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Reflections on 2011

December 26, 2011 in General

The United States Proxy Exchange (USPX) is a experiment premised on the notion that a grass roots movement—by individual shareowners, for individual shareowners and funded entirely by dues of individual shaeowners—can improve corporate governance and address financial abuse. It is too early to say for sure, but based on what we achieved in 2011, the experiment appears to be working. Accomplishments included:

  • We developed simple say-on-pay voting guidelines to help shaeowners make sense of executive compensation and cast productive say-on-pay votes.
  • We drafted a model proxy access proposal that shareowners have been submitting to corporations for shareowner votes in 2012.
  • We kept a focus on the threat of virtual-only shareowner meetings, attracting media attention, including a recent Wall Street Journal article.

All the while, our members expanded their own personal efforts: attending annual meetings, submitting shareowner proposals, blogging and otherwise advocating for shareowner rights. These individual efforts, more than any other, are the measure of our success. In 2011, supporting them was a primary focus.

In June, we held a meeting of long-time supporters, who made a commitment to decentralizing our movement. The idea was that, no matter how capable our leadership may be, we can accomplish more by providing members the tools to self-organize around issues. Central to this strategy was our new social-networking website, which went live in November. Already, five members are actively blogging on the site, with social networking tools promoting their posts and ensuring a ready audience.

Our membership continues to grow. More importantly, the sophistication and commitment of our members is exemplary. With the social networking tools of the new website at members’ disposal, we are poised to make a difference.

Still, we face enormous challenges. Wall Street and corporate interests have seemilgly limitless funds to spend on lawyers, lobbyists and other enablers. They set the agenda and we respond to it. All three branches of our government—legislative, executive and judicial—are largely beholden to them. Most shares in this country—and the voting rights that go with them—are held by institutional investors, the majority of whom are profoundly conflicted.

With executive compensation at astronomical levels, those institutional shareowners approved compensation packages at 98% of corporations in 2011 say-on-pay votes.[1] Prospects for proxy access appear similarly dismal for 2012. The 2010 Supreme Court decision in Citizens United v FEC ensures that the upcoming presidential and congressional elections will be awash in corporate spending.

The 2011 Occupy Wall Street movement has fizzled for now, but it has lessons. For a time, their message that the system is broken resonated with Americans. They allowed themselves to be painted as “left wing” (mostly, they were) and failed to articulate an agenda. Certainly, one can take decentralization too far. Occupiers were disturbingly unsophisticated, earnestly debating meaningless proposals to abolish corporate personhood or restore the gold standard.

The USPX—small, sophisticated, adamently non-partisan, and with a clear agenda—can succeed in ways Occupy Wall Street could not. We plan for the long term and understand that education is a precursor to reform. Shoulder-to-shoulder, we face an uncertain future. We don’t promise success. We do promise a good fight.

Footnotes    (↵ returns to text)
  1. James Barrall and Alice Chung, Say on Pay and Related Advisory Vote Proposals, Latham Watkins, September 12, 2011

Occupy Wall Street: Lessons From Women’s Suffrage

October 5, 2011 in General

We can learn from the Women's Suffrage Movement.

Finally, it is happening! Waves of people are hitting the streets. They are camping out at the bastions of casino capitalism. They are organizing, demanding change. It started in New York, with Occupy Wall Street and is now spreading to cities across America.

We at the United States Proxy Exchange (USPX) have long advocated that a mass movement such as this was possible, and we have worked hard to prepare for it. Now it is happening, and we are thrilled. But there is much hard work ahead, not to mention uncertainty. Let me lay out for you what is ahead, and how the USPX will be involved.

First of all, movements like this don’t succeed quickly. They take years, often decades to achieve results. The Arab Spring may be the model for Occupy’s street demonstrations, but it cannot be the model for what comes next. Toppling dictators is like amputating limbs. When the time comes, you can do it quickly. Reengineering a financial system is like fighting cancer. If you are too aggressive, you can kill the patient. It takes time, and in a democracy like America, it takes a lot of time.

A better model for today’s demonstrations is the Women’s Suffrage Movement launched at Seneca Falls in 1848. Approximately 300 people gathered for that first meeting. Only one survived seven decades to see the day women would actually vote in national elections.

A couple days ago, Occupy Boston demonstrators promised to regather on Earth Day to replant the grass their encampment has destroyed. Believe me, the only way these demonstrations will finish up by Earth Day—six months from now—is if they fail. If you are taking part in the demonstrations—and I hope you are—think in terms of decades, not months.

Another lesson from Seneca Falls is the transformation that occurs when a movement defines itself. The purpose of the 1848 meeting was to present for debate and a vote a Declaration of Sentiments and an accompanying list of resolutions. The most controversial resolution was the one that women have the right to vote. Lucretia Mott argued against it. Frederick Douglass spoke for it. The resolution passed. But in the days following the meeting, a number of participants asked if they could scratch their names from the list of signatories. They were too embarrassed by the controversy the meeting had caused.

The Declaration of Sentiments and resolutions passed at the Seneca Falls meeting defined the Women’s Suffrage Movement. Other than a meandering list of grievances against corporations, Occupy has produced nothing similar−no principles, resolutions, goals or demands. You can understand the hesitancy. When they do that, it will define the movement. Like signatories scratching out their names, some people will look at those principles or demands and say “this isn’t for me.”

No movement can claim to represent 99% of the population for long. This isn’t bad. It is part of the growth trajectory of any successful movement.

With Occupy approaching a crossroads, which route will the movement take? I see four possibilities:

  1. Hesitancy and internal divisions might prevail. The movement fails to endorse clear principles and looses momentum.
  2. Or Occupy might embrace a broad liberal agenda, positioning itself as a sort of Democrats’ answer to the Tea Party.
  3. Another alternative would be that Occupy sticks to its initial financial/economic agenda but embraces the notion that capitalism is the problem. The movement would then turn towards socialism.
  4. Finally, the movement might stick to its initial financial/economic agenda but accept that the problem is broken capitalism and not capitalism itself. They would then advocate for fundamental repairs to American capitalism.

Given our commitment to capitalism, and the fact that we are non-partisan, the USPX cannot endorse the Occupy demonstrations unless and until they take the last of the above four courses.

But that need not sideline us. Engagement is not endorsement. We need to be engaged. Yesterday, I formed a members group on the USPX website to discuss how we should be engaged. That discussion is in its early stages, so I encourage members to join this group and share your thoughts. Early discussions have identified two ways we should be engaged:

  1. If things take a negative turn with Occupy, there are going to be disaffected supporters who believe in our “repair capitalism” agenda. We need to reach out to those people—at least let them know we exist.
  2. More importantly, we need to work to ensure Occupy doesn’t take a negative turn. These demonstrations could represent an historic turning point for our country. We cannot sit idly by and see the opportunity squandered or take a turn that harms our country. We have a voice and compelling ideas about how America’s broken capitalism can be fixed. The Occupy Movement needs us. We must speak out.