Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Innovation Investing Conference
    • 2022 Defined Contribution East Conference
    • 2022 ESG Investing Conference
    • 2022 DC Investment Lineup Conference
    • 2022 Alternatives Investing Conference
Breadcrumb
  1. Home
  2. Print
October 02, 2006 01:00 AM

Time for access

  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    The Securities and Exchange Commission must open up the corporate proxy ballot to allow shareholders to nominate at least some directors and should do so, if possible, in time for 2007 annual meetings.

    Investor confidence has been shaken by what seems to be a constant stream of corporate scandals, stretching in recent memory at least from Enron Corp. and WorldCom Inc. to the latest revelations of unethical and possibly illegal actions by Hewlett Packard Co. in obtaining personal phone records, which led to the resignation of three directors, including the chairman.

    The HP trouble closely followed the disclosure of options backdating at many companies to furtively boost executive compensation. The SEC is investigating more than 100 companies for possible breaches of securities law or fraud resulting from such backdating.

    These activities all suggest board-level involvement or at least oversight.

    The board is charged with watching over management on behalf of the shareholders. But it is clear that many boards have failed, perhaps because they are too friendly with management. Many appear to have become lapdogs, rather than watchdogs.

    The pool of executives from which directors are chosen needs an infusion of new blood to improve the breed. And directors must be made to answer more directly to shareholders.

    Shareholder access to the director nomination process — called the holy grail of corporate governance — would help ensure greater board accountability.

    The SEC plans to meet Oct. 18 to revive the idea it should have adopted three years ago, when it proposed permitting shareholder access under limited conditions. It never brought the proposal to a vote. But now it should adopt a rule permitting access with fewer restrictions than its initial proposal.

    The meeting was spurred by a 2nd Circuit U.S. Court of Appeals decision in favor the $600 million American Federation of State, County, and Municipal Employees Pension Plan, Washington. The plan appealed the exclusion in 2005 by American International Group Inc., New York, of an AFSCME fund shareholder proposal that sought to amend corporate bylaws to allow shareholder-nominated candidates on the corporate ballot.

    The AFSCME plan filed suit after the SEC's division of corporation finance issued an advisory opinion to AIG, allowing the company to omit the AFSCME plan's proxy access proposal.

    The appeals court ruled the SEC was wrong in allowing AIG to omit the AFSCME proposal from the company's proxies.

    All investors should commend the AFSCME for its initiative, tenacity and perseverance in pursuit of better shareholder access, from bringing proposals in 2003 that led to the SEC proposed rule, to pursuing the bylaw changes at AIG. (The AFSCME is no longer pursuing nominations at AIG after the company made changes the fund found satisfactory, said Richard C. Ferlauto, director of pension and benefit investment policy.)

    One change the SEC could make would be to require majority vote of shareholders for the election of directors. That would make it difficult for single-agenda candidates to be elected to the overall detriment of corporate performance.

    Harvey L. Pitt, former SEC chairman and now chief executive officer of Kalorama Partners, a business consulting firm, told the Council of Institutional Investors at its September conference that shareholders should be allowed to establish procedures to nominate directors through access to the corporate proxy ballot. He criticized the SEC for arbitrarily denying such proposals. He said access could help make corporate boards more accountable to shareholders.

    "The widespread abandonment of ethical, moral and legal obligation contributed to the loss of investor confidence," he said. "It is important (to) use your collective ownership for constructive and prudent" oversight of corporations. "Corporate governance and disclosure should play a role in where to invest," he said. Some empirical evidence shows companies with better governance and transparency outperform other companies, he added. He said investors should take that relationship into account in their investment decisions.

    The SEC ought to act quickly to make the idea a reality.

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    Alternatives: Investing Across the Spectrum
    Sponsored Content: Alternatives: Investing Across the Spectrum

    Reader Poll

    May 9, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Are Factors a Thing of the Past?
    Q2 2022 Credit Outlook: Carry On
    Leverage does not equal risk
    Is there a mid-cap gap in your DC plan?
    Out of the Shadows: The Revolution in Shadow Accounting
    The pivotal role of fixed income markets in the ESG revolution
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    May 9, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Innovation Investing Conference
      • 2022 Defined Contribution East Conference
      • 2022 ESG Investing Conference
      • 2022 DC Investment Lineup Conference
      • 2022 Alternatives Investing Conference