The Bank Regulation Bill: Will it let unions take over businesses?

It looks like the government theft of GM and Chrysler assets to give to unions was only the start. Now Democrats want to have the SEC determine who will stand for election to the board of directors? Is this serious?

For years, Democratic-backed labor unions have been trying to get behind enemy lines, so to speak, by helping to put more union-friendly representatives on corporate boards as a way to shape policies from the inside.

Now, they’ve got a surprising new weapon to help them in that effort: the Wall Street reform bill.

Buried deep in the Democrats’ Senate bill are two major changes to how board members are elected — both designed to crack open the insular world of corporate boardrooms and make them more responsive to shareholders.

Union officials have long argued that the current system of electing corporate boards is stacked against them — resulting in rubber-stamp elections of corporate-blessed candidates and unaccountable directors. Businesses say unions are trying to run opposition candidates on the company dime and oust incumbents without having to run a challenger.

But when Democrats set out to reform Wall Street, they also included a few provisions that benefit their allies in the labor movement, along with provisions on reining in “too big to fail” banks and exotic investments.

One provision would essentially give the Securities and Exchange Commission the power to force the names of outside nominees onto the corporate ballot. Right now, corporations can print up the ballots — and leave off the other names.

Such a change could give large, long-term investors — such as the pension funds that fund union members’ retirements — a better shot to get elected to the boards.

The other change would require directors running in an uncontested election to win a majority of votes cast. Currently, most directors need to win only a plurality, which has resulted in directors losing the majority vote but still winning the seat.

Labor representatives say the fixes would lead to more-responsive boards and better-run companies and give unions a victory they have pursued for years.

“The current director election process is not working in the interest of shareholders. Over the past 10 years, stock market investors have seen the value of stocks decline,” the AFL-CIO’s Brandon Rees said. “We need to reform how boards are selected and make the process more democratic so long-term investors can have their voices heard rather than just incumbent directors and executives.”

Critics argue the push is little more than a move by Democrats to reward their friends in organized labor. . . .



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