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The Motley Fool's Testimony on Corporate Governance and Shareholder Empowerment

Today at 10 a.m., Rep. Paul Kanjorski, D.-Pa., chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government-Sponsored Enterprises, held a hearing on Corporate Governance and Shareholder Empowerment dealing with many of the same issues discussed in our coverage of a proposed Shareholder Bill of Rights. What follows is the official written testimony The Motley Fool submitted to the subcommittee. Post a comment in the comments section below to let us hear your thoughts on this issue.

Testimony From Tom Gardner, CEO of The Motley Fool Holdings, Inc., Before the U.S. House Financial Services Subcommittee on Capital Markets, Insurance, and Government- Sponsored Enterprises, April 21, 2010

Mr. Chairman and members of the Subcommittee, I want to thank you for the opportunity to offer testimony for the public record. 

The Motley Fool has a long history of advocacy on behalf of the 63 million American shareholders of public companies. We are a private corporation based in Alexandria, Va., just across the Potomac River from Washington. But we note that we are not an industry or consumer advocacy group, nor are we a political action committee. In fact, we have engaged in legislative or regulatory debate only under two conditions. The first is when we have been asked to provide our expertise, including our service on the Securities and Exchange Commission's Committee to Improve Financial Regulation, or our testimony on the need for greater transparency in mutual fund fees and on the collapse of Enron.

The second is when we have believed the rights of individual investors are at stake, as we did when we publicly pushed for the passage of Regulation Fair Disclosure in 2000. Arthur Levitt, then the Chairman of the SEC, publicly credited The Motley Fool with helping ensure the passage of Regulation FD, marking one of our company's proudest moments.

The Motley Fool views poor corporate governance -- regardless of its source -- as a drag upon our collective prosperity. There is a natural, inevitable tension between the interests of company managements and their outside shareholders. Our interest lies in promoting regulatory and legal regimes that both allow and incent boards of directors to assure that company managements make decisions that optimize the benefit to their shareholders, the owners of their businesses.

We believe that shareholders will benefit most where there is a healthy balance of power between shareholders and management, overseen by the boards. At present, executives at American public corporations can all too often alter this balance of power to their benefit, and to the detriment of long-term shareholders, through their influence over the constitution of corporate boards of directors. Often, management has virtually no checks on its practical ability to appoint the board which then oversees it, which we believe falls woefully short of the ideals of checks and balances upon which our country was founded, and upon which the corporate entity relies. Aspects of this legislation [H.R. 2861] promise to restore some of that balance.

We'd like to address four prevalent corporate governance practices that we feel have failed to serve the long-term individual investor.

First, too many CEOs nominate directors whom they know will be unconditionally gracious in return for the social and monetary benefits of boardsmanship. Despite the reforms of the Sarbanes-Oxley Act of 2002, the world of corporate boards, quite frankly, remains a clubby alliance of mutual back-scratching and groupthink, rather than serving its intended goal of democratic shareholder representation.

The lack of a mandated majority voting structure in uncontested elections is largely to blame for this. Under so-called plurality systems, uncontested directors can keep their seats so long as they receive one vote.

As of late 2009, a record 93 board members failed to receive 50% of votes cast by shareholders during that fiscal year. Yet even in the face of broad shareholder opposition, not one of those 93 directors tendered his or her resignation. As Notre Dame Law School professor Julian Velasco put it, "Incumbent directors are virtually immune to the effects of a shareholder vote. In most cases, it seems misleading to claim that there is any election or right to vote at all."

And let's not forget that 93 is a very small number. Either shareholders were ecstatic with corporate leadership during the year in which boards' profound abdication of responsibility was so publicly laid bare, or the balance of power is skewed so far in management's favor that shareholders are stymied from electing their own representatives. We think the latter.

This practice of suppressing shareholders' voices must end, which is why The Motley Fool supports requiring that all uncontested directors receive majority votes to retain their board seats. In a corporate governance system riddled with flaws, this, we feel, should be priority number 1.

