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Corporate Governance

: PomTalk

White House Betrays Shareholders

By Jessica N. Dell

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As the Huffington Post reported today a ?lightning bolt" struck important investor protection provisions from the Wall Street reform bill when the conference committee unexpectedly voted against language which would have affirmed the SEC's authority to allow investors to have proxy access to the corporate decision-making process.

The Council of Institutional Investors issued an email urging concerned parties to take immediate action. See their recommendations copied below:

Amendment Imposes Steep Ownership Threshold for Proxy Access

All interested Council member funds are encouraged to contact House and Senate conferees TODAY to express strong opposition to an amendment on proxy access included in the Senate's set of suggested changes to the financial regulatory reform legislation base text. By inserting an onerous and unworkable 5% ownership threshold, this amendment would effectively close proxy access to responsible, long-term owners such as Council members.

Language passed separately by both the House and Senate simply affirms the Securities and Exchange Commission's authority to issue a proxy access rule, leaving the technical details to be worked out by the SEC through its rulemaking process. Despite the clear consensus among both houses of Congress, the Senate's amendment inserts a 5% ownership threshold and 2 year holding requirement for shareowner access to the proxy to nominate directors. This proposed change would gut proxy access and make it extremely difficult if not impossible for Council member funds to use.

We therefore strongly encourage interested Council members to contact House and Senate conferees right away in order to urge them to vigorously oppose this harmful proposed change. The conference committee is considering the Senate's counteroffer today, so be sure to reach out to both House and Senate conferees ASAP. Emailing congressional staffers is the most effective way to get the message to conference committee members, but following up with a call to members' offices will also help. Talking points and contact information are below. Our most recent letter to House conferees can also be found here.

If you have any questions, please do not hestitate to contact Council analyst Jonathan Urick at (202) 261-7096 or jonathan@cii.org, or our general counsel Jeff Mahoney at (202) 261-7081 or jeff@cii.org.

Talking Points

The global financial crisis represents a massive failure of board oversight.
A 5% ownership requirement would effectively shut out those large, long-term institutional investors?largely public and union pension funds?most willing to engage companies and hold corporate boards accountable.
As a result of pension funds? obligation to diversify their portfolios and manage risk, the level of holdings that those funds may have in any single company is generally quite small.
Even the very largest pension funds in America?CalPERS and CalSTRS?typically own no more than 0.3 - 0.5% of the outstanding stock of any company in the Russell 3000.
Research compiled by the Council of Institutional Investors indicates that even if the 10 largest public pension funds in the nation were to successfully aggregate their holdings of a single public company?s securities, those funds combined would rarely if ever be able to clear a five percent hurdle.

Senate Conferees Contact Information

Christopher Dodd (D-CT)	(202) 224-2823	dean_shahinian@banking.senate.gov
Jack Reed (D-RI)	(202) 224-4642	kara_stein@reed.senate.gov
Charles Schumer (D-NY)	(202) 224-6542	jonah_crane@schumer.senate.gov
Tim Johnson (D-SD)	(202) 224-5842	laura_swanson@johnson.senate.gov
Blanche Lincoln (D-AR)	(202) 224-4843	anna_taylor@lincoln.senate.gov
Tom Harkin (D-IA)	(202) 224-3254	Richard_Bender@harkin.senate.gov
Patrick Leahy (D-VT)	(202) 224-4242	Greg_Cota@leahy.senate.gov

Richard Shelby (R-AL)	(202) 224-5744	hester_peirce@banking.senate.gov
Judd Gregg (R-NH)	(202) 224-3324	jenn_gallagher@gregg.senate.gov
Mike Crapo (R-ID)	(202) 224-6142	gregg_richard@crapo.senate.gov
Bob Corker (R-TN)	(202) 224-3344	courtney_geduldig@corker.senate.gov
Saxby Chambliss (R-GA)	(202) 224-3521	adam_noah@chambliss.senate.gov