In the name of shareholders
One of the memes used to justify corporate actions is ‘things are done to increase shareholder value’. We all know ‘value’ can be interpreted in different ways, oft times after the fact of actions since shareholder participation has rather cumbersome mechanisms for participation. Maybe a new way will emerge to aid greater participation of more shareholders in what is done in their names.
The NYT frames the question this way:
Sure, in theory, investors could vote for the people who serve on the board, many of whom are paid handsomely to oversee management and set executive pay. But investors don’t have any say on the nominees. Nor do they have much of a real choice even if they do vote. Say you withhold a vote for a candidate running uncontested. It doesn’t matter, since directors can win without a majority.
And if you chose not to vote? Your broker is allowed to cast your ballot without your permission, and brokers typically vote in line with management.
But the tide is beginning to turn, albeit slightly. In recent years, more companies have adopted a “majority rules” requirement, meaning a single vote can no longer elect the entire board, even if all other votes are withheld (though some companies retain the power to reinstate directors). And starting this year, brokers can no longer vote shares held in their customers’ accounts without permission.
On top of that, more voter resources are beginning to sprout on the Web that aim to educate smaller investors, demystify the issues on the ballot and make voting easier.
ONe of the rights defenses of managment against the stockholder is to say the stockholder can always sell. This shows that the right is really corporatist, not capitalist. Some investment strategies such as index investing don’t allow selling unless a company is booted off an index.
Note that the brokers are no longer allowed to cast ballots for shares in street name that are not voted.
I would like a bit more about the nominees for board positions than just their biography, a bit about where they see the company going (not quanitative but qualitative) to allow one to make a better choice. But its a step to ending the soviet style democracy that corporations run.