And a Bit More on Private Ordering and Social Contracts

According to Delaware's amicus brief in Biz Roundtable v. SEC, shareholders always had a right to propose, and submit to a vote, bylaws that afforded themselves proxy access. 

Except no one ever took advantage. 

So pro-market types will immediately conclude, of course, that if shareholder proxy access were efficient and profitable, they would have existed even before Dodd-Frank.  They don't exist, so they're not.  Therefore, the proposed rule 14a-11, mandating proxy access, is not only redundant, but also restricts shareholders' free will. 

Nothing like a 2-second analysis as neat and tidy talking point.  This analysis, of course, sounds a little like:

Well, we don't give women the right to vote, but, if giving women the right to vote were efficient and profitable, we would have.  So giving them the right to vote is inefficient and unprofitable.  And, therefore, forcing us to give women the right to vote is restrictive of freedom. 

The analysis is a bit lazy, yes? But it does fit so nicely with our illusions regarding social contracts.

Then, indubitably, these law-and-economics types will draw a moral conclusion about the inherent badness of shareholder proxy access and the goodness of excluding them from corporate democracy.  Because all that is good is efficient and profitable, and all that is bad is inefficient and unprofitable.

Love me some American economics.   Or certain corporate law professors hailing from UCLA.  I wonder what they say to their mums on Mother's Day: "mom you're so wonderful because you're efficient and profitable."

But we'll put the political economy issue aside for now.

Delaware, of course, wanting to give the illusion that it's be fair, enacted in 2009 Sections 112 and 113 of DGCL, clarifying sharheolders' rights to propose such bylaw amendments if they wanted to.  Nothing like the moral high ground assumed in this sea-level state.  And nothing like Delaware politicians to split the difference between the interests of business conservatives and... corporate directors.

We couldn't expect them, of course, to seriously educate themselves as to why shareholders weren't taking advantage.

Perhaps it's time to switch the debate around and at least be honest about it.  Let's decide first whether shareholder proxy access is a good thing, and then decide how we go about repressing or enabling it. 

But deciding on what's actually good and bad -- well, that's the rub.  That's hard.  And why bother, since no one's getting paid to do it?

This whole thing is intellectually dishonest.  Then again, what can one expect, given what's coming out of Washington Republicans these days.