Exercise Your Capitalism

It's that season, again.

I don’t celebrate Easter or Passover, though it is intriguing how far apart the two days are this year. The season that I am talking about is annual reports and proxies. This is just a friendly reminder to say that voting your proxies is something that helps keep capitalism legitimate. Granted, I think that board elections should always be contested, and that access to the proxy should be available to anyone with more than 1% of outstanding shares, but my view is that both amateur and professional investors should take the time to evaluate proxies, vote accordingly for their interests, and not blindly side with management.

I vote down:

• All directors at firms that have lost money for me. (And the auditor!)
• Most options and supplemental pay plans. Pay people cash, not contingent stock that dilutes me. And, most of the officers earn enough already. If you don’t do your job because you love it, you’re not the right person for the job.
• Shareholder proposals limiting executive pay, environmental issues, and other liberal folderol.

I vote up:

• Proposals for greater shareholder democracy.
• Plans to de-classify boards, and eliminate poison pills.
• Proposals to split the Chairman and CEO positions.

If we’re going to be capitalists, let’s exercise our responsibilities, and have our companies act fairly and ethically. When we do that, it helps give capitalism a good name, and maximizes the benefits in the long run to shareholders.

Comments

[locke:]

"If you don’t do your job because you love it, you’re not the right person for the job. ... [I vote down] Shareholder proposals limiting executive pay"

How is that consistent?

2008 Apr 19 03:13 PM

[steveballmer:]

Capitolism has been darned good to me!

2008 Apr 19 09:36 PM

[richjoy:]

I never vote the proxies! Why should I?

I feel strongly that those who vote need to do so on an INFORMED basis; and frankly, I have no interest in devoting the hundreds of hours necessary to study the directors, issues, etc. so as to make an informed vote...and I am sure you don't study them either! (I also suspect you mark proxies on an emotional basis; are you proud of that?)

Furthermore, I see my stock ownership as similar to getting on a train...I travel from point A to point B...I have no particular interest in where it was before getting to point A, nor in where it goes from point B.

2008 Apr 20 11:07 AM

[seffieandcoco:]

good article......corporate governance is the biggest issue we face. Our country is controlled by the corporations and the stockholders have little voice. The regulations need to be modified to give the stockholders control of the corporations. They could have it even now but they cannot act with a unified voice. Some method has to be found to strengthen the voice of the stockholders. Now we just sell a stock when the CEO pay goes through the roof.......

2008 Apr 20 01:04 PM

[gerrele:]

capitalism like PURE(MARX) communism, in principle, is fine. BUT, as they exist in practice, now more so than ever they're both permeated by fraud, controlled by thieves. In all publicly traded stock, bond, commodity etc markets, price changes/fluctuations NEVER randomly occur, THEY'RE only manipulated BY BIG MONEY THIEVES. Even our gov't wrongfully manipulates public trading prices. Capitalism is supposed to have markets that ONLY operate under private consumer public demand and supply. The SEC's purpose is to keep a level playing field for everyone involved in pubic trading. THAT'S BECOME A BIG JOKE. THE SEC SURELY SEES THE EXTREMELY ABUNDANT CROOKED MANIPULATIONS; BUT DOES ALMOST NOTHING TO STOP IT.

PUBLIC, STAY AWAY FROM "THE MARKET"; OR BE PREPARED TO BE SKINNED BY PRICE MANIPULATING CROOKS.
r

2008 Apr 20 03:42 PM

[GKM:]

I don't have a problem with pay for performance. To me that makes sense, but the plan needs to be designed to allow for long term accretion of shareholder value. Otherwise executives are too incented to swing for the fences so they can cash a bunch of stock options and then let the price plummet while someone else comes in and cleans up the mess only to repeat the process. I guess rinse and repeat is all that we shareholders can expect though.

Along similar lines, the other issue I have is with repricing options. One company I've owned for a while decided that to incentivize current management, so they wouldn't walk out the door, that they should reprice the options granted to a lower strike. How does that make any sense? You want to keep the guys that have dragged the company down because why? Not because they are solid performers as reflected in the stock price. You had a chance to wish them well out the door without having to can their sorry arses and you didn't take it? What a crock.

2008 Apr 20 04:49 PM