Will Increasing Proxy Access for Shareholders Lead to Chaos?
The Wall Street Journal has an interesting article from Clark Judge and Richard Torrenzano regarding the likely effect of the expected 2010 vote by the SEC to grant additional proxy access to shareholders.
The article states that, on the one hand, theoretically, granting more proxy access to shareholders will deliver “shareholder democracy” and create an environment in which execs will feel more compelled to explain and defend their decisions.
However, in practice, more proxy access for shareholders will more than likely create a level of chaos that Wall Street must be prepared to deal with.
The following are all among the factors contributing to what the article says could be a very new environment for board oversight and voting moving forward:
- Social media savvy
- “All hands on deck” – meaning that all directors, not just the chairman, must be prepared to explain and defend decisions
- Hidden agenda
- The end of privacy
- Permanent campaigns
- Silence = guilt
I encourage you to read the article to get the explanation and breakdown for each of these factors.
The question is, are the authors correct?
Shareholders have long clamored for more access and input, and it will be interesting to see what happens now that they (theoretically) have it. What will truly be interesting to see is exactly how chaotic it all becomes and what kind of effect it has on actually improving corporate governance.
Your thoughts and theories are requested for the comment section below.
Tags: board of directions, corporate governance, proxy access, sec
