Barney Frank and his House colleagues are standing strong against a White House effort to block shareholders from having proxy access to governance issues in corporations in which they have a stake. Investors, pension funds and labor unions reacted with alarm when Sen. Chris Dodd (D-Conn.) introduced the Senate proposal that would effectively deny so-called “proxy access.” The provision had not been approved by either the Senate or the House and several sources, both in Congress and in the industry, said the White House is pushing the measure. The White House proposal would require a shareholder to hold a five percent stake in order to have proxy access — a level met by virtually no institutional investors.
Corporate Directors are supposed to make decisions based on what is best for the company, and its shareholders(even if its not the best thing for the company’s employees). Union sponsored directors will be tied to their small constituency, union members. America could be nearing the day when a corporate director telling a negotiating manager, give the unions what they want or you are fired!
In the WSJ Paul Atkins, a former SEC commissioner and a partner at Patomak Partners LLC., made this warning, about the new rule:
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It’s no coincidence that only unions and cause-driven, minority shareholders want this coveted access. They would use it to advance their own labor, social and environmental agendas instead of the corporation’s goal of maximizing long-term shareholder wealth. The rule will give them pressure points with which to hold companies hostage until their pet issues are addressed. Many corporate managements and boards will acquiesce to avoid a contested director election.
Transparency and fairness will suffer because the rule invites abuse. Institutional representatives admitted—at a public 2007 SEC roundtable on the proxy process—that they already use the machinery of shareholder proposals as leverage to accomplish private objectives behind closed doors. In other words, they threaten to propose a proxy measure and see what the company will give up to keep it off the proxy ballot. The company may even adopt some or all of the proposal, even though the measure would likely fail in a shareholder vote. This rule adds another powerful tool to that arsenal of threats.
Ever since they came into power with the 2006 Congressional election, and solidified that power by gaining the presidency in 2008, the progressives have been siding with the 12% of Americans who are members of unions over the rights of the remaining 88% of the country. While not supported by the President, this new rule has all the marks of the progressive majority.
While they claim to be void of any special interest group influence, progressive politicians are beholden to the the union leaders who put them into power. In the end, the American people lose.