Stepping ten years into the past, in April of 2000, the SEC proposed rules requiring that mutual funds and investment advisors disclose their proxy votes. See my Comments on SEC Proposed Rule: File No. S7-10-00. It was about time. In 1988 the Department of Labor (DOL) set forth the opinion that, since proxy voting can add value, voting rights are subject to the same fiduciary standards as other plan assets. I argued for many years that the same standards of trust law should also hold for mutual funds and other institutional investors. In other news that month, Charles Elson took charge of the John L. Weinberg Center for Corporate Governance at the University of Delaware.
Five years ago, The Economist noted that the crisis in American corporate governance continues. Sarbanes-Oxley is imposing heavy costs but “whether these are exceeded by any benefits is the subject of fierce debate and may not be known for years.” Their 4/7/05 article, Bossing the Bosses, concludes with the following:
Despite all the talk in America about shareholder democracy and ownership, shareholder resolutions, even if backed by a majority, are rarely binding on management. In many cases, managers can even stop a resolution from being put to a vote. The Securities and Exchange Commission recently proposed a tiny rule change to make it slightly easier for shareholders to nominate candidates for election to boards of directors. Lobbyists representing America’s top bosses easily and unceremoniously killed the proposal. Look no further to see where the real power still resides in corporate America.