August 30, 2009
I support the proposed proxy access rules.
In my previous job I advised boards. I never ceased to be amazed at how poorly they did their job. Deliberations were lawyer-driven "form over substance." One example: in the morning, a board approved one set of financial projections to set management incentive compensation in the afternoon, the board acquiesced to an entirely different set of financial projections to turn down an acquisition proposal. Same day, same board, same projection period, different numbers to justify a different management-benefiting conclusion.
Directors are chosen for their resume (i.e., more form) and their willingness to "go along." Many, while statutorily independent, have personal relationships with the CEO. Others can be bought off through flattery and perks. They become a committee that feels more of an obligation to each other than to their constituents, the shareholders who own the company. Thus people who would be tough as nails in negotiating with their landscaper or Mercedes dealer become sheep when negotiating management compensation packages and ego-driven spending plans. It is, after all, not their money.
Anything that makes boards more accountable to shareholders is a positive. This proposed rule is a step in the right direction.