“Shareholder Access” Harmful to Shareholders, Groups Say
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Contact: Christine Hall, 202.331.2258
Washington, DC, February 8, 2007—Leaders of 29 conservative and free-market groups banded together in opposition to proposed "shareholder access" rules that would harm the interests of ordinary shareholders.
In a letter sent Feb. 7, the public policy groups – including the Competitive Enterprise Institute, the Christian Coalition, the American Conservative Union, and Americans for Tax Reform -- alerted Securities and Exchange Commission Chairman Chris Cox that a rule forcing companies to put shareholder-nominated director candidates on proxy ballots would result in special-interest politicking that would hurt the portfolios of average investors.
The letter identified severe flaws in the concept of “shareholder access” under debate at the SEC:
· "Through pension funds, labor unions and other anti-market interest groups have significant stakes in major corporations as well as entrepreneurial new firms.”
· Rules allowing activists to nominate corporate directors and put them directly on proxy ballots would put "everything on the anti-market political wish list, from Kyoto-like carbon restrictions ... to prescription drug price controls, to animal rights activism" on the table.
· "Shareholder access" rules would give liberal special interests leverage "to achieve through the board nomination process what they have been unable to accomplish throughout the political process."
· The letter concluded by encouraging Chairman Cox to "stand up to the special interest pressure pushing for shareholder access" and "reject any measure that would allow shareholders to nominate their own directors in company proxy materials."
The letter was initiated by the Competitive Enterprise Institute in consultation with Americans for Prosperity (AFP) and the American Shareholders Association (ASA). It was sent in response to calls from left-wing activists for the SEC to adopt "shareholder access" rules to resolve a lawsuit, American Federation of State, County and Municipal Employees Pension Plan v. AIG. Similar rules to require companies list shareholder nominees on proxy ballots have been debated before at the SEC and have been wisely rejected.
CEI President Fred L. Smith, Jr. and the director of CEI’s Center for Entrepreneurship, John Berlau, were both signatories to the letter.