Investors have won enhanced powers to challenge runaway pay packets and poor management at the top of the US business world under contentious rules approved today that make it easier for shareholders to unseat directors of Wall Street-listed companies: http://www.guardian.co.uk/business/2010/aug/25/investors-boardroom-pay
In an outcome cheered by unions but vehemently opposed by business lobbyists, the securities and exchange commission the organisation responsible for managing the US stock exchanges, voted by a narrow margin of 3-2 to allow investors holding more than 3% of a company's stock to put their own nominees for boardroom seats on election ballots sent out in advance of annual meetings.
The change amounts to a historic shift in the balance of power in the US corporate world, where shareholders have traditionally had only very limited sway over the direction of companies.
An umbrella organisation of US unions, the AFL-CIO, applauded the greater access afforded by the provision, which is likely to be used to challenge multimillion-dollar boardroom bonuses. Richard Trumka, president of the AFL-CIO, described it as "an important and historic step in empowering long-term investors".
David Hirschmann, head of capital markets competitiveness at the US Chamber of Commerce, described it as "a giant step backwards" fora verage investors: "Using the proxy process to give labour union pension funds and others greater leverage to try to ram through their agenda makes no sense."
Sorry David it now means more accountability for those bosses who have gorged themselves on pay and perks while tyring to crush workers and their pension funds. Shareowners like us in the UK have similar rights and we can vote down exectuive pay but our union movement still refuses to take up the challenge in the same way as our brothers and sisters in the US.
