Free-market and conservative think tanks have joined a letter objecting to the financial regulation bill, S.3217, Restoring American Financial Stability Act of 2010.
John Berlau of the Competitive Enterprise Institute posts about and reprints the letter at National Review’s The Corner, “Dodd Bill: Bailouts, Taxes, and Overregulation.” This paragraph from the letter is worthy of note:
“Proxy access” and corporate governance provisions would take power from states and empower progressive interest groups — from unions to animal rights: Even though they have little justification in preventing the next financial crisis, the bill contains “proxy access” provisions that would empower union pension funds and other progressives by forcing companies to fund their Saul Alinsky-style campaigns for a company’s board of directors. Combined with other items federalizing incorporation law — like a mandated majority instead of plurality standard for director votes — this could enable special interest activists to harm the interests of ordinary shareholders and encourage corporate directors to cut deals with them on things like card check, cap-and-trade, and kicking conservative media personalities off the air.
The National Association of Manufacturers and other major business groups joined in a letter earlier this month criticizing the corporate governance provisions as well. Excerpt:
We believe that the enactment of statutory provisions mandating a federal right to proxy access and an advisory vote on executive compensation (“say on pay”), disenfranchising retail shareholders and requiring majority voting in uncontested director elections would:
- Federalize corporate law, thereby creating a “one-size-fits all” approach to the resolution of these issues that will deprive the American economy of diversity and innovation, impose an unwarranted burden on mid-sized and smaller companies, marginalize the state corporate law expertise that has been developed over decades and is better suited to address these issues, and undermine ongoing reforms undertaken by the State of Delaware and the “Model Business Corporation Act,” which impacts 30 states;
- Threaten shareholder wealth creation and preservation by creating an excessive focus on short-term actions and results as management becomes increasingly distracted from its long-term business objectives by annual proxy contests;
- Unleash an onslaught of activists trying to manipulate the proxy process to force corporate decisions that adversely impact shareholders as a whole in order to further their parochial social or political agenda; and
- Saddle the Securities and Exchange Commission (SEC) with significant additional responsibilities at a time when it is struggling to perform its existing mission critical goal of protecting investors.