Schumer's Bill: What the heck are shareholders going to gripe about now?

If Senator Charles Schumer’s bill – Shareholder Bill of Rights Act of 2009 – is passed, shareholders are going to have to come up with a whole new set of proposals. The bill requires companies to:

1. Introduce a non-binding vote on executive compensation (a say-on-pay vote)
2. Introduce a vote to approve golden parachutes
3. Provide shareholder access to the proxy for the purpose of nominating directors
4. Split the roles of chairman and CEO
5. Make all director elections annual
6. Introduce majority voting for directors

And the bill also makes all the above a listing requirement.
I mean, what’s left?
Sure the bill says that a Say on Pay vote won’t preclude other compensation-related proposals, but if shareholders have just approved the pay package, are they really going to vote in favor of banning golden coffins? Or approve a ban on any further grants of stock options? Or require the compensation consultant to do no other work for the company?
In fact, the only thing that will be left for shareholders to do is, well, vote….

For additional insight, J.W Verret at Conglomerate wrote about the proxy access and say-on-pay provisions of the Schumer Bill in a post this morning. His analysis is hilarious, and he might be quite right. Except, as Verret points out, given RiskMetrics’  dominance of the market already, I don’t know that another set of proposals to advise on is going to make that much difference to its stock price. Hewitt and Watson Wyatt… they’ve been taking a beating since the “independence” of their advice – seeing as it is often to the same firm that often pays them millions of dollars in benefits consulting fees – has been called into question by certain activist shareholders. Might this be enough to cause a rebound in their fortunes? Possibly.

Paul Hodgson — Senior Research Associate, Executive and Director Compensation

Comments

[Sanford Lewis]

I know your question is probably tongue in cheek, but actually there are other areas of problems for shareholders. Notably, substantial problems persist with the SEC excluding shareholder resolutions, even on issues of core concern to shareholders. See http://corporatedisclosurealert.blogspot.com/2008/12/investors-send-letter-to-obama.html

[Broc Romanek]

One biggie is left - CEO succession planning.