"I Just Want to Throw Away All Those Proxies"
How can I convince you to stop doing this and
stopping your clients from doing this? The tendency to believe that
your vote doesn’t
count permeates not just corporate America but I even
hear that sentiment about political elections. Admittedly, my vote
alone and your vote alone are not going to make a very big difference
unless we are very big shareholders. But think about what our votes
together would mean if we were able to focus some of the issues we
face in areas of corporate governance today?
In the late 70’s, very little concern was expressed about the
issue of stock options for corporate executives. When the bull market
of the 80’s and 90’s gave rise to great expectations of shareholders,
it was thought that if a major source of compensation
for top management came from stock options, then their
interests would be aligned with the other shareholders. By this time,
we know that just the opposite has happened and we now find numerous
cases of backdating options for the convenience and advantage of management
over the average shareholder. Do you remember throwing away the proxies
that have a vote required for incentive and other stock options? Withholding
your vote and writing on the proxy itself that this type of item should
be accompanied by a note indicating the cost this provision will cost
If all of us demand to know the cost of the options
and other provisions being asked for approval on
proxies, it will be a step in responsible shareholder activism. Greed
when backed up by shareholders who don’t
care is a breeding ground for people to reach deeper
into the cookie jar. Personally, I have been voting
against almost every stock incentive plan that I can because it hurts
all existing shareholders and rarely shows that it achieves its intended
purpose to make management more aligned with shareholders.
Pray for a great week for the National Association of
Christian Financial Consultants, NACFC as we have our annual get together
this week in Asheville, N.C. God Bless you all!
Sent July 24, 2006
Dwight Short if you would like to receive future
Monday Morning Messages.
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