July 31, 2006
There is a renewed political campaign for freeing corporate managers from shareholder oversight. It is called "short-termism" and it is bogus. It is seductive, as many catch phrases are: Our managers are managing for the short-term and not the long-term, hurting their own companies. The solution? Leave managers alone and let them run their companies without shareholder interference, read accountability. Where does the data come from on short-termism?? Manager surveys. Managers who know a good thing when they see it: "Oh yes, I would make better decisions if I was not accountable." Why the new push?? Shareholders are figuring out how to use the voting machinery to attach executive salaries and the SEC is allowing the increased use of Internet proxies. Main Street is establishing a policy base for re-asserting restrictions on shareholder voting (director elections every five years anyone??). The seductive power of the claim is evidenced by a testimony of new believer William Donaldson, the old SEC Chair. He was always an easy mark, however.
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