By Maxine Shapiro, KERA 90.1 commentator
Dallas, TX – Today, President Bush travels to Wall Street to speak to group of corporate executives. Many feel that the President does not go far enough in addressing this serious problem of corporate integrity and corporate accountability. I'm Maxine Shapiro with KERA Marketplace Middays.
From all reports, Bush's plan is basically a twofold program. Stricter penalties for those executives convicted of a fraud and more funding to the regulatory agencies. Sorry President Bush, I believe that this just might be the easier, softer way. There isn't a soul around that wouldn't agree that both items are badly needed. You'd have to be a rock in the bottom of the ocean not to sense the almost lynch mob attitude of the rightfully appalled investor or innocent employee. And more funding for the SEC. Why, even I've been saying that since the day after Enron. Since taking office, Bush has cut SEC funding.
Sarah Teslik, Executive Director for the Council of Institutional Investors, agrees this is just too little. This organization of the largest shareholders in the market suggests more. For starters, fill the two SEC seats that have been vacant since Bush took office. Next, adapt the New York Stock Exchanges proposal which will be voted on in August. Here's a capsule of that proposal: all Board of Directors of a company should be independent. All committees must be independent and both must meet routinely without staff, management, or the CEO attending. The Audit committee will meet with the auditors, also alone, and will be able to hire and fire if necessary. The Board will have to vote on stock options, an item that will take a full day to cover. And the Proxy vote will be taken away from the Broker.
Now let me explain this. I never even knew this. As an investor, we sometimes receive material from the company asking us to vote on specific issues. If we as investors do not vote, our broker is given the opportunity to vote in our place. As Ms. Teslik put it, can you imagine telling registered voters of a political election that if they don't cast their vote, someone else will do so in our place? And brokers usually vote on the management's side.
The NYSE isn't suggesting anything radical, just a way to give power back to shareholders. For KERA Marketplace Middays, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 P.M.