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| Name | Power to the American Shareholder |
| Video Uploader | Video From Bocconi University |
| Upload Date | This Video Uploaded At 29-02-2012 08:51:49 |
| Video Discription | In a newly published article Marco Ventoruzzo suggests that list voting could be the best way to guarantee minority representation in American boards of directors. Register to Bocconi Newsletter http://www.unibocconi.eu/newsletter Corporate America could take a leaf from the Italian company law book, according to Marco Ventoruzzo (Department of Law). In Empowering Shareholders in Directors' Elections: A Revolution in the Making (European Company and Financial Law Review, Volume 8, Issue 2, June 2011, Pages 105-144, doi: 10.1515/ecfr.2011.105) he states that list voting could be the best way to give shareholders some say in new directors' elections, currently managed and decided by the directors sitting in the board. While reforms recently implemented or currently under consideration both at state and federal level are steps in the right direction, they are too timid, Ventoruzzo argues, and list voting is superior to the traditionally recommended cumulative voting in terms of simplicity, predictability and certainty. "The extensive powers that directors enjoy as fiduciaries of the shareholders can only be justified, from an economic and legal point of view, to the extent that shareholders, acting as principals, retain control on the selection and removal of their agents", Ventoruzzo writes. But in the US such control is virtually nonexistent: "plurality vote, limitations to proxy access, the cost of an independent proxy solicitation, and brokers' discretionary vote in uncontested elections have traditionally made it very difficult, for shareholders, to have a strong and independent voice in the appointment of directors". In the last years South Dakota, Delaware and the SEC have proposed reforms aimed at shareholders empowerment in the election of the board and greater accountability of directors to the stockholders. The South Dakota reform, though, even if pervasive, is destined not to change American corporate life because no major company is incorporated there and no one chose to do so after the reform. Delaware (the champion of incorporation in the US) and SEC reforms are too bland, allowing ways out or requesting the companies to opt in. Directors are currently elected one by one, usually following the plurality rule and chosen from the list contained in the proxy statement. Often the sitting directors put all the names in the list and the election in uncontested because the number of the candidates matches the number of the vacant seats. The ability of shareholders to propose nominees to the board is so severely constrained, Ventoruzzo writes, that "in case of disagreement with the way in which the corporation is managed, stockholders can more easily sell their shares and vote with their feet". With the list voting system proposed by Ventoruzzo, shareholders wouldn't vote for the new directors one by one, but for competing lists, with the prevision that the second most voted list would have a certain number of representatives in the board. Past literature, to overcome the representation problem, has proposed the cumulative voting system, according to which each shareholder is entitled to cast a pool of votes corresponding to the product of his shares, times the number of directors up for election. Ventoruzzo's simulations show that both the systems lead to a minority representation, but the outcome of the election with cumulative voting is not very predictable and the system is open to strategic voting, while "list voting ensures a meaningful but predetermined level of representation of minority shareholders on the board, and it encourages the creation of shareholders' coalitions that share the same interests". In order to prevent possible objections, Ventoruzzo explains in conclusion that the system is working well in Italy and Spain and that its viability doesn't depend on the structure of corporate ownership. Subscribe to our channel ➤ https://www.youtube.com/channel/UCdZISa8UNFbwhazbYy_uWvQ?sub_confirmation=1 Watch the playlists below: Executive Chats ➤ http://bit.ly/331f6e4 Bocconi Knowledge ➤ http://bit.ly/2C03Oux Bocconi Life ➤ http://bit.ly/2sLQ1Xd Do Tell Bocconi ➤ http://bit.ly/2Pjk9B0 Follow our social media accounts: LinkedIn ➤ https://linkedin.com/school/universita-bocconi/ Facebook ➤ https://facebook.com/unibocconi Twitter ➤ https://twitter.com/Unibocconi Instagram ➤ https://instagram.com/unibocconi/ #Bocconi #BocconiUniversity #UniBocconi |
| Category | Education |
| Tags | Empowering | Shareholders | unibocconi | Bocconi University | Educational | language:eng | Milano | Milan | USA | Board Of Directors | Marco Ventoruzzo | reforms | directors | fiduciaries | boards of directors | plurality voting | broker dealers | proxy |
