Prof. Bebchuk sets forth a few practical suggestions for legal reform that could help the cause. Full paper available here)
The business rountable, on the other hand, would paint shareholders as "third party outsiders" who have no business influencing corporate decision-making. This is no surprise, of course. And there are various and sundry "theories" of corporate governance and economics justifying this position. E.g., investors "contract" away their rights to influence because it's more efficient to have a board of directors run the show. Yes, yes, I know, this is about as realistic as the "social contract" theory espoused by Rousseau et al. You ever sign a social contract with Uncle Sam???
While observing all the briefing submitted in the case challenging Rule 14a-11, one wonders how the plaintiffs' bar would label workers. Third party outsiders? But they are no more "outsider" than are shareholders. Unlike many investors, they have a very vivid interest in the long-term success of the company. So, shouldn't they have a say as to what their company does, too? How it spends its campaign contributions?
Yet, it would be reasonable to suspect that investors will be jealous of any piece of the corporate coffer going to worker-specific interests. Their business is -- no matter how passionate their PR campaign -- to make money for their beneficiaries. Unless and until unions can get their acts together and make their pension funds pay attention to something else other than independent directors and "say on pay," at least. (recognizing, of course, that state law authorities would scream bloody murder at such antics -- but that's an essay for another day).*
Under the favorite-son nexus of contracts theory, workers can have just as much a right to corporate governance as do shareholders -- it all depends upon the contracts they negotiate. See also, e.g., Stout & Blair's team theory; workers as "residual" claimants in the success of the firm, etc. And, given their unequal bargaining power, perhaps the state can step in, as it does with our collective bargaining laws, to give unions more influence in corporate decision-making, and thus corporate political speech. Perhaps some day we can see a Rule 14a-8 for other stakeholders. Or even a 14a-11.
So, any argument presented by investors that they can have a say to corporate free speech, while the workers can't, necessarily involves a moral judgment about who's more important when it comes to steering the corporate bastion.
Awk-ward.
Well, whatever. Push comes to shove, American industry may just stop incorporating, and rid itself of the whole mess.
*updated - Feb. 1. Nevermind - Race to the Bottom already did.
More to the point, shareholders wanting to communicate with other owners to make the case for a change in the board need access to information on board behavior. On this score, Section 220 and the credible basis standard has been used to deny shareholders access to such basic information as the reasons for arguably excessive compensation (see Seinfeld) or the board's refusal to accept letters of resignation of directors who did not receive the requisite support under a majority vote provision (see Axcelis). The courts in Delaware have long used excessive procedural thresholds to deny shareholders basic information that any owner of a business would want to have. See Disloyalty Without Limits: Independent' Directors and the Elimination of the Duty of Loyalty.