Second, there's never just one cockroach in the kitchen, and shareholders sometimes attempt to remove multiple board members. Yet roughly half of companies traded on major U.S. stock exchanges have erected another barrier to shareholders' reprieve -- so-called staggered boards.

When staggered boards are in place, a majority of shareholders looking to replace directors must overcome enormous institutional constraints. Removing a set of poorly performing directors may take multiple elections and several years, assuming it can be done at all. In cases of incompetent or corrupt leadership, staggered boards ingrain the status quo.

Some have hailed supposed benefits of the staggered-board system, including its ability to stave off hostile takeovers. Yet if majority votes are required in director elections, as mentioned above, we should question whether the deal is truly hostile. By far the most significant implication of staggered boards is prolonged tenures for directors of whom a majority of shareholders may disapprove. To this point, there are verified economic drawbacks of the staggered-board system. A Harvard University study found that "staggered boards are associated with a lower firm value" that is "economically meaningful."

Third, we applaud the SEC's recent ruling to allow the NYSE to end discretionary broker voting in director elections -- whereby brokers vote the proxies of their clients without written instruction. The practice has led overwhelmingly to brokers rubber-stamping management's recommendations. Because a substantial majority of shares are held by brokers on behalf of their beneficial owners, discretionary voting in many cases renders elections moot. We hope to see such a ban enacted into law in the case of director elections and, as a general principle, on other matters of importance.

Lastly, the issue of proxy access in director nominations must be addressed. When management handpicks board nominees, even through the apparent veil of an "independent" nominating committee, it muddies the intended role of corporate directors. A determined CEO can simply repeatedly renominate the same gracious director. Moreover, as Warren Buffett said at last year's Berkshire Hathaway press conference, a lot of directors love the job for the money and sociability, so they aren't going to do anything that gets them kicked off that board or not invited to another board. The average "independent" Lehman director was paid more than $360,000 in 2007 -- a sum that would ingratiate any director to those with the power to hire and fire. Without the ability to nominate their own candidates to company proxies, shareholders don't have a reasonable alternative to the CEO's personal priorities.

That's why we strongly feel that shareholders must be given a legitimate and practical chance to nominate directors.

While The Motley Fool strongly advocates on behalf of the individual investor, blanket shareholder empowerment per se is not what we're after. As the financial crisis made plain, investors often have a short-term investment horizon that can be just as damaging as an entrenched status quo. We believe that empowering long-term shareholders will lead to healthy business practices that are beneficial to all stakeholders, including employees, customers, and even the wider economy.

Therefore, investors with proven long-term time horizons and much at stake should be given priority in nominating directors. Doing so would address the reasonable concern than increased shareholder participation in corporate affairs could cause greater short-term pressures on management and boards. The proposed two-year minimum share holding period would help to ensure that alternatives to management's candidates are vetted by shareholders with the company's best long-term interest at heart.

In the end, these changes to corporate governance are about fairness and oversight. They're about whether a company's owners should be able to elect their own representatives and, by extension, the managers they are hiring to operate their companies, or whether a few senior executives should have the power to select their own supervisors, their own compensation committees, and their own rules, and run others' companies however they see fit.

I appreciate the opportunity to submit public testimony to the Subcommittee, and would be happy to answer any questions from either the Members or their staff.


Tom Gardner, CEO, The Motley Fool Holdings, Inc.

On behalf of himself and:

William H. Mann, Motley Fool Asset Management, LLC
Ilan Moscovitz, The Motley Fool
Morgan Housel, The Motley Fool
Anand Chokkavelu, The Motley Fool

More on these issues:

Read/Post Comments (51) | Recommend This Article (161)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 21, 2010, at 3:57 PM, TMFRoyal wrote:


  • Report this Comment On April 21, 2010, at 5:07 PM, redpatscelts wrote:

    Amen!! - but, unfortunately, fat chance.

  • Report this Comment On April 21, 2010, at 5:16 PM, TMFLomax wrote:


  • Report this Comment On April 21, 2010, at 5:17 PM, LakeDaisy wrote:

    hmm... Shouldn't this have been titled: The Motley Fool's Testimony on Congress Empowerment, with the words 'people and congress', substituted for 'shareholders and management?'

