A new SEC rule will allow an investor or groups owning 3% of a company’s stock for 3 years or more to place its own candidates on the ballot to be a company director. This means……you guessed it…… Union Leaders will be eligible to be one of the directors for the company they have their union’s pension in.
The Wall Street Journal reported former SEC commissioner Paul Atkins stating:
“It’s no coincidence that only unions and cause-driven, minority shareholders want this coveted access. They would use it to advance their own labor, social and environmental agendas instead of the corporation’s goal of maximizing long-term shareholder wealth. The rule will give them pressure points with which to hold companies hostage until their pet issues are addressed. Many corporate managements and boards will acquiesce to avoid a contested director election.
Transparency and fairness will suffer because the rule invites abuse. Institutional representatives admitted—at a public 2007 SEC roundtable on the proxy process—that they already use the machinery of shareholder proposals as leverage to accomplish private objectives behind closed doors. In other words, they threaten to propose a proxy measure and see what the company will give up to keep it off the proxy ballot. The company may even adopt some or all of the proposal, even though the measure would likely fail in a shareholder vote. This rule adds another powerful tool to that arsenal of threats.”
This ruling could be a huge downfall to hopes of a recovering economy anytime soon!
