Breaking Views

Shareholders don't need a bill of rights

Much of a new Senate bill is laudable, but shareholders are already tackling these matters themselves.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Robert Cyran,

( -- The Shareholder Bill of Rights Act of 2009 that Democratic Senators Charles Schumer and Maria Cantwell introduced on Tuesday in Congress proposes a raft of big reforms for public companies.

Each is worth supporting in its own right. The trouble is, shareholders are already tackling most of these matters themselves. A blunt act of Congress is the wrong way to proceed.

Schumer's bill contains a generous sampling of governance measures du jour. It would put an end to staggered board elections, making proxy fights easier. Elections would be decided by majority votes and companies would have to establish a risk committee. Firms would have to split the chairman and chief executive roles. Shareholders with stakes of more than 1% would be allowed to nominate directors to stand for election. And companies would hold advisory votes on executive pay. Taken together, these would increase the power of shareholders.

So it's hard to see how one could argue with Schumer's intentions. But consider the following: Staggered boards have largely been eliminated among America's most widely held corporations and majority voting for directors is already the norm at most large public companies. Shareholders are also increasingly demanding a split of the chairman and chief executive roles. Less than 20% of new CEOs in 2008 were also board chairman, down from 40% in 2004, according to Booz & Co.

Moreover, the Securities and Exchange Commission is currently considering a rule change to give shareholders the right to propose directors. And about 150 companies are expected to adopt advisory "say on pay" votes this proxy season, almost three times more than did so in 2007, according to RiskMetrics.

So shareholders are already voting for - and companies are moving to establish - desirable behavior as a norm. There is, then, no apparent need for lawmakers to get involved. Sure, after a year in which investors have seen nearly half of their investments wiped out, offering them a Bill of Rights sounds appealing. By all means, legislators should support moves to improve shareholder democracy.

That means not only fostering measures like these, but bolstering rule changes such as the SEC's plan to prevent brokers from voting undecided shares in favor of management. But mandating through legislation simply transfers decision-making, and accountability, from company owners to Congress. After a year of unprecedented bailouts that is the wrong message to send. To top of page

Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.