    Thank you Tom (and others) for writing this.

  • Report this Comment On April 21, 2010, at 5:19 PM, chukarlady wrote:

    Thank you, Tom Gardner! @redpatscelts- if at first you don't succeed, try try again. You can't win if you surrender off the bat because you are cynical.

  • Report this Comment On April 21, 2010, at 5:19 PM, vriguy wrote:

    Thank you for trying.

  • Report this Comment On April 21, 2010, at 5:32 PM, solarfool314 wrote:

    I'm glad someone spoke for the shareholders in a way that represents our interests. Collectively we do own the damn companies after all!

    Thanks very much, Charlie

  • Report this Comment On April 21, 2010, at 5:49 PM, Idahosehead wrote:


  • Report this Comment On April 21, 2010, at 6:12 PM, benthalus wrote:

    Well said.

    @LakeDaisy: I see no reason why corporations shouldn't be modeled after our government. They certainly resemble our representative democracy much more than they do individuals, and perhaps should have similar checks and balances.

  • Report this Comment On April 21, 2010, at 6:16 PM, glboater wrote:

    I have been on both sides of this issue, a senior corporate officer and a investor. I strongly endorse your testimony. Corporate Boards are a club run with the "club" mentality. Even with a strong director or a few strong directors, a savvy CEO with a few "club" members continues to have effective control of the board. Shareholder interests always take a back seat to current corporate interests, including compensation, capital investments, mergers, etc. Most so called corporate governance "reforms" is window dressing at best. Your suggestions have teeth in them, which is why they are so difficult to achieve.

  • Report this Comment On April 21, 2010, at 7:14 PM, sapereaude1 wrote:

    Let's do the same with teachers' unions. Optional life tenure promotes mediocrity or worse.

  • Report this Comment On April 21, 2010, at 7:15 PM, oim12 wrote:

    I totally agree! Now how do we get it done?

  • Report this Comment On April 21, 2010, at 7:31 PM, CMFStan8331 wrote:

    Very well stated. It's an uphill battle because corporate governance is an issue easily obfuscated by those seeking to protect entrenched interests, but at least you're helping bring sunlight to some of the common nefarious practices.

  • Report this Comment On April 21, 2010, at 7:44 PM, meddguy wrote:

    Great job!


  • Report this Comment On April 21, 2010, at 8:39 PM, jc09058 wrote:

    I like this and applaud the effort that was made. Granted, this would be a very long fight to make this happen but it is overdue.

  • Report this Comment On April 21, 2010, at 8:53 PM, TopAustrianFool wrote:

    "allow and incent boards of directors to assure that company managements make decisions that optimize the benefit to their shareholders, the owners of their businesses."

    Yeah... Yeah... The shareholders are too stupid to know when the board is not acting on their best interest. Leave it to the anointed ones, TMF and govt to take care of them.

    It all sounds great... I am glad this will never happen again.

  • Report this Comment On April 21, 2010, at 9:02 PM, Dannysea wrote:

    One of the top articles to come out of MF, including the delivery at fed level.

    And once in place, let the echelon run their own privately/closely-held corporations if they feel inclined. I think of European corporate management and their well-known moderation, whether implied or factual.

    I also enjoy running things my way; but whether I am an empire of one or 10,000, I know that by the end of the day everybody has to eat. Have become complacent to own stocks as I feel vulnerable; all the way from who is given so much power there is corruption, to short term quick fixes that bury values longterm. I have watched investors and corporations go extinct so many times, all for and from too much power given to so few with little to answer for.

    Changes like this and it will bring in so much small-investor money! It would revolutionize investing/savings/longterm growth. I think once the blue collar felt comfortable, lets say in ten years that show a stability, these few would become the norm and gain momentum to become the masses.

  • Report this Comment On April 21, 2010, at 9:12 PM, rbielam1 wrote:

    The two year holding period should be mandatory or else large pension fund managers could buy a lot of shares to elect board members. After the election they then sell the shares and move on to the next shareholder meeting to repeat process

  • Report this Comment On April 21, 2010, at 9:21 PM, justicebdone wrote:

    WOOT!!! Excellent testimony.

