For Immediate Release
Tuesday, September 23, 2003
New Poll Shows Groundswell of Investor Support for Reforming Corporate Director Elections
WASHINGTON —Shareholders across the country want a stronger voice and a seat at the table when it comes to board of director elections, according to a Harris Interactive® survey released today by the American Federation of State, County and Municipal Employees (AFSCME), AFL-CIO. A strong majority of shareholders would support the adoption of new rules currently being drafted by the Securities and Exchange Commission (SEC) to allow shareholder-nominated directors to appear on publicly owned companies' proxy statements.
"Shareholders — the actual owners of a corporation — almost never get the opportunity to nominate candidates to corporate boards. It is clear that individual investors want to see a strong proxy access rule that will give shareholders a meaningful choice in corporate board elections," AFSCME President Gerald W. McEntee said.
According to McEntee, "The SEC needs to create an effective rule to open up the nominating process that currently silences shareholder voices and allows corporations to hand pick all directors. Now is the time to get corporate elections out of the back room and onto the proxy ballots where they belong."
McEntee chairs the AFSCME Employees Pension Plan, the union's staff plan. Over one million AFSCME members nationwide participate in public employee pension plans with total assets of more than $1 trillion.
The key findings of the Harris Interactive survey of more than 1,000 individual investors, show:
- Eighty percent think there should be a process to allow shareholders to nominate candidates for boards of directors;
- Ninety percent agree that corporate misconduct has weakened investor confidence in the stock market;
- More than half of the shareholders agree that corporate management is not in the best position to decide who should be nominated to the board of directors.
A large majority of these investors also believe shareholders should have access to corporate proxy materials to nominate board member candidates rather than leaving the decision solely in the hands of corporate management. Currently, any shareholders who want to challenge an incumbent board member would have to pay hundreds of thousands, even millions, of dollars to run their own candidates. "This is simply unaffordable for both small and large investors" McEntee said.
AFSCME thinks that the new rules being considered by the SEC should adhere to the following principles to be meaningful to individual and institutional shareholders:
- Access to the proxy should be granted when an investor group with substantial ownership in the company seeks to nominate a director.
- Investors should be long-term shareholders with the long-term interests of the company in mind, not short-term market manipulators.
- This right should be available to elect less than a majority of investors-the new rules should not assist hostile takeovers but rather should be a tool to reform corporate boards to make them more accountable to shareholders.
- Investors must be able to use these rules in a timely manner so that they will impact corporate conduct in the shortest period of time possible.
"We want these changes implemented for the next cycle of board elections at 2004 annual meetings. We cannot afford to let another election cycle occur without them — and neither can the rest of the country," McEntee said.
The Views of Corporate Governance poll was commissioned by the AFSCME. The survey was conducted online within the United States between August 29 - September 2, 2003, among a nationwide cross section of 1,030 adults, aged 18 years and over, who own shares of stock in individual companies. Figures for age, sex, race, education, region and income were weighted where necessary to bring them into line with their actual proportions in the population. "Propensity score" weighting was also used to adjust for respondents' propensity to be online. This online survey is not a probability sample.
RELATED DOCUMENTS:
- Public pension funds urge Securities & Exchange Commission to heed the call of investors seeking access to proxy for electing directors
- Prepared Remarks of Gerald W. McEntee, AFSCME International President, on Release of Proxy Access Poll, September 23, 2003 (PDF)
- Views of Corporate Governance, Harris Interactive (PowerPoint) (PDF)
- Corporate Governance Survey Data, Harris Interactive (PDF)
