I wonder if Professor Verret also offers advice on how to circumvent tax codes, the Occupational Safety and Health Act, or the Americans With Disabilities Act. Harvard must be pleased to have such a distinguished scholar. Hopefully, most companies will seek to work with their shareowners but I suppose there will always be companies like Apache that may find Verret’s strategies appealing. No, I’m not adding these posts to our Links page. Hopefully, they will fall under the category of fantasy.
I've spent the better part of my career crossing swords with these folks and I find them a remarkably thin skinned bunch. Call them "self-appointed" or "gad flies" or "water carriers for left liberal organizations like unions" and they get all offended.
Anyway, let's dissect McRitchie's effort to cloak proxy access in immunity from criticism. Notice the rhetorical sleight of hand he uses. First he tees up three laws he thinks everybody loves: taxes, OSHA, and the ADA. (It says a lot about the mindset of McRitchie and his ilk that he thinks these are such wonderful laws, BTW. Considering how much those laws cost shareholders every year, there's a real inconsistency between his status as self-appointed shareholder advocate and his invocation of them as golden calfs of the law.) Then he implies that any attempt to mitigate the impact of those laws is evil. Then he sneaks proxy access into the protected circle of laws that no right thinking person would try to avoid.
But what's wrong with giving people advise about how to circumvent the tax code? After all, as famed Judge Learned Hand opined, "any one may so arrange his affairs that his taxes shall be as low as possible." If they get a lawyer's help in doing so, who cares?
As for giving people advice on circumventing the Americans with Disabilities Act, why not? David Frum recently observed that the ADA was "a generous idea turned into a litigation morass." His comment was prompted by Walter Olson's devastating 20th birthday salute to the Act., in which he observed that:
One reason for the law’s immunity from criticism is that it is defended as a matter of identity politics: if you’re against it, then you must be against the people it protects. So it is treated as rude, not merely provocative, to bring up the failure of the original ADA premise that the new law would “pay for itself” by increasing the labor force participation of the disabled (the rate declined instead). Or to question the law’s “all for one, one for all” extension of the disability label to cover alcoholics, the mentally ill, and the mentally retarded, groups whose problems have historically been seen as quite different from those of the blind, deaf or paraplegic. Or to mention the money-driven ADA “filing mills” in California, Florida and other states under which complainants roam the land filing hundreds of similar complaints against local businesses which their lawyers then convert into assembly-line cash settlements.
McRitchie none too subtly tried to cloak proxy access in the same immunity from criticism that he think the ADA deserves. Clever, but unpersuasive. Proxy access is a bad idea and will make a lousy law, as Verret opines:
Enabling large institutional investors like CalPers and the AFL-CIO will result in politicization of the shareholder voting process. Groups like Corpgov.net and Nell Minow’s Corporate Library hide behind fluffy notions like the “triple bottom line” to justify pushing companies toward vague objectives like sustainability or stakeholder accountability in order to support their ideas that companies should make decisions about health care coverage or wages without a view to profitability. Those groups have never been able to effectively respond to Bainbridge’s argument that the profit motive is the only viable accountability mechanism for corporate boards.
So kudos to Verret. Any day one riles up the self-appointed shareholder spokesperson crowd is a good day.