    Until we vote out the cockroaches in the federal kitchen though, I would have to say that we have a slim to none chance of any constructive legislation being enacted. :-/

  • Report this Comment On April 21, 2010, at 9:27 PM, TMFTomGardner wrote:

    Dannysea, I have copied and pasted this line of yours for future reference. You will be comforted to know that we run The Motley Fool as you would wish...with many stakeholders with open access to information and the invitation to a healthy debate (just like this open community). I loved this line of yours:

    "I have watched investors and corporations go extinct so many times, all for and from too much power given to so few with little to answer for."

  • Report this Comment On April 21, 2010, at 9:32 PM, bjbutler777 wrote:

    I might suggest as an essential read:

    "13 Bankers" " The Wall Street Takeover and the Next Financial Meltdown". Simon Johnson, James Kwak.

    Unless some severe downsizing occures, the Anti-Trust laws are enforced, and shareholders have some input, it's not a matter of "if" but that of "when" the next meltdown will come.

    Absent some real change in the way Wall Street does business, any shareholder empowerment will be useless. Too big to fail IS too big to exist.

  • Report this Comment On April 21, 2010, at 9:53 PM, cimarron430 wrote:

    Tom, kudos for two things: making clear and concise suggestions to the subcommittee on corporate governance and for rising to the level of respectability to command such an audience. I only hope they pay attention and that your suggestions come to some legislative fruition.

    On a somewhat minor point, I think it would be wise of you to reflect a bit on the difference between your "feeling" and "thinking - or believing" about something. There are many scholars, including psychologists like me, who think that increased clarity exists when one asks: "is this a feeling, (e.g.,anger, sadness, joy, boredom, etc.), or is this a cognition/thought or belief I am putting forth?

    Feel feelings and have thoughts and write like that as well! Not only is it perceived as clearer and more precise, but it makes one differentiate more clearly what is going on in their head (and heart). In other words, don't write about feelings when they are, in fact, thoughts, opinions, and beliefs.

    Keep up the good work!

  • Report this Comment On April 21, 2010, at 10:35 PM, DBrown7 wrote:

    Excellent Tom! I will be very interested to see what proposed legislation develops from the subcommittee hearings. Please keep us informed.

  • Report this Comment On April 21, 2010, at 10:37 PM, JerryMandering wrote:

    Corporate CEOs/Directors and the U.S. Congress.....don't their ships sail in the same direction?

    Hold yourselves accountable when you own companies with bums for executives.....kinda like what you should do when you hate what you see in Washington.

  • Report this Comment On April 21, 2010, at 10:52 PM, TMFDiogenes wrote:

    bj, Morgan and I (Ilan) second your recommendation of 13 Bankers. Rest assured we read Johnson and Kwak and that there'll be more too big to fail articles coming in the near future. Stay tuned...

  • Report this Comment On April 21, 2010, at 11:16 PM, onst4me wrote:

    Thank you, thank you, thank you! Yesterday I filled out several proxy's and did not understand some proposals very well but voted against a few that "felt wrong." I just read this article (and am grateful yousubmitted testimony to the SEC) and actually now understand WHY I SHOULD have voted against the proposals. Thanks for plain language that makes complex ideas easily understandable. I'm an informed and bemused consumer!

  • Report this Comment On April 22, 2010, at 2:17 AM, snjolly wrote:

    very well stated and great job! pls keep us informed

  • Report this Comment On April 22, 2010, at 3:33 AM, koolkrissy wrote:

    Your presentation is wonderful! You cannot imagine how happy it makes me to see someone with expertise speak the truth so plainly and so eloquently.

    I have known about the incestuous relationship of the CEO's and the Boards of Directors of large Fortune 500 companies since 1986. My husband lost his job because he and his Union (the P-9er's of Austin, Minnesota) tried to bring the truth of what you have stated to the public at the time of the P-9 worker's strike against the Hormel Company. The media would not listen and no one would believe the truth about the CEO and his Board.

