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Governance
Super-voting
Shares
We reject all types of differentiated voting rights. In most cases they
serve to protect the interest of a dominant owner. This does not mean,
however, that we subscribe to the simplistic theory of 'one share, one vote'
that is currently so popular in corporate governance circles, academia and
politics. Super-voting shares are blatant discrimination and an abuse of
the privilege that limited and public company status provides.
04-Mar-07
One Share, One Vote?
It sounds more than reasonable to apply this formula to the realm of corporate
governance. After all, what is seen as the best (or maybe least bad) system of
government in the political field, should also be the most appropriate form of
shareholder representation.
Never mind that even in politics this principle is only a rough guide to the
reality. Various intended and unintended checks and balances exist and lead to
a situation where the principle is undermined.
In our opinion, calls by the Association of British Insurers or the EC for the
introduction of unified share voting rules should be scrutinised carefully.
The founding fathers of the US constitution
were deeply suspicious of
unfettered democracy and maybe shareholders would be better served if the
voting structure in public companies is designed as carefully as the
constitution of the United States.
We are certainly not in favour of giving groups of shareholders
(often founding families or other controlling owners) different
voting rights. But more research is necessary and may well lead to
the conclusion that the limitation of voting rights is well-suited
to force all stakeholders to focus on the long-term well-being of
the enterprise.
Some recent corporate
controversies - Deutsche Boerse, Newcorp or Rentokil, to name just the most
prominent ones - would have developed differently if there would have been
different voting arrangements.
07-Jan-07
Funny games at Volkswagen
The inability of VW's board to bring Chairman Piech to account over the
share transaction with his family's Porsche AG underlines that the role of
non-executive directors is in urgent need of reform. The German system of
Co--Determination (where staff/unions control half the board seats) just is
an extra complication. Board Members are easily turned into 'insiders' that
are in the Chief Executive's or Chairman's pocket.
26-Nov-05
EU launches Corporate
Governance Forum
A new 15-person corporate governance forum will advise the EU Commission and
member states on reform. While the members may all be highly qualified it is -
as usual with EU activities of this kind - not clear who selected them and for
what reason.
As the outcome of any deliberation in such a forum depends on the composition
of its members - and the influence each member manages to wield during the
discussions - the outcome is bound to be unsatisfactory.
There is no intent to have a
clear decision - either via the forces of the free market or via a transparent
political process.
We suggest that all our readers keep an eye on the activities of this forum so
that we can avoid that any harmful decisions are made.
As the Forum is only supposed to meet once or twice a year (!) we will not
hold our breath and expect any dramatic decisions soon.
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