In the wake of the current financial crisis, federal legislators have proposed numerous reform measures. We’ve covered many of the more significant ones: click here to read about Congressman Paul Kanjorski’s Investor Protection Act, Private Fund Investment Advisers Registration Act, and Federal Insurance Office Act; and click here to read about Senator Specter’s Anti-Twombly Act and Anti-Stoneridge Act. (As it was the Pomerantz firm that brought the Stoneridge case to the Supreme Court, we are especially pleased with Congress's interest in legislatively reversing the Court's decision.)
Add to these a new piece of proposed federal legislation, the Shareholder Bill of Rights Act of 2009, introduced earlier this year by Senators Charles Schumer and Maria Cantwell. According to a recent article in Securities Law 360, “the legislation is aimed at empowering shareholders in order to curb the types of excessive risk taking and runaway executive compensation and will increase oversight at publicly traded corporations.” The article credits the Shareholder Bill of Rights as mandating “the most significant changes to corporate governance requirements . . . since the enactment of the Sarbanes-Oxley Act of 2002.” Specifically, the bill calls for (i) a “Say on Pay” vote on executive compensation, which will give the shareholders of all public companies an annual nonbinding vote on executive pay; (ii) a rule allowing longtime 1% owners of public companies the ability to nominate director candidates using the company’s own solicitation materials; and (iii) new exchange-listing requirements, including the requirements that company directors be elected by a majority of shareholders, that companies eliminate classified board structures, that every public company have an independent Chairman, that the positions of CEO and Chairman be separated; and that companies establish risk committees comprised of independent directors to evaluate risk management practices. While the Shareholder Bill of Rights is certain to provoke heated debate in Congress, it has already garnered the support of roughly twenty major pension funds, labor unions, and consumer groups, according to Securities Law 360. And we certainly applaud any reform effort that gives shareholders a strong voice in the corporate boardroom. Like many of the other pieces of legislation introduced this year, the Shareholder Bill of Rights makes a strong statement about shareholders’ rights: that they belong to shareholders, and that shareholders’ long-term interests should come before managements’ short-term gain.
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