting over pretty small numbers. The difference between the current 10% fee and 1% probably adds up, but the difference between 1% and 3%, or 5%? So, I went to Google Finance to see how much money 1% really is. I picked a couple of very large companies to start: Google, IBM, and AT&T, and I did the math. IBM has a market cap of $157 billion so 1% of that is $157 million. That's the minimum price to get one's proposal before the eyes of IBM shareholders. To me, that sounds like a shitload of money - maybe even a couple of shitloads - more than your average crazy has laying around his bunker. The numbers for Google and AT&T are similarly large - they won't have to worry about a flood of alternative director slates.

Smaller companies, however, probably will - a company with a market cap of $250 million would have an entry fee of $250,000. Not exactly spare change to the American Nazi Party, or the Black Bloc, but certainly low enough so that every hedge fund in town could float its own slate. So this is maybe a receipe for chaos, but what the hey ... how else do we find out what happens?