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An Investor Response to Corporate Scandals:
Never Again!
Greg A. Kinczewski, Marco Consulting Group
Melissa A. Moye, Amalgamated Bank
Trustees must aggressively advocate their interests in the corporate arena to prevent a repeat of the corporate scandals seen in 2002, according to two experts in shareholder activism, Greg Kinczewski and Melissa Moye.
Greg Kinczewski began with a brief historical review of corporate governance legislation and regulation. He demonstrated how Congress and regulators have frequently altered the degree of shareholder rights, beginning in the 19th century with a change from one vote per person to one vote per share.
Some of the most significant changes followed the stock market crash of 1929, notably the creation of the Securities and Exchange Commission. Prior to that time shareholder rights were largely a matter of state law, resulting in inconsistent and incomplete application of shareholder rights.
Regulators introduced dramatic changes most recently following the Enron, Tyco and WorldCom financial scandals. As a result, Kinszewski sees several indicators that shareholder activism is no longer “Don Quixote tiling with windmills.” As an example, he noted the recent vote of no confidence in Disney CEO Michael Eisner and Marsh & McClennan’s decision to add a shareholder nominee to its board slate—an idea encouraged by a number of public employee pension plans.
Moye offered a long list of steps that trustees and administrators can take to increase their involvement, noting that “most of them do not require great expense.” She strongly encouraged the attendees to attend at least two shareholder meetings in the next year, one for a large company and another for a smaller one. “You’ll be surprised at how easy the process is and the level of influence participants can have at these meetings.”
Kinczewski is legal counsel for the Marco Consulting Group. The firm’s proxy voting service analyzes and votes on shareholder issues at more than 3,000 U.S. and foreign companies each year.
Dr. Moye is first vice president and chief economist of Amalgamated Bank’s trust and investment management business. She oversees group research on corporate performance. She has worked with plan sponsors in implementing pension fund policy since 1997.
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