The real question regarding the shareholderaccess debate is whether once shareholders have the power to nominateminority directors whether they will use it for good or ill, or at all. Yair Listokin has a paper, “If You GiveShareholders Power, Do They Use It? An Empirical Analysis,” in whichsuggests the answer might be that they won’t use it at all. Listokin looked at state antitakeoverprotection statutes that provide shareholders with the opportunity to opt-outthrough the adoption of shareholder initiated bylaw proposals. He finds that very few companies’shareholders take advantage of the opportunity to opt-out of thesestatutes. This finding is consistentwith earlier work from Rob Daines and Michael Klausner who looked at customization ofincorporation documents and found very little opting out of default provisions(here).
Recently, we started to have experience with shareholdervotes relating to ‘say-on-pay’ a hot-button issue(and here) itthere ever was one. So far,shareholders who have had the opportunity to vote on pay packages appearreticent to say ‘no.’ The WSJ recentlycanvassed 15 companies large cap companies with say-on-pay policies that permitshareholders to review executive pay policies (here) and noneof questions passed. Given the highdegree of emotion that pay questions can generate, the vote results (or lack of them) are prettyamazing. All of this simply providesfuel for the shareholder access debate.
-bjmq