U.S. chief executives, already wrestling with a steady flow of activist investors in their boardrooms, face a newly challenging landscape now that the loudest voice of the bunch will have the ear of the next president and his securities’ rule makers.

The advisory role granted to billionaire investor Carl Icahn by President-elect Donald Trump is a potential blow to CEOs and board directors who hoped the new Securities and Exchange Commission would favor corporate management teams over shareholder proposals that they deem too friendly to shareholders.

Icahn’s appointment, announced on Wednesday last week, spans all regulatory matters. That includes vetting SEC candidates, a significant boost to shareholder activists who want commissioners to keep corporate governance initiatives on the front burner.

While Icahn has spent four decades antagonizing CEOs and boards, the extent of his Washington influence and where he will lean on shareholder issues remains to be seen. Still, it is clear that holding the feet of executives and directors to the fire of activists is high on his list of priorities.

Carl Icahn (Photo Victor J. Blue/Bloomberg )
Carl Icahn
(Photo Victor J. Blue/Bloomberg )

“We don’t hold our managements or boards accountable enough,” he said Thursday in a CNBC interview following his appointment.

Icahn’s strong support of the “universal” proxy card, a major initiative that activists feared would die in a Trump administration, may help it survive its current SEC review. In a contested shareholder vote on board membership, universal proxy cards allow investors to pick and choose among all nominees, rather than just being able to vote for an entire slate.

But Icahn has thrown cold water on other governance proposals and has yet to voice an opinion on another key initiative: the SEC’s adoption of a rule requiring public companies to disclose the ratio of the compensation of their CEOs to the median employee compensation.

“The question I have is, Which Carl Icahn do we see in this role? Icahn the activist, or Icahn the businessman, advocating for the business community?” said Keith Gottfried, a Washington D.C.-based partner at law firm Morgan Lewis, who specializes in activist defense. “We will probably see more of the latter.”

Icahn’s support of universal proxy cards pits him against the U.S. Chamber of Commerce, a powerful business lobbying arm, and Republican SEC commissioner Michael Piwowar, who believes the rule favors shareholder activists at the expense of other investors.

SEC Chair Mary Jo White outlined the rules in October, but she has said she will leave her post at the end of the Obama administration. With the SEC accepting comments through Jan. 9, that leaves only a small window for her to act before Trump takes office on Jan. 20, a prospect most see as slim.

“With Icahn playing a role in selecting commissioners, it’s very possible universal proxy cards will remain on the agenda,” said Bruce Goldfarb, CEO of Okapi Partners, a proxy advisory firm that represents activists and companies.

Icahn may also have influence over the pay ratio rule, which was adopted by securities regulators in 2015 and set to begin next year.

Republicans and the Chamber of Commerce have fought the rule, which is seen as being too favorable to shareholder activists who focus on keeping executive pay in check. Icahn has not indicated his view.

Activist Agenda

Shareholder activists have launched 670 campaigns against U.S. companies since 2015 and have placed 213 directors on boards of companies with a market value of $500 million or more, data from Lazard show.

Icahn, known for inviting CEOs he’s targeting to his home and offering them a martini, has placed nine directors on boards this year alone.

Icahn’s new role is “probably going to be mildly bad news” for most CEOs, said Michael Levin, an activist investor and director on the board of Comarco Inc.

Levin said he does not expect Icahn to have much interest in changes related to social or environmental activism by shareholders.

Once seen as a sideshow, the proposals have often drawn traction since the financial crisis. Measures calling on companies to report on sustainability averaged around 30 percent support from shareholders this year for instance, according to the Sustainable Investments Institute.

But critics have pushed back at the ballot questions, often seeing them as nonbinding distractions or unrelated to core business issues and best left for managers to decide.

Paul Atkins, a transition adviser and a former SEC commissioner who is one of two leading choices to head the SEC, which regulates how questions can be put on company ballots, has been a steady critic of the trend. In a 2008 speech he referred to “the abusive use of the shareholder proposal process by some institutional investors.”

Another SEC front runner, Debra Wong Yang, is a partner at law firm Gibson, Dunn & Crutcher, which is frequently tapped by companies to fend off unwanted shareholder proposals.

Although Icahn himself has filed shareholder proposals, such as one calling for Apple Inc. to up its stock buybacks, he has voiced skepticism of smaller-scale proposals aiming for what he regards as minor governance changes, which he said in a 2013 interview, do not “move the needle much.”

(Editing by Dan Burns and Leslie Adler)