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News :: Miscellaneous |
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Elections Of US Corporations Board Of Directors Are Just Like Elections In Communist Countries. Support Petition To Give Shareholders Equal Access To Board Nominations. |
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by Russ Rybicki
(No verified email address) |
24 Sep 2002
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Under SEC Rule 14a-8(i), ONLY the names of Candidates for Directorship nominated by the Corporation appear on the corporation's ballot. Shareholders however must pay the company an expense of approximately $250,000 to place the names of Director-candidates nominated by Shareholders on their own separate ballots. At present, there is no equal access to the ballot. A call to support corpgov.net's Petition for Rulemaking to the SEC for equal access. |
Culver City, CA --- The Committee of Concerned Shareholders announced that the Committee and James McRitchie, Editor of CorpGov.Net, asked the Securities Exchange Commission (SEC) to amend its Rule 14a-8(i) concerning the election of a company's board of directors, so that ALL Shareholders, using the simplified Shareholder Proposal process, will be able to nominate Director-candidates and the names of those Director-candidates must be placed on the corporation's ballot. Currently, under current Rule 14a-8(i), ONLY the names of Candidates for Directorship nominated by the corporation appear on the corporation's ballot. Shareholders however must pay the company an expense of approximately $250,000 to place the names of Director-candidates nominated by Shareholders on their own separate ballots and effectively solicit votes. At present, there is no equal access to the ballot.
A public investor from Germany responded to Internet message board postings of the Committee and summarized the current situation by stating, "When I have started to invest in the USA about 3 years ago I was sure that elections of directors are fair. ... So when I have discovered that elections of directors of USA public companies are not democratic I was very surprised and disappointed. ... This is EXACTLY how voting in communist countries worked. Everyone could vote, but there was just NO CHOICE of candidates. The point was not how to be elected, but how to get on the election list. With this system no changes were possible, so there was no motivation to improve the governance." (Emphasis in original.)
The present system is rife with conflicts of interest. Presently, Directors are beholden to Management and/or fellow Directors for their selection, the financing of their proxy solicitation efforts and their longevity on the Board. They, most likely, would not ask the "tough questions" of Management so as not to limit their longevity. However, Directors owe a duty to Shareholders to ask those questions. Furthermore, entrenched Managers and Directors will only improve corporate governance when they can be held personally accountable, e.g., voted out of office and replaced.
For more information and to view a copy of the Petition for Rulemaking and Description of Proposed Amendments is available at CorpGov.Net |
See also:
http://www.corpgov.net
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