Shareholder Democracy and the New York Times

Author:
Publish date:
Updated on

Gretchen Morgenson is one of the most aggressive advocates of shareholder voting rights proposals. Criticism of the proposals to increase shareholder proxy access only seems to strengthen her resolve. One source of this strength appears to be her spectacular immunity to argument and evidence.
One would think that advocates of a massive, centralized, bureaucracy driven overhaul of the proxy access rules would want to build their arguments on a foundation of improving the shareholder value. After all, investors don’t buy shares of public companies in order to exercise metaphysical governance rights or realize some Platonic form of ownership. They buy shares to invest, to make money. That’s why we call them investors.
And, in fact, many advocates of the new proxy access reforms do claim that there proposals would somehow enrich shareholders. (We think they’re lying, mistaken or misled, but no reason to go into that now.) But not Gret-Gret. She frankly acknowledges that corporate governance is producing amazing returns for shareholders.
“Given that this year’s stock market performance has been so stellar, most investors are probably pretty content. It is not as if shareholders have their torches in hand and are ready to storm the nation’s boardrooms,” she writes.
It's hard for us lowly editors of DealBreaker to think like a New York Times columnist. But we're pretty sure Gret-Gret thinks that this strengthens the case for increased proxy access. Because most shareholders are content, the changes “would probably not result in a mass ouster of directors,” she writes. This may be the first time in history generalized contentment has been cited as bolstering the case revolutionary change.
Of course, except in the Business section of the New York Times, most people paying attention to this issue understand that the case against the proxy access proposal doesn’t rest of a nonsense fear of the overthrow of the directors of the means of production. It rests, instead, on a respect for federalism, insights into public ignorance, the ability of dissatisfied shareholders to sell their shares and a rational fear of special interest exploitation. But to read Gret-Gret, you’d think these objections have never been raised.
But if it’s not mismanagement that’s driving Gret-Gret, what is? It seems to be a desire to achieve some sort of cosmic justice. Or, as she puts it, to ‘do the right thing.”
“Ownership usually brings certain rights, after all,” she writes. And Gret-Gret—and, of course, the employee dominated pension funds—know exactly what those ‘certain rights’ should be.
As long as we’re sticking the knife in, might as well give it a twist. Larry Ribstein points out that whatever the New York Times editors might think of shareholder democracy, the owners of the New York Times have a very, very different view.
The Owners Who Can’t Hire or Fire [New York Times]
The NYT and shareholder rights [Ideoblog]

Related