corporate governance

SEC Expands Shareholders vote power

The SEC has voted to allow shareholders more power to elect corporate board members.

The SEC’s rule would allow shareholders who own 3 percent of a company’s voting stock to nominate board members. To prevent short-term investors from swooping in to shake up a company, shareholders must own their stock for three years before proposing candidates. Shareholders must own their stock outright and cannot use borrowed shares to count toward the 3 percent threshold.

This is amazing the SEC vote was 3-2, considering who owns 3% of one company stock? There is a nonbinding vote on executive pay:

Also under the new law, shareholders will be able to weigh in on pay packages for top executives. Nonbinding votes on executive pay will be held at least once every three years.

The Wall Street Journal:

The "proxy access" rule, which passed the commission on a 3-2 vote, would require companies to print the names of shareholder board nominees directly on corporate ballots if certain conditions are met.

A policy idea worthy of consideration - Tie corporate profits to U.S. job creation

Les Leopold has written a piece on The Huffington post, Tie Wall Street Profits and Bonuses to the Unemployment Rate. This is similar to what the Horizon Project has alluded to, in addition to policy ideas Ralph Gomory and Margaret Blair have presented to Congress on the problems with executive pay and corporate governance.

Leopold proposes a steep windfall tax on executive pay and bonuses, tied directly to the U.S. unemployment rate: