Social Investment Forum Urges Defeat of Carper Amendments Undercutting Corporate Governance in the Senate Financial Reform Bill
Attack on Proxy Access and Majority Voting Seen Will Hurt Efforts to Restore Investor Confidence in the Marketplace
WASHINGTON--The Social Investment Forum (SIF), the national non-profit association of professionals, firms and institutions engaged in socially responsible investing (SRI), issued a statement today in response to amendments introduced by Senator Tom Carper (D-Del.) to the pending Senate financial reform bill, Restoring American Financial Stability Act of 2010 (RAFSA).
SIF CEO Lisa Woll said: “We are deeply concerned that the Carper amendments would strip two vital corporate governance reforms from the Senate financial reform bill. Socially responsible and sustainable investors support these provisions because they will give shareholders the tools they need to hold management accountable and to help prevent another financial crisis.
Specifically, we oppose the Carper move to delete the Senate financial reform bill language on proxy access and majority voting. Proxy access and majority voting are critical corporate governance reforms that need to be passed as part of financial reform legislation. These are common-sense, market-based tools to hold managements and boards accountable. They will improve the functioning, performance and stability of financial markets over the long term.
At present, shareholders have to wage extremely costly proxy contests and issue their own proxy materials to contest director elections. Under the status quo, incumbent directors hold a de facto monopoly on director nominations. Proxy access would change this and give all shareholders a stronger voice in the boardroom.
Under most state laws, including Delaware, the default standard for uncontested corporate elections remains a plurality vote. Therefore, directors can be elected or reelected even if a majority of votes are withheld from them. A majority voting standard would end this practice and hold directors accountable to shareholders.
Contrary to the misinformation spread by certain corporate interests, the proxy access and majority voting provisions of the Senate financial reform bill will not advance the interest of a small minority of investors, but accomplish the opposite: these provisions will ensure democratic safeguards in the governance of America's publicly traded companies.
We urge members of the U.S. Senate to send a clear signal to the American people and financial markets that the ‘old way' of doing business is not acceptable. We need a strong Senate bill that makes it clear that shareholder rights will no longer take a backseat to management self interests. The American public deserves a bill that will restore investor confidence in the marketplace.”
Carper amendments numbers 3860 and 3861 seek to strike Section 972 of RAFSA, which affirms the authority of the Securities and Exchange Commission (SEC) to issue a uniform proxy access rule, as well as Section 971 of the bill, which requires majority voting for directors in uncontested elections. SIF opposes both of these amendments and supports the present Senate bill's corporate governance elements.
The Social Investment Forum (http://www.socialinvest.org) advances investment practices that consider environmental, social and corporate governance criteria to generate long-term competitive financial returns and positive societal impact. The Social Investment Forum is the U.S. membership association for professionals, firms, institutions and organizations engaged in socially responsible and sustainable investing (SRI). SIF members support SRI through such strategies as portfolio selection analysis, shareholder advocacy and community investing.