ShareOwners.org Applauds Corporate Governance Reforms in Dodd Financial Services Reform Bill

WASHINGTON, March 16 /PRNewswire-USNewswire/ -- ShareOwners.org acting executive director Maureen Thompson issued the following statement today on the corporate governance provisions of Senate Banking Committee Chairman Chris Dodd's Restoring American Financial Stability Act of 2010:

"We commend Senator Dodd for recognizing that, if given the tools, investors can play a critical role in holding management and boards accountable and help regulators restore and maintain the integrity of our capital markets and the accountability of its participants.  While we believe the Senate Banking Committee should have gone further to include the full range of corporate governance reforms contained in the earlier draft of the bill, we believe that proxy access, majority voting and 'say on pay' are among the most important corporate governance provisions.  Therefore, we fully support their inclusion in the legislation the Senate Banking Committee proposes, as noted below.  We also want to recognize the important role Senator Schumer played in ensuring that these reforms were included in the legislation.

• In uncontested elections, directors should be elected by a majority of votes cast. At many U.S. public companies, directors in uncontested elections are elected by a plurality of votes cast.  Shareholders facing a slate of board candidates nominated by management can only 'withhold' their votes to express opposition to a board candidate for an uncontested seat.  An uncontested election occurs when the number of director candidates equals the number of available board seats.  Plurality voting in uncontested situations results in 'rubber stamp' elections, while majority voting in uncontested elections ensures that shareowners' votes count and makes directors more accountable to shareowners.  
• Shareowners should have the right to place director nominees on the company's proxy.  Today, U.S. shareholders have no real voice in the board nomination process, and no effective means, therefore, of holding boards and managements truly accountable.  The only way that shareowners can run their own candidates is by waging a full-blown election contest, which entails printing and mailing their own proxy cards to shareowners while undertaking a proxy solicitation campaign.  Therefore, even when board members are underperforming, most investors decline to wage such a fight.  Providing shareholders with access to the proxy and the ability to nominate their own directors will invigorate board elections and make boards more responsive to shareowners, more thoughtful about whom they nominate to serve as directors and more vigilant in their oversight of companies.  Therefore, federal securities laws should be amended to affirm the Securities and Exchange Commission's authority to promulgate rules allowing shareowners to place their nominees for directors on the company's proxy card.
• Companies should give shareowners an annual advisory vote on executive compensation.  Nonbinding shareowner votes on pay would make board compensation committees more careful about doling out rich rewards to underperforming CEOs.  In addition, so-called 'say on pay' votes would open up dialogue between boards and shareowners about pay concerns, help more closely link pay packages to performance and aid in keeping runaway CEO pay in check."

Thompson emphasized that ShareOwners.org is commenting today narrowly in relation to the corporate governance provisions of the Dodd bill.

For the full text of the ShareOwners.org 10-point plan for financial reform, go to http://216.250.243.12/SO/ShareOwners_on_financial_reg_reform_FINAL.pdf on the Web.

ABOUT SHAREOWNERS.ORG

Launched in June 2009, ShareOwners.org (http://www.ShareOwners.org) is a nonprofit and nonpartisan organization that is educating and organizing U.S. investors to support both short- and long-term financial market reforms. ShareOwners.org's broad four-part agenda focuses on the need for stronger regulation (including a beefed-up SEC), increased accountability of boards/CEOs, improved financial transparency, and the protection of the legal rights of investors. With 500 members today and growing, ShareOwners.org is working to substantially increase its ranks in 2010.

SOURCE ShareOwners.org, Washington, D.C.