When people talk seriously about “corporate governance” it takes a great deal of effort for me to conceal my smirk – 15 years of watching American executives laugh at the whole jerkoff exercise will do that to you. I’m completely cynical and I think governance only becomes a meaningful issue when it’s too late and a stock has crashed or an activist has gotten involved.
I liked Matt Levine’s take a lot:
Shareholder democracy is for the most part a very training-wheels sort of democracy. If you don’t like the directors of your company, you can vote against them, but you can’t vote for anyone else: if you want to nominate someone new, you generally have to run an expensive and time-consuming proxy contest, which for the most part is only a good idea if you’re somebody who’s in the business of running proxy contests. Absent that, voting against a director has the effect more of a tantrum than of an actual vote, since the general rule is that the candidate who gets the most votes wins, and if there’s only one candidate and there’s one vote for him and one hundred million against, he wins.
That about captures it. Which is why I instruct my clients to throw those ballot things in the trash rather than expending any time on them.
You know who else thinks governance is adorable and hilarious? Aubrey McLendon at Chesapeake ($CHK), that’s who.