Cablevision Systems Corporation (CVC), Bank of America Corp (BAC): One Way Big Finance Stifles Shareholders

Instead of attempting to simply block the issue, this year, Western Union agreed to compromise by granting some shareholders the right to list their director nominees on future proxies, but making holding requirements more stringent than those initially proposed by Norges Bank. Western Union now allows access to shareholders who have beneficially owned at least 3% of the company’s stock for at least three years.

Outside the finance industry, other companies have also responded to shareholder pressure to offer better proxy access. For example, Hewlett-Packard Company (NYSE:HPQ) responded to shareholder pressure in 2012 by promising to include a proxy access proposal in its 2013 proxy materials. When it did, the company’s board even recommended that shareholders vote for the proposal.

Why investors want a voice on the board
Many investors worry (rightly, I think) that the current system for selecting corporate directors undermines accountability. As the Cablevision Systems Corporation (NYSE:CVC) case shows, uncontested director elections can make it virtually impossible to oust even the most unpopular directors.

Also, as I’ve argued previously, I believe investors should worry about a system in which all of the directors are selected by insiders — especially given that the interests of company insiders aren’t always aligned with shareholder interests.

For these reasons, I believe we should look more favorably on companies that list shareholder nominees for the board of directors than those that don’t. And I suspect investors will more favorably value the shares of companies that do.

The article 1 Way Big Finance Stifles Shareholders originally appeared on Fool.com.

Motley Fool contributor M. Joy Hayes, Ph.D. is the Principal at ethics consulting firm Courageous Ethics. She has no position in any stocks mentioned. The Fool has a disclosure policy. Follow @JoyofEthics on Twitter. The Motley Fool recommends Goldman Sachs, Wells Fargo, and Western Union. The Motley Fool owns shares of Bank of America and Wells Fargo.

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