PALO ALTO, Calif. -
There was every reason to believe that 2003 was going to be the Year of the Shareholder.
A variety of pro-shareholder measures were being pushed by the major stock exchanges, the Securities and Exchange Commission and Congress. Revolution (or at least reform) was in the air.
Just a few months ago, it all seemed so likely. Not anymore.
Death by a thousand cuts
The biggest disappointment is in the apparent slow death of a proposal to put a clamp on how companies are able to dole out stock options to employees without shareholder approval.
Under pressure from shareholder rights advocates, the New York Stock Exchange had proposed eliminating so-called "broker-voter" rules that enabled brokerages to vote proxy statements automatically on behalf of clients that don't bother to do so themselves.
The brokers almost always vote with management. So even if a company bothers to ask its shareholders to approve a new options plan, it's got plenty of reason to expect some help from friendly brokerages.
Earlier this year, when I wrote about it in Fortune, this provision seemed like a no-brainer to pass muster at the SEC, which needs to approve rules changes at the exchanges. But as of Wednesday, the commission said it doubts it can get to the matter in time for this year's proxy season.
Apparently, the SEC has too much on its plate to handle the broker-voter provision, as well as other initiatives to stunt the growth of runaway options-granting. Patrick McGurn of research group Institutional Shareholder Services calls the delay "a setback for shareholder rights."
It's not the only one. Congress recently unveiled research showing that mutual-fund fees have been creeping up over the past few years.
| Recently by Adam Lashinsky
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You'd think that with the greater economies of scale of ever-bigger funds that the industry would find ways to cut fees, not raise them. Not so. The better analysis is that as more and more average investors have entered the marketplace, the mutual fund complex has figured out how to take more and more of their money -- of course, while delivering worse and worse returns.
The upward creep of fees reminds me of a scene in the otherwise horrible film adaptation of Tom Wolfe's classic Bonfire of the Vanities. In it, Sherman McCoy's wife (played by, get this, "Sex and the City's" Kim Cattrall) explains to their little girl (played by, get this, an eight-year-old Kirsten Dunst) that Daddy makes money by picking up the little crumbs everyone else drops.
The mutual fund industry -- still the best way for most people to invest their savings -- has been picking up more and more of our crumbs lately. It's a shame.
The Year of the Shareholder? The only time we can expect that is the year stocks go up. Whenever that will be.
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Tired of spam?
You're not the only one. (In fact, for those of you who've signed up for the e-mailed version of this column, you might eventually view this as spam.)
As annoyed as you may be, corporate America is really honked off, according to an illuminating and meticulously reported article Thursday by the Washington Post's Jonathan Krim.
Among its findings: About 40 percent of all U.S. e-mail traffic is unsolicited garbage, up from 8 percent in late 2001, and the costs of combating the problem are rising. The long article, which ran on the paper's front page, is worth the read.
Adam Lashinsky is a senior writer for Fortune magazine. Send e-mail to Adam at lashinskysbottomline@yahoo.com.
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