The Corporate Governance Provisions of the Dodd Wall Street Reform Bill: What Others Are Saying

04/25/2010

The Corporate Governance Provisions of the Dodd Wall Street Reform Bill: What Others Are Saying

Allows activist groups to use the corporate governance process for issues unrelated to the corporation or its shareholders. Section 972 of the bill authorizes the SEC to require firms to allow shareholders to nominate directors in proxy statement. Such proxy access turns corporate board elections from a process designed to ensure that each board has a good mix of skills and experience into a popularity contest where the long-term interests of the stockholders become secondary to political agendas or corporate raiders. The process can also be used by labor unions, politicians who manage public pension funds, and others to force corporations to respond to pet social or political causes.

Duncan Currie:

There are also legitimate concerns that Dodd’s corporate-governance provisions would boost the clout of labor unions and other politically active interest groups while doing very little to help smaller shareholders.

Ira Stoll quoting Obama's recent speech on financiaL reform:

"These Wall Street reforms will give shareholders new power in the financial system. They will get what we call a say on pay, a voice with respect to the salaries and bonuses awarded to top executives." Britain's shareholders had a say on pay. It didn't prevent the failure of Northen Rock or Royal Bank of Scotland.

"And the SEC will have the authority to give shareholders more say in corporate elections, so that investors and pension holders have a stronger role in determining who manages the company in which they've placed their savings." Another handoff to unelected bureaucrats, this time at the SEC rather than at the Federal Reserve. They did so well with Madoff, why not give them the additional job of rewriting Amerian corporate governance? The "investors and pension holders" that Mr. Obama really has in mind are things like the New York and California state pension funds that have already been troubled by scandals and politicization. Shareholders have a role in corporations, as even good capitalists like Carl Icahn recognize. But using the proxy power to take control of companies away from management and directors and into the hands of radicals is straight out of the Saul Alinsky playbook.

Posted at 04:12 PM in Wall Street Reform | Permalink

Comments

James Gattuso:

Allows activist groups to use the corporate governance process for issues unrelated to the corporation or its shareholders. Section 972 of the bill authorizes the SEC to require firms to allow shareholders to nominate directors in proxy statement. Such proxy access turns corporate board elections from a process designed to ensure that each board has a good mix of skills and experience into a popularity contest where the long-term interests of the stockholders become secondary to political agendas or corporate raiders. The process can also be used by labor unions, politicians who manage public pension funds, and others to force corporations to respond to pet social or political causes.

Duncan Currie:

There are also legitimate concerns that Dodd’s corporate-governance provisions would boost the clout of labor unions and other politically active interest groups while doing very little to help smaller shareholders.

Ira Stoll quoting Obama's recent speech on financiaL reform:

"These Wall Street reforms will give shareholders new power in the financial system. They will get what we call a say on pay, a voice with respect to the salaries and bonuses awarded to top executives." Britain's shareholders had a say on pay. It didn't prevent the failure of Northen Rock or Royal Bank of Scotland.

"And the SEC will have the authority to give shareholders more say in corporate elections, so that investors and pension holders have a stronger role in determining who manages the company in which they've placed their savings." Another handoff to unelected bureaucrats, this time at the SEC rather than at the Federal Reserve. They did so well with Madoff, why not give them the additional job of rewriting Amerian corporate governance? The "investors and pension holders" that Mr. Obama really has in mind are things like the New York and California state pension funds that have already been troubled by scandals and politicization. Shareholders have a role in corporations, as even good capitalists like Carl Icahn recognize. But using the proxy power to take control of companies away from management and directors and into the hands of radicals is straight out of the Saul Alinsky playbook.