    My husband is no longer living, but I applaud you from both of us. These greedy people destroyed the economy of the city of Austin in order to make Richard Knowlton the highest paid executive in Minnesota within 4 years of the strike in Austin. Mr. K retired from Hormel with $1 million a year pension after 30+ yrs of employment. My husband's pension which he never drew a penny of, after 19 years employment, is now drawn by me, his widow. It is $96 a month. That is the way they treat their employees; and they treat their shareholders similarly. In over 20 years of reduced wages ( of more than 50%) to labor employees, the amount paid to stockholders has not changed more than 20 cents per share since 1986.

    Unfortunately, this has been the trend in most large, successful corporations in the country. The company is very, very successful and the profits are up substantially; however, the only one who profits is the greedy CEO and his cohorts on the Board and some of the corporate VP's.

    Greed is contagious! It has spread to the financial CEO's and their top paid executives and board members, too. The results are evident to everyone, but nothing has been done to prosecute these men and women who have shirked their fiduciary responsibilities to their shareholders and their moral responsibilities to their employees to pay them a living wage.

    These CEO's have for years stolen the lion's share of the profits of the companies for which they work. If an employee embezzles the company's funds, they go to jail. In my view, the CEO's are no less guilty. Their assets should be seized and they should go to jail for knowingly putting their companies at risk of financial ruin and for stealing the company's assets by accepting billions of dollars that should have been used to pay their shareholders.

  • Report this Comment On April 22, 2010, at 6:46 AM, TopAustrianFool wrote:

    I don't get it. Isn't board of directors, management and CEO behavior one of the main characteristics that we use in TMF to ID good companies. What are you complaining about? If you don't like the way BoD and CEO scratch their own backs then don't invest in those companies. Why do you need more regulations? All the regulations will provide is new window dressing that will make it hard for investors to ID those behaviors you do not like.

  • Report this Comment On April 22, 2010, at 6:56 AM, theboo1 wrote:

    Tom - Excellent wordsmithing.

  • Report this Comment On April 22, 2010, at 7:01 AM, penchy1 wrote:

    I applaud you Tom. There are so many great replies that it is in true MF fashion a learning experience just reading the posts. I humbly add that as to the CEO's and boards, "A fool despises good counsel, but a wise man takes it to heart."

    -- Confucius

  • Report this Comment On April 22, 2010, at 7:29 AM, TopAustrianFool wrote:

    "At present, executives at American public corporations can all too often alter this balance of power to their benefit, and to the detriment of long-term shareholders, through their influence over the constitution of corporate boards of directors."

    Don't you have absolute power as CEO/Founder of TMF? Is that a detriment to your customers? Why are your customers still subcribe to your newsletters?

    Just because you are a public company doesn't mean that your shareholders do not have the freedom to sell their shares. If they don't like corporate governance they can buy shares in comapnies that have great management.

  • Report this Comment On April 22, 2010, at 7:37 AM, TopAustrianFool wrote:

    "I have watched investors and corporations go extinct so many times, all for and from too much power given to so few with little to answer for."

    Going extinct means they are answering to the Free Market.

  • Report this Comment On April 22, 2010, at 7:55 AM, TopAustrianFool wrote:

    "investors often have a short-term investment horizon that can be just as damaging as an entrenched status quo. "

    So short-term horizon is bad? So should AMZN ignore the iPhone because in the long-term AAPL will come up with some other device, like the iPAD? Short-term needs to be flexible, hand cuffing a company into long-term decision may make it inflexible to respond to short-term changes. There are real consequences to regulations, businesse adjust and in 10 yrs you will be asking for more. It never ends.

  • Report this Comment On April 22, 2010, at 8:58 AM, JeanievonBeanie wrote:

    "TOPSECRETFOOL" stated it-most shareholders are too ignorant to know how to

    whom to

    vote for.

    I feel guilty now, for all the times I should have gotten information to make my vote count, yet didn't have the time or channels to do it.

    Thank you, for speaking up!

  • Report this Comment On April 22, 2010, at 9:34 AM, moblackty wrote:

    GREAT JOB!!!!!!!!!!!!!!!

