NEW YORK (TheStreet) -- On Wall Street, nothing distinguishes the professionals from amateurs better than the demonstration of a clear understanding between the difference of "price" and "value." Those who are astute at the game and appreciate details understand that "value" is often a two-way street. The most valuable companies on Wall Street acquired their status by first demonstrating that they value their shareholders.
They show this appreciation by continually making decisions that are in the best interest of shareholders, increasing "value" in the stock price. However, one company that continues to ignore this concept is satellite radio giant
and disappointingly, so do its shareholders.
I'm beginning to wonder if the shareholder revolt that I once envisioned will ever materialize? Although I enjoy watching a train wreck as much as the next person, I always hope that everyone comes out of it OK. In the case of Sirius XM, I think the body count will continue to mount.
Last week, Sirius was back to form as it once again declined shareholder wishes to remove Leon Black from its board of directors. For the third consecutive year, the company has said a big "so what" to investors' pleas to oust the founder of
Apollo Global Management
, who has held the post since 2001.
Black's record and influence as a director has become suspect as best.
, the company reported that Black received 955.2 million votes against him vs. the 512 million to retain a post. So the question is, what was the point of the vote?
It seems that Sirius uses what is called plurality voting rules which means regardless of how the votes are tallied, as long as there were no challengers for Black who received more "in favor" votes, he was able to retain his seat.
I don't know which is more of an indictment of the company: That for the third consecutive year a board member was retained while not receiving sufficient votes, or that no other candidate wanted the job.
Intelligent investors have to wonder about the implications of the situation. A director who is clearly not liked by shareholders remains in a position to vote on issues that benefit the same people who hold him in contempt. It's hard not to imagine that he might take some enjoyment in seeing some of these same investors suffer losses even at his own expense. Of course, it goes without saying that his financial position is somewhat different from that of retail shareholders.
This comes back to the question of "value" and what it truly means. In this situation, the company has clearly shot itself in the foot. But it can rely on misguided investors to come apply the bandage even though those investors are hemorrhaging losses of their own.
This disregard for investors is remarkable for a company that continues to generate one of the biggest investor followings there is -- even reaching cult levels where only
can compare. In fact, recent insider activity suggests that the company may actually care more about making things easier for
to acquire its assets than it cares to make investors wealthy.
Many investors maintain their unyielding loyalty to the stock in the face of recent declines and chronic disappointments. These investors need to start asking themselves the same question that Wall Street has been wondering over the past three years: How much is their loyalty worth?
In light of the Leon Black situation, the company is suggesting to investors that they "deal with it," taking for granted that investors will always be around to support the company. It's like a bad domestic situation that is never improving. Remarkably, I think the company might be right!
At the time of publication, the author was long CSCO.