The issue is "shareholder access." John explains:
While most of the right is closely scrutinizing the concoction of liberal legislation of the new Congress, a more immediate threat to conservative policies may be brewing at a regulatory agency about a mile away from Capitol Hill.Read it all here.
Through letters, e-mails and personal visits, activists of the left are swarming the Securities and Exchange Commission, the powerful agency that supervises the U.S. stock market. A court ruling that requires the SEC to clarify its rules on company proxies is being used to push the agency to enact policies that would give unions and other liberal pressure groups an enormous lever of power over U.S. companies.
These groups are pushing for what they call “shareholder access” in the elections of publicly-held companies’ boards of directors. They want the SEC to force companies to include directors nominated by specific groups of shareholders on the company voting proxies that are mailed out to all shareholders. Advocates of “shareholder access”—and their champions in the press -- say this would empower U.S. shareholders against corporate management. The entity that filed the lawsuit that forced the SEC to reconsider this issue, a large government employees’ union called the American Federation of State County and Municipal Employees (AFSCME), has called shareholder access rules the “holy grail of corporate governance.”
But who this type of rule would mostly empower would be unions such as AFSCME, the AFL-CIO and other pressure groups. Through the pension funds that unions directly run as well as the state and local government employee pensions that unions and other liberal activists have influence over, the left has control over a large number of shares in America’s public companies.
Many activists are planning to use this new “shareholder” power as a lever to force U.S. companies to bow to their various wish lists—on everything from union demands to animal rights to boycotts of Israel. As Larry Ribstein, professor of law at University of Illinois and widely read business blogger has put it, “This isn’t about shareholder ‘democracy,’ but about shifting power from powerful managers to powerful shareholders (i.e. unions) who are even less likely to champion the interest of shareholders generally.”
Observers say SEC Chairman Chris Cox, a former GOP House member from California, is under tremendous pressure from the media and new congressional committee heads, such as House Financial Services Chairman Barney Frank (D.-Mass.), to give in to the demands of activists such as the AFL-CIO. And while Cox was justly praised for fighting for important conservative principles in Congress, conservative experts are troubled by the fact that he is reportedly searching for consensus with the two Democrats on the five-member SEC, and that he has not publicly taken “shareholder access” proposals of liberal groups off the table.
That’s why conservatives say Cox needs to be reminded what is really behind the push of some of these groups. The danger is not just that left-wing groups will get their own candidates on the boards of directors. It’s that board members will strike deals with the left in return for activists’ informal agreements not to nominate opposing candidates. Jay Falk, president of SRI World Group, which advises pension funds on “socially responsible” investing, admitted gleefully that enhanced “shareholder democracy” would be used to enact the agenda of the left. He recently told the website Social Funds, “The strengthening of shareholder democracy this year promises to further empower investors to address governance issues such as out-of-control executive pay as well as environmental and social issues such as climate change.”
Even now—without “shareholder access”—the public pension managers and union bosses haven’t been shy about asserting union and other social priorities that would reduce returns for their own pensioners as well as other shareholders...
