The New Normal

Stephen Barth & Joshua Agen argue our traditional market-based, capitalistic, macro-economic business environment may be entering a new era, dubbed the “new normal,” characterized by slower domestic economic growth; more government involvement in private business through increased regulation, taxation and direct intervention; a relatively weak dollar; long-term inflation risk; and overall increased business risk aversion. (Corporate Governance in the “New Normal” Business Environment, Corporate Compliance Insights, 2/1/10)

They also speculate the financial provides momentum to “opportunistic” corporate governance practices such as majority director voting, the elimination of classified boards, the elimination of broker non-votes in director elections, permitting shareholders to more easily call special meetings and proxy access.

One effect of many of these reforms is to change the relative balance of power between directors and shareholders in favor of shareholders by permitting shareholders to more easily affect director elections, as well as some of the decisions being made in the boardroom. This may result in the potential for politicization of the director election process and use of the election process for narrow special agendas that are of interest only to some shareholders.

Hmm, elections are politicized if shareowners can more easily affect director elections. If China moves to a president elected by popular vote, would we say their elections are policicized?

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