May 28, 2008

A big blow to "shareholder rights" advocates

Do you want a greater say in how the companies you invest in are run, or do you trust management to make the tough decisions for you? That's at the heart of the shareholder democracy movement. The Wall Street Journal reports that a sharp blow was delivered to shareholder activists in the latest battle, but the war is far from over, and promises to intensify. In a party-line vote, the paper reports, the SEC said companies can reject shareholder efforts to put their own director nominees on corporate ballots. The move set off a storm of criticism from shareholder activists and Democrats, who responded with their sharpest rebukes yet for SEC Chairman Christopher Cox.

In the latest twist in a long-running saga, the chairman voted with the 3-1 majority on what has been dubbed the "nonaccess" proposal, even though Cox said his ultimate goal is to give shareholders broader proxy rights.

The Journal writes that the battle is important because it cuts to the heart of fundamental questions about how companies should be run. Shareholders see proxy access as a way to hold directors accountable for the performance of companies and management. Business groups oppose the concept, charging that it would allow special-interest groups such as unions to promote their own agendas, such as collective bargaining, over the best interests of all shareholders.

We'll keep you posted.

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