Bloomburg reports that:
"The Securities and Exchange Commission voted 3-2 today to require that companies put investor board candidates on the proxy statements sent to stockholders before director elections. Investors or groups that meet the ownership threshold for three years will be eligible to offer nominees.
The SEC acted in response to investor complaints that company-selected directors failed to rein in compensation and risk-taking that led to more than $1.79 trillion of financial- company writedowns during the credit crisis."
You can read the whole report here:
The most interesting comment to me was the response from business leaders and the Chamber of Commerce; predictably they are opposed. And the reason they give for being against the rule?
"Business groups including the U.S. Chamber of Commerce have fought the change, arguing that labor unions and pension funds will use the threat of proxy fights to seek concessions that would harm companies."
In other words, not all shareholders are created equal. Shareholders who use the corporation to pay themselves obscene amounts of money at the expense of other shareholders, employees, and communities are somehow the only ones who should count when selecting board members.
And will our country's well compensated business leader accept this rule? Of course not.
"Using the proxy process to give labor unions, pension funds and others greater leverage to try to ram through their agenda makes no sense," David Hirschmann, chief executive officer of the Chamber’s capital markets unit, said in a statement. The business lobby "will continue to fight this flawed approach using every method available," he said.
My question is, why should the agenda of corporate executives to enrich themselves while the rest of the country suffers through a recession be rammed down our throats. Why should the agenda of worker and retiree shareholders be less worthy of board representation?
A board of directors is a group of people legally charged with the responsibility to govern a corporation on behalf of the stockholders, all the stockholders -- a more progressive definition is that the board is responsible to the stakeholders, that is, to everyone who can be effected by the corporation.
The Chamber of Commerce, the nation’s biggest business lobby, is weighing the possibility of filing a lawsuit to protect their right to steal from the rank and file shareholders.