So I was lining my birdcage this weekend and happened upon an op-ed in Saturday’s Wall Street Journal. Entitled, “Mary Shapiro’s Say on Pay,” the editorial was classic WSJ character assassination-as-editorial commentary. Basically, the piece boiled down to the fact that the Journal took great umbrage with the SEC Chair’s attempt to force Bank of America to adopt compensation disclosure rules that no other company currently must adhere to.
Basically, the company is now required to have a non-binding say on pay proposal, which shareholders can now vote on. (Yawn) A tragedy for managers no doubt.
Of course, the Journal apparently missed the fact that quite a few of these say on pay proposals are currently in place at a number of public companies not to mention that under TARP regulations, such say on pay advisory votes are required. No worries. This didn’t stop the Journal editors from launching into a tirade about another sore subject for company executives: Proxy access.
So what is proxy access anyway? As the Council of Institutional Investors (CII) notes on this subject “[it] allows share owners to place their nominees for director on the company’s proxy card. In the United States, unlike most of Europe, public companies are not required to provide share owners with access to the proxy to nominate directors. The only way that share owners can present alternative director candidates at a U.S. public company is by waging a full-blown election contest. For most investors, that is onerous and prohibitively expensive.”
This isn’t the stuff of a Bolshevik Revolution by any means but the Journal and its management allies are understandably threatened but such prospects.
As the CII notes further on in describing why proxy access is important, they make a simple but important point about why this shareholder right is important: “Permitting share owners to nominate candidates for director on the company’s proxy card would invigorate board elections and would make boards more responsive to share owners, more thoughtful about whom they nominate to serve as directors and more vigilant in their oversight of companies.”
Getting back to the WSJ tirade, they spent the balance of the article building conspiracies by organized labor and calling Ms. Shapiro a hypocrite for not disclosing executive compensation at FINRA when she served at the helm of that organization. Deflecting the question at hand, should shareholders (that’s holders of 2% or more of a company’s stock) be entitled to put forth a candidate for the board of directors that all shareholders can then vote on an unreasonable proposition?
There is considerable consensus that some form of proxy access should be allowed. Giving shareholders a right to vote on a choice of directors is a good idea. As citizens, we would find it abhorrent if we were only allowed to vote on the presidential candidate selected by the political party in power in Washington. Yet that is what we as shareholders do every time we vote our proxies since we have no real choices today.
For a more complete discussion on proxy access, take a look at the N.Y. Times Dealbook article “The Proxy Access Debate” by Steven Davidoff.