September 29, 2003

Shareholder Access Debate Intensifies Readers

Readers of WSJ might have noticed a full-page advertisement on Thursday by a group of investors calling for the SEC to adopt a shareholder access rule. This ad followed a 9/23 press conference held by members of Calpers, AFSCME, CalSTERS, New York State Comptroller, New York City Comptroller and Connecticut State Treasurer on the same point.

At the press conference, AFSCME released a survey showing that 84% of 1,030 individual investors stated that there should be a process to allow shareholders to nominate candidates for boards. The survey also showed that a majority of the respondents believed that management is not in the best position to determine who should be nominated. Many institutional investors have made clear that this rulemaking is their top priority right now.

It is my belief that the SEC is not going to be able to ignore this kind of pressure – just like Dick Grasso couldn’t. Trivia question – Which company was the last to ring a bell on the floor of the NYSE with Dick? Answer in tomorrow’s blog – winners to be prominently identified.

Always a laggard, the ABA finally has submitted its comment letter on the disclosure of nominating commitee activities proposal.

SEC Ain’t Spending It As Fast As It Gets It

Before the end of its fiscal year tomorrow, the SEC will not be able to spend $103 million (or 40% of the $258 million budget increase) it received from Congress to hire more accountants and lawyers. The SEC is moving carefully towards it goal of bringing on 800 new professionals. Believe me, they have more than enough resumes and have their pick of the litter (i.e. only Ivy League need apply).

What is Harvey Pitt Doing Now

Based on an interview published yesterday with the Washington Post, Harvey’s new consulting firm is giving “seals of approval” to boards before they obtain D&O insurance.

In the interview, Harvey espouses an opinion about using more cash in executive compensation – which Professor Charles Elson rightfully criticizes. Catch Professor Elson with Pat McGurn of ISS on our October 22nd webcast, “The Wildest Proxy Season Ever: Forecast for 2004.”