Shareholders Want More Say

The public workers pension funds in four states are making a case for being able to nominate board members on public corporations, in this case, Hewlett-Packard. One would think that if a particular group of shareholders owns enough of a stock, they would have some sort of say in the process of nominating board members. They are asking H-P to change thier by-laws to accomodate this proposal. The shareholders must be long term holders, 2 years or more. This is to avoid predatory hedge funds or corporate raiders over-leveraging or tearing a company apart for short term gains.

Boards of Directors are supposed to represent shareholders. There is a valid perception by many small fish shareholders that public companies are often controlled by an "Old boy network" who are less than diligent when looking out for the small investors. Sometimes these boards are referred to as "lap dogs".


When proposals like this get publicized, the company spokespeople usually try to argue that the shareholders interests wouldn't be served if a shareholder's representative was nominated. Okay.



Wall Street Journal, Sept 26, pg A2:

"Hewlett-Packard Co. should overhaul its board in the wake of the leak-investigation scandal, corporate-governance experts say, and four public pension funds are proposing a way for shareholders to help do that.

The four funds -- representing public workers in Connecticut, New York, North Carolina and Washington, D.C. -- said they filed a proposal asking H-P to change its bylaws to allow any shareholder group holding 3% of the company's stock for at least a year to nominate one or more board candidates.

Backers of the proposal are the New York State Common Retirement Fund, the Connecticut Retirement Plans and Trust Funds, the North Carolina Retirement Systems and the American Federation of State, County and Municipal Employees Pension Funds. Their proposal relies partly on a recent appeals court ruling that sided with AFSCME."