Watch out, corporate America. Lawmakers have proposed a shareholder bill of rights that at least one observer says could have a bigger effect on business than Sarbanes-Oxley did.
My question is, "What kind of impact?" But I'm getting ahead of myself.
BusinessWeek's Jena McGregor reported last week that Sens. Charles Schumer (D-N.Y.) and Maria Cantwell (D-Wash.) have proposed legislation that John S. Wood, vice-chairman of executive search firm Heidrick & Struggles, says could have "a bigger impact on the business world than Sarbanes-Oxley" has. In part, that impact would come from the fact that it would allow shareholders to suggest board members via companies' proxy statements. But according to the news release posted on Schumer's Web site, the Shareholders' Bill of Rights also gives investors an advisory vote on executive compensation and requires the CEO and chairman roles to be split, among other things.
Investor advocacy groups are all for the changes, of course, but management-types are balking. In fact, the news release indicates that the legislation was introduced at this time as a means of giving "the force of law" to a proposed SEC rule that would allow shareholders with at least a 1 percent stake in a public company to nominate directors. The legislation will "eliminate any debate" regarding the agency's authority to make such a change, and as such, should also head off lawsuits that the business community has reportedly threatened.
Now back to my question: What kind of impact? It's too early to know all of the implications, but from what little we know so far, I would gather that though it may substantially change how companies are run at a high level, it won't be quite the headache for IT departments that Sarbanes-Oxley turned out to be. That said, will its overall impact on the business world be good or bad? That depends on which side you ask.