Nat Worden
For now, the Securities & Exchange Commission has quietly opted to allow public companies to block proxy access to shareholders, but that is expected to be reversed if a Democrat wins the White House in November. In the meantime, activists have turned to other popular governance measures that are helping shareholders hold more sway.
Many companies have adopted majority voting rules at their annual meetings. These rules require directors to win approval from over 50% of the votes cast in order to hold their seats. Companies are increasingly abandoning staggered election systems so that shareholders can vote on their entire board of directors every year rather than just a fraction of them, and they're giving up various kinds of takeover defenses that insulated boards from shareholder dissatisfaction. One of the most important steps for shareholder activists, according to former Vanguard CEO John Bogle, was the SEC's decision in 2003 to require mutual funds to disclose to their clients, the shareholders, how they vote their proxies. Bogle, once named by Fortune as one of four investing giants from the 20th century, has argued that the explosion of financial intermediaries like mutual funds and other institutions has distanced the investing public from the companies that put their capital at risk. That has contributed to the rise of a new form of capitalism in the U.S. designed to benefit managers at the expense of owners. "The consequences of this mutation in our system have substantially weakened our nation's system of capital formation, and what is wrong must be remedied," said Bogle in his 2005 book, The Battle for the Soul of Capitalism. His remedy is simple: "Shareholders unite!"
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