    In regards to Corp. America experience I would like to add a real experience to this form. I worked for a

    Major Oil Field Service Company that was "taken over" by hostile take over. I had 20 yrs of service, our

    Retirment fund was flush and well managed. With 20 yrs of service I was entitled to 70% of my base pay at 65 years old. After the take over, our retirment fund was stripped and used to pay off the hostile copanys

    debt, all remaining emplayees were give an insurance innuity (s.p.?) for $200/month at age 70. Atotal rip off!! Keep your powder dry and keep up the good work!!!!

  • Report this Comment On April 22, 2010, at 9:39 AM, clawmann wrote:

    Tom Gardner and and all other Fools: I have a favor to ask. I know of a publicly traded company that has not held – in clear violation of Dealware law – an annual shareholders meeting in four years. As indicated in the Motley Fool's testimony, there is currently a bill before the house (HR 2861) (CRS summary at: that attempts to address some of the inequities in the management-shareholder balance of power.

    I am in the process of sending e-mails to certain congressmen asking for HR 2861 (CRS summary at: to be modified to address the issue about the failure of a company to comply with state law requirements regarding shareholder meetings. In particular, I have written, among other things:

    “It would seem to me that HR 2861 could include some additional provision to require that trading in the shares of a publicly traded company will be halted (regardless as to whether the shares are traded on an exchange, the NASDAQ, the OTCBB or the pink sheets – “penny stocks” are notorious for legal compliance issues) at any time during which such company is in violation of the law of its state of incorporation with respect to the holding of shareholders meetings or the election of directors.”

    May I kindly ask all of you who are US citizens to find your congress-person at

    and send them a similar meassge.




  • Report this Comment On April 22, 2010, at 9:44 AM, clawmann wrote:

    Sorry for providing the same link twice in the above.



  • Report this Comment On April 22, 2010, at 12:41 PM, DrRube wrote:


  • Report this Comment On April 22, 2010, at 12:50 PM, eaglett101 wrote:

    I agree with the comments and add my gratitude for your honest evaluation. One thing that I fail to see in any comments is who performs the oversite. In several of the investigations taking place the SEC is mentioned and pointed out that they new what was happening and chose to ignore it for one reason or another. No one seems to be addressing this issue.

  • Report this Comment On April 23, 2010, at 8:35 AM, ewent0 wrote:

    I'm in total agreement with Motley Fool. However, when it comes to management, risk and governance, there's just one little gate to the balance of power between management and shareholders: "at will" companies. Formerly, this applied solely to the idea that management could, for any reason, fire an employee without giving cause. Management contorted "at will" to mean using funds of investors "at will" at their convenience and disposal to take risks with money they are only supposed to "manage". Herein, lies the problem.

    The transition from the moment money is handed over to management and the moment it is to be invested is the "ah hah" moment that risk is incurred.

  • Report this Comment On April 23, 2010, at 12:35 PM, curtn100 wrote:

    Fantastic! I have been writing my congressperson and senators for at least two years about some kind of shareholder reform. I think there should be some kind of mechanism for long-term shareholders to initiate a referendum, informal shareholder poll or some other input regarding executive compensation as an alternative to a shareholder takeover or other drastice measures.

  • Report this Comment On April 23, 2010, at 1:33 PM, romeczek wrote:

    A very thoughtful testimony.

    I find the idea that "investors with proven long-term time horizons and much at stake should be given priority in nominating directors", a very good solution to the problem of short term gains obscuring the future of the company.

    Unfortunately, this was lately a frequent result of the gap between management and ownership.

  • Report this Comment On April 23, 2010, at 4:19 PM, arkayny wrote:

    The board of directors has a fiduciary responsibility to the shareholders of the corporation. They should be held to the same laws and penalties as any in cases of fiduciary negligence.

    The recent problem especially seen in the banks many much of the current culture came from Private Partnerships where the partners (rightly) owned the profits and losses and were compensated accordingly. If they overpaid themselves and the company failed, those debts could be attached to them in their private lives.

    The trouble now is that the executives and directors want to still enjoy those Private Partnership compensations and can leave the liabilities to the company and shareholders.

