prudentinvestor

10 Reasons to Expect More Activism in 2009

The real crisis in corporate governance appears to stem from the fact that votes of mutual fund managers have replaced those of direct shareholders.

As a result, many rational shareholder proposals get voted down if the executives view them as a threat to their ability to plunder the company. An example is recouping bonuses that are later determined to have been based on fraudulent accounting that is subsequently re-stated. It seems obvious that in such cases bonuses should be recouped, but virtually all proposals to that effect have been routinely voted down in "shareholder meetings".

Perhaps some of the fund managers who vote on behalf of the real shareholders are just too inexperienced and impressionable, in awe of the "big guys" on corporate boards.