While Bear Stearns (NYSE: BSC) was in the midst of collapse because of what can only be called horrifically bad management and governance, the company was fending off efforts by its shareholders to have more of a say in the election of directors at the company.
Back in November, the employees' pension fund of the American Federation of State, County & Municipal Employees filed a proposal asking filed proposal Stearns to amend its corporate bylaws to allow shareholders access to proxy statements. An amendment like this would have made it easier for outside shareholders to have a say in who was on the ballot without mounting a costly proxy fight. The New Jersey Division of Investments and the North Carolina State Treasurer joined AFSCME in that battle.
Bear Stearns -- which very, very incorrectly decided that it didn't need more input on how the company was run -- sought to block the proposal. (Read the details in this piece from BusinessWeek.)
Tragically, the Republican-controlled SEC has established a track record of backing managerial entrenchment over shareholder rights.
The collapse of Bear Stearns should give them pause to reconsider the importance of accountability but I somehow doubt that it will.
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Reader Comments (Page 1 of 1)
3-18-2008 @ 5:05PM
Chilla said...
How ridiculous to place Bear Sterns melt down at the feet of the Republicans. This was miserably bad management. And what makes you think shareholders would be any less motivated by greed than the "entrenched" management?
3-18-2008 @ 5:05PM
David Huston said...
According to the Republicans, any governance is bad governance; left to its own devices, the markets will self-regulate and self-correct. And oh, by the way, the horse and sparrow theory still lives and the tooth fairy is own its way.
3-18-2008 @ 5:13PM
Kent said...
Hedge funds cater to the few but impacts the many. They are not under government scrutiny either until the bottom drops out like yesterday. A good lesson learned by all and the regulator needs to put it right in the future.
3-18-2008 @ 6:34PM
NewsVisual said...
Should Shareholders Have Been Able to Replace the Bear Stearns Directors? Although the speed with which it met its demise might have come as a shock to just about everyone in the worldwide financial community, there was a fight underway by disgruntled shareholders to replace several members of The Bear Stearns Companies Inc (NYSE:BSC) Board of Directors earlier last year. This weekend’s demise of Bear Stearns did not end the debate over who should have a right to elect the Directors of companies. The question of whether of Bear Stearns Board of Directors service on other corporate boards will come in for more scrutiny remains a question to be answered in the coming days.
3-18-2008 @ 9:05PM
kcoryms said...
I love this quote from the article "Investment banks soar on strong earnings". "It is no longer OK to be in a black box," Lehman Chief Financial Officer Erin Callan told The Associated Press. "There will be a lot more honesty from us as an industry, and it is painfully obvious this will be the biggest change." WOW the most painful change is to be honest. I guess if they quit stealing they would burst into flames. Well....... I won't even go there.