The US Chamber of Commerce’s Center for Capital Markets Competitiveness conference convened this week to look at the impact of shareholder activism and shareholder rights. Two interesting themes have emerged from reports of the conference, firstly research into the impact of shareholder resolutions and secondly comments from SEC Commissioner Troy Paredes criticizing the SEC’s proposal’s for proxy access.
Navigant Consulting revealed the results of a study, commissioned by the business-backed Chamber, which concluded that union-backed pension fund activism provides no economic benefit for plan participants, and may actually reduce shareholder value. “There is growing concern that big labor unions are trying to achieve at the board table what they cannot achieve at the negotiating table—under the guise of shareholder protection,” said David Hirschmann, president of the Center for Capital Markets Competitiveness.
The study reviewed 166 shareholder proposals at 107 companies selected as “key votes” from 2002-2008 by the AFL-CIO on issues from corporate-board elections to environmental issues. However the research didn’t examine the effect of any non-union proxy fights.
The Chamber has been taking a strong stand against the Obama administration’s regulatory reform initiatives in recent weeks and launched a flurry of publicity to highlight its concerns about the potential costs associated with proposed reforms.
Also speaking was SEC Commissioner Troy Paredes who last month voted against the SEC’s proposed reforms stating that he believed that the rule changes, as currently proposed, go beyond shareholder empowerment and disclosure to creating a Federal corporate control environment. Rather than taking a centralised approach to reform, which he believes conflicts with States law, Paredes has made a counter-proposal to permit shareholders to include bylaw amendment proposals to enable director nominations, provided that a company’s state of incorporation permitted such a process.
Commissioner Paredes was appointed by President George W. Bush to the U.S. Securities and Exchange Commission and was sworn in on August 1, 2008. Before joining the SEC, Paredes was a professor at Washington University School of Law in St. Louis, Missouri where he primarily taught and researched in the areas of securities regulation and corporate governance.