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Marty Robins Headshot

Conservatives: Do the Right Thing on Proxy Rules!

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I'm a conservative because I feel that it is best for the greater good when government gets out of the way of the people, lets them make their own decisions and keep hold of their own earnings. I've been quite troubled by the activist, anti-business agenda which our current administration has pursued and feel that it has suppressed economic recovery -- witness all economic statistics from unemployment to home sales to capital investment. A genuine conservative agenda -- emphasizing personal responsibility instead of more programs, taxes and regulation -- is an essential antidote.

But when I read about the legal challenge to the new SEC proxy access rules which have caused a stay of the application of such rules, I wonder about the motives of my fellow conservatives.

As a bit of background, the rules are intended to improve corporate governance by making it easier to remove poorly-performing corporate directors who fail to supervise management. In particular, the rules are intended to allow the names of candidates opposing the management slate of directors to go directly on management's proxy card next to those of the management slate allowing dissatisfied minority holders to avoid costly proxy fights. Far from authorizing candidacies by fringe groups with trivial stock positions, the rules require a 3% holding for three years, which in many cases such as Apple, GE and other companies of the same size, will require over a billion dollars of stock. They also do not guarantee anyone a board seat, but only a spot on a ballot.

Reading the papers filed by the Business Roundtable and U.S. Chamber of Commerce in their lawsuit made me wonder whether I had inadvertently been transported back 100 years to a wood-paneled private club where portly industrialists railed against "commonists" between sips from their brandy snifters and puffs on their cigars. Specifically, the papers which were filed dwell on the likelihood that the new rules will bolster the influence of "union funds," "union interests," "labor unions," and "union pension funds" as reasons why its adoption was "arbitrary and capricious".

Reasonable arguments have been made by many, including institutional investors for institutional investors, and against the new rules. Only time will tell whether they will be sustained in court and if so, if they can facilitate the avoidance of the debacles we have seen far too frequently during the last decade, as corporate managements did stupid and/or dishonest things in the absence of any oversight from boards of directors. However, this sort of union baiting is hardly a legitimate argument. Anyone with a given stock position in a company should have the same rights, irrespective of their nature or affiliation. I feel that the labor laws are too heavily weighted toward labor, especially public employees, and that mandating card check to replace secret ballot in organizing drives would be a disaster for the economy. But saying that something is bad only because it bolster the voice of unions undermines the conservative movement.

Invoking the specter of union domination suggests that far from principled opposition to a public policy, the supposedly mainstream Roundtable and Chamber may not care much about investors as a whole but care more about their "class" avoiding challenges to their authority. I sincerely hope that this is not the case and that other business organizations and conservatives will disavow these anachronistic sentiments and recognize that many business practices need to change in order to facilitate recovery and avoid future disasters .

To facilitate the election of genuine conservatives, it is essential to demonstrate that this would serve the interest of the country as a whole and is not a movement limited to the privileged. For example, if we don't want a Consumer Financial Protection Bureau taking steps which will reduce consumer lending and borrowing at a time when this would be disastrous for the economy, we need lenders to demonstrate that they have learned from recent debacles annd will behave responsibly on their own. In order to avoid and roll back the burdensome, counterproductive policies of the present administration, conservatives need to demonstrate that they are serious about individual responsibility, And that starts in the boardroom.