July 22, 2010
Dodd-Frank Forum: Proxy Access and Judging Success
Posted by Lisa Fairfax
So yesterday Erik asked me how I would judge whether proxy access is a success.  It is a question I have been thinking about for some time.  And not just with respect to proxy access, but also with respect to the overall bill--but I will leave the latter one for another day!  Especially because I ultimately think it may be difficult to judge whether or not proxy access has proved successful.  On the one hand, while proxy access advocates certainly insist that such access will enhance corporate governance and reduce instances of corporate malfeasance, I am pretty sure that none of them would measure the success of proxy access in terms of whether or not it served to prevent the next crisis or otherwise led to dramatically enhanced corporate performance at most public companies.  Indeed, it is entirely possible that any "success" will only be at the margins, and hence very difficult to measure.  On the other hand, it is probably the case that many opponents of proxy access do not expect that it will single-handedly bring about the demise of the public corporation as we know it.  However, it is also completely possible that proxy access will enable some shareholders to gain influence over corporate affairs and directors in a manner that is counter-productive and even potentially harmful.  So I suppose we measure success with a balancing test: have shareholders been able to hold directors accountable without holding them hostage, or otherwise undermining the best interests of the corporation as a whole?  I am not sure how one answers that question (which means in answer to one of Erik's other questions--I definitely will be teaching the reform bill and issues related to proxy access).  However, I am fairly sure that, if implemented by the SEC, the debate over whether or not proxy access has been a success will be as hotly contested as the debate about the benefits of proxy access. 

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