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Carney on Shareholder Activists

Dealbreaker’s John Carney opines:

It’s important to remember that our system of corporate governance has generated enormous wealth for shareholders and workers over the years, bringing us unprecedented prosperity. We should exercise caution when seeking major reforms, especially when the costs of those reforms will be difficult to measure and the reforms will be next to impossible to reverse. By creating a uniform, national rule for proxy access, the proposed reforms would shut off jurisdictional competition and experimentation between the states. Worse, the proxy access reform is clearly viewed by many of its proponents as a first step in what they view as a revolution in corporate governance. There will be more to come. The proxy access reforms are precedent not a final resting place. ...

Perhaps the most disconcerting aspect of the debate over the proxy access rules has been the success the proponents have had at portraying themselves as the friend of the ordinary shareholder. As we’ve pointed out twice now, this friendship is illusory. Many of the proponents are ideologically committed or self-dealing representatives of special interests who hope to take advantage of public ignorance on matters of corporate governance. Their behavior in this debate is just a prelude to the manipulation of public opinion that will follow if the proxy access rule is enacted and they begin their campaigns to intimidate and unseat corporate directors.

Exactly. Both points have been at the core of my critique of shareholder access proposals, as exemplified by this article on the SEC’s last bout of shareholder “democracy” idiocy.