Peter C. Clapman
January 22, 2009
I commend Jeff Gordon for trying to reconcile many comments from a variety
of sources, but in the final analysis believe he had it right the first time
through. I do not see the basis for distinguishing between the size of
companies or the markets they are traded upon. The British model is not
appropriate because the AIM market does not require companies traded upon it
to adopt the broad British principles of corporate governance, SOP being
only a small part of the total regime. Trying to distinguish between NASDAQ
and the NYSE would make no sense. Equally, using some broad index makes no
sense as well.
I also raise, perhaps heretically, whether advocates of legislative
universal SOP appreciate that they may be harming their presumed cause.
Under current regulatory practice, companies with poor practices (or so
alleged) can be individually targeted by shareholder resolutions which is a
shadow SOP question. As noted before, company directors are now
substantially subject to majority vote requirements for their own
continuance on the board, again a real SOP result in substance.
A relatively small number of companies can be managed by a sufficient number
of shareholders in terms of focus. If a universal rule were in place, all
companies would include a pay practice report, which in short order would
become a very routine item, and as such largely ignored by most shareholders
except as they would follow a proxy advisory recommendation. The basic flaw
in all this is how few shareholders are really capable of, or prepared to
provide the resources for any case-by-case analysis of individual companies.
The companies which currently might be subject of a shareholder resolution
would then be merged into the mass of all companies. This outcome does not
serve the system well.
Governance for Owners,