  • Report this Comment On April 23, 2010, at 8:32 PM, jwaymoo wrote:

    I'll add my thanks for the testimony and agreement with most of the previous comments. In addition, I just finished the new "13 Bankers" book mentioned by bjbutler777 - it is a must read and is easy reading - the authors do an extremely good job of explaining the crisis that we just may have just survived and the need for action to prevent it from happening again.

  • Report this Comment On April 24, 2010, at 6:38 PM, trurl9 wrote:

    Thank you for your testimony, Tom. Whether it will be effective, we all have our opinions, but at least you've highlighted several enduring problems. Good on you and the Motley Fool Continuum.

    As for fumigating cockroaches in the kitchen, I've wondered what's happened to individuals' ethics? Many of us claim to have integrity and honesty, but when we look in the mirror we know we aren't telling ourselves the truth.

    From the economic meltdown everybody points damning fingers at everybody else but the truth is swept under the rug.

    There were people who bought houses they couldn't afford. People decided to get into debt and had already determined to walk away from their obligations when their situations went pear shaped.

    Government de-fanged its ability to protect citizens because it allowed itself to be bought by rich and powerful special interests. When lobbyists write legislation, the fox enjoys guarding the chicken house.

    Corporate executives have practiced deception and fraud to create success for the few while they endanger the many.

    There's plenty of duplicity to go around. If I were truly concerned about poor corporate governance I wouldn't invest my money in a system that is corrupt on so many levels.

    But my greed to earn more that 0% in my savings account compels me to sell my soul to the devil by investing in the "free market". What is free about a market where the rich get richer and the poor get poorer?

    We have to demand responsible behavior from ourselves as well as others or we're hypocrites like those we're disgusted with.

    Live in truth and light,


  • Report this Comment On April 27, 2010, at 3:22 AM, ilovesumm wrote:

    Thank you ,,

    long overdue for truthful and fair play in the market that is supposed to be FREE not controlled.

  • Report this Comment On April 28, 2010, at 12:51 AM, MyDonkey wrote:

    Translating the gist of Tom's letter into plain English, we get something like this...

    "Dear Mr. Chairman:

    Unlike the many millions of Americans who are actually poor, we 63 million American investors have more money than we need to live day-to-day, so we invest our extra cash in shares of public companies, with the aim of letting our money "work for us" (i.e. grow like stink) while we watch TV and eat Cheez Doodles.

    It's a pretty good scheme (we generally start out with thousands of dollars and make thousands more without lifting a finger) but compared to you savvy dudes, we're just a bunch of country bumpkins! And we're not happy about it. In short, we're envious, and we want more.

    We're sick of watching politicians take million-dollar bribes in exchange for deals that generate billion-dollar profits for large corporations. It's just not fair! I mean, we want to be millionaires too! And the millionaires among us want to be multi-millionaires! So, could you please try to spread the wealth a little? Please? Pretty Please?

    Thank you for your time and your money."

  • Report this Comment On April 28, 2010, at 7:21 PM, Clint35 wrote:

    Thank you Tom. You and everyone at TMF are great!

  • Report this Comment On April 29, 2010, at 1:11 PM, mikeinmadrid wrote:

    A couple of points:

    Voting proxies is not the same as voting in a general election. Small shareholders with a few hundred shares effectively have no say and are wasting their time voting.

    The main vote you can make is by NOT buying the stock if you don't like the corporate governance. I recall that David Gardner once posted that he never voted his shares. He considered it a waste of time and detrimental to intelligent investing.

    Corrupt management should be held accountable and be prosecuted under the law, but onerous compliance measures will discriminate against small companies.

  • Report this Comment On June 13, 2010, at 4:48 PM, corpgov wrote:

    Thanks for your testimony. mikeinmadrid is mistaken in believing that voting isn't worth it. With sites like and, researching your vote is easier than ever and should be even more so by next year. Individual shareowners still hold about 30% of the market and much more so in small companies.

    Sure, sell, if the company is hopeless. If a few tweaks will help, be sure to vote.

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