This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

New Efforts Push Investors to Take a Stand

WASHINGTON (TheStreet) -- Companies are meant to be small-scale democracies. Chief executives may be perceived as kingly, but boards and shareholders are supposed to be the ultimate rulers.

As government regulation decreased in the 1980s, this system of checks and balances was touted as being a better way to ensure responsible profitability. The conflicts of interest, excessive compensation and Ponzi-like securitization schemes that took root proved that approach to be naive.

"We were taking too much risk," Ethics Resource Center Chairman Michael Oxley (co-author of the Sarbanes-Oxley law) said at the group's conference in January. "Nobody cared as long as the cash register kept ringing, because nobody shoots the bartender when the drinks are on the house."

In pursuing short-term profits over long-term prosperity, many companies were gambling with house money -- as in your house and your money. Government bailouts may have saved some of the endangered "too big to fail" institutions on Wall Street, even propelling some to record earnings, but on Main Street the fallout was toxic.

Household assets, after peaking at $81 trillion in the summer of 2007, dropped by nearly $15 trillion by the end of 2008. Unemployment rose to 10.2%, a 26-year high. Americans' retirement plans lost as much as $2 trillion and, according to Hewitt Associates (HEW), the average plan shrank by $10,000.

As most American's continue to be nickel and dimed, CEO pay at the nation's 500 largest firms still averages nearly $11 million a year. The Institute for Policy Studies says the average CEO earned about 319 times more than the average worker in 2008.

The spike in compensation may stem from an effort to curb it. A 1992 move by the Securities and Exchange Commission required detailed disclosures of executive pay. Shedding light on these practices didn't shame companies into backtracking. Instead, armed with knowledge of what their peers were pulling down, CEOs demanded more.

In theory, shareholders should keep executives and their often hand-picked directors in line. But even when they have the power to effect change, they usually don't. Less than 20% of individual shareholders voted in annual elections last year, according to Broadridge Financial Solutions (BR), which builds the infrastructure underpinning proxy services for over 90% of public companies and mutual funds in North America.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,079.57 -42.44 -0.25%
S&P 500 1,996.74 -3.38 -0.17%
NASDAQ 4,557.6950 -11.9260 -0.26%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs