The shareholder empowerment provisions enacted as part of the recent bailout legislation are internally incoherent because they fail to address the short-termist realities of shareholder ownership today. Ownership has separated from ownership in modern corporate America: individual investors now largely hold stock through mutual funds, pension funds, and hedge funds. The incentives of these short-term financial intermediaries only imperfectly reflect the interests of their long-term holders—an imbalance only exacerbated by the bailout’s corporate governance legislation. The bailout’s focus on shareholder empowerment tactics—such as proxy access, say-on-pay, and increased disclosure—makes little sense if shareholders are only in it for the short term. This Article uses the bailout provisions to illustrate the point that shareholder empowerment inadequately addresses systemic problems. The Article explores the recent regulation of target-date retirement funds as a further example of regulators’ persistent neglect of the separation of ownership from ownership. The Article concludes with some reflections on the difficult question of how to encourage long-lived firms when individual players, including even long-horizoned investors, may be looking for a quick payoff.
Volume 95 - No. 5
- Note: Maximizing the Min-Max Test: A Proposal To Unify the Framework for Rule 403 Decisions
- Note: Anticompetitive Until Proven Innocent: An Antitrust Proposal To Embargo Covert Patent Privateering Against Small Businesses
- New Economy, Old Biases
- Will LGBT Antidiscrimination Law Follow the Course of Race Antidiscrimination Law?
- “The More Things Change . . .”: New Moves for Legitimizing Racial Discrimination in a “Post-Race” World
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