{"id":466,"date":"2010-08-05T08:07:00","date_gmt":"2010-08-05T12:07:00","guid":{"rendered":"http:\/\/www.intuitiveinvestor.com\/web\/?p=466"},"modified":"2018-08-17T15:48:57","modified_gmt":"2018-08-17T19:48:57","slug":"wonderful-shareholder-empowerment-news","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2010\/08\/05\/wonderful-shareholder-empowerment-news\/","title":{"rendered":"Wonderful shareholder empowerment news"},"content":{"rendered":"

In a decision that definitively will<\/strong> change the face of U.S. capitalism and investing, the Securities and Exchange Commission (SEC) today announced that in August at some point shareholders will receive the right to directly nominate candidates for a company’s board of directors.\u00a0 Only shareholders who hold more than 3% of the outstanding shares will win the right to nominate directors.<\/span><\/p>\n

While this may sound like something shareholders can already do, it has proven to be nearly impossible.\u00a0 While this may sound like a benign shift, it will ultimately have a massive affect on businesses and how they are run.<\/span><\/p>\n

Currently if a shareholder wants to nominate their own director they have to pay for this proxy campaign out of their own pockets.\u00a0 Clearly for a business that has millions of shareholders, like General Electric, this is prohibitively expensive.\u00a0 Furthermore, even after incurring this expense there is no guarantee that your candidate will win in the election.\u00a0 Additionally, most corporations have staggered board terms.\u00a0 This means that only a small number of board seats are up for election in any given year.\u00a0 So to win a majority on the board of directors takes many years and many millions of dollars.\u00a0 And why is this important?<\/span><\/p>\n

It is an open secret that corporations are largely dominated by their upper management teams, especially the chief executive officer (CEO).\u00a0 Typically the CEO is also the chairperson of the board of directors.\u00a0 This gives the CEO the ability to dictate the agenda of the board.\u00a0 So what?\u00a0 Well the board of directors is supposed to serve the shareholders.\u00a0 You remember them, yes?\u00a0 Shareholders are actually the owners<\/span> of the business, not just sniveling providers of secondary market capital.\u00a0 Not just victims of corporate indifference.\u00a0 The problem is that boards are usually chock full of directors nominated by, supported by and friends with the upper management teams of most corporations.\u00a0 Folks this is why executives are so massively overpaid.\u00a0 This is why most executive compensation plans only reward success, but don’t punish failure.\u00a0 This is a huge reason why the recession occurred.\u00a0 That is, there was very, very, very lax corporate governance in place.<\/span><\/p>\n

Predictably the\u00a0two Republican (of\u00a0five total) SEC commissioners are expected to vote against the SEC “proxy access” rule.\u00a0 Expect Republicans, in general, to complain, along with businesses, that the new rule will allow “needless,” “unwarranted” and “dangerous” meddling in the day-to-day operation of U.S. businesses.\u00a0 Can I just tell you: THIS IS RIDICULOUS!\u00a0 First of all, to become a 3% shareholder in a business requires billions of dollars in many instances.\u00a0 Few, except for truly well-monied and interested parties, can afford to achieve this threshold.\u00a0 Second, the best way for businesses to avoid scrutiny from large investors is to run the business well enough so that shareholders don’t feel the need to become activists.\u00a0 Duh!<\/span><\/p>\n

Way to go SEC!<\/span><\/p>\n

Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

In a decision that definitively will change the face of U.S. capitalism and investing, the Securities and Exchange Commission (SEC) today announced that in August at some point shareholders will receive the right to directly nominate candidates for a company’s board of directors.\u00a0 Only shareholders who hold more than 3% of the outstanding shares will […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-466","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/466","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=466"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/466\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=466"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=466"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=466"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}