The pros and cons of dual-class stock and high-frequency trading were the subject of lively debate at the spring meeting of the Council of Institutional Investors in Washington.
The council represents pension funds and other institutional investors advocating for corporate governance and shareholder rights.
The April 17-19 event included the first meeting of CII's new advisory council, whose 15 non-voting members represent some of the largest institutional investors outside the pension fund community, including BlackRock Inc., TIAA-CREF, State Street Global Advisors and T. Rowe Price Inc.
“The board wanted to make sure our non-voting members are more connected to the council, to gain from their ideas for strengthening CII corporate governance activities, and to bolster CII's voice on 'big tent' corporate governance issues,” said CII Deputy Director Amy Borrus in an interview.
CII has taken a position against multiple classes of common stock with unequal voting rights, and has asked both the New York Stock Exchange and Nasdaq stop new listings of companies with dual-class stock.
“What I see (is) that shareholders are powerless,” said Anne Simpson, senior portfolio manager and director of global governance for the $258.3 billion California Public Employees' Retirement System, Sacramento, who moderated the governance panel. “Why do we buy non-voting shares?”
“You want to go where the returns are,” answered Lynn Stout, distinguished professor of corporate and business law at Cornell University Law School, Ithaca, N.Y. “The ugly truth is that we keep taking the same medicine and the patient keeps getting sicker.”