Corporate governance issues seem to be gaining steam -- as well they should. Recent corporate scandals suggest that more powerful governance policies would be a change for the better, and shareholders need to show that they are keeping a close watch on how managements and board members are performing. ExxonMobil (NYSE:XOM) is the latest company in the governance spotlight.
ExxonMobil shareholders shot down a shareholder proposal to separate the roles of chief executive officer and chairman of the board of directors, and install an independent chairman -- a common shareholder proposal. Even though it's not unusual for a single individual to fill both the chairman and CEO roles, from a governance point of view, it's certainly more than a bit questionable for the head of management to also serve as head of the board of directors (who are supposed to advocate shareholders' interests, not management's).
The interesting thing about the story isn't that the proposal existed (or got shot down, a result my Foolish colleague David Lee Smith agrees with). It's that the proposal gained interesting and high-profile allies on this go-round: the Rockefeller family, descended from Standard Oil founder John D. Rockefeller.
Corporate governance issues are certainly on a roll lately. Although Whole Foods Market (NASDAQ:WFMI) shareholders have never approved a resolution to separate the chairman and CEO roles there, the organic grocer has adopted majority voting, which is accepted as more shareholder-friendly than old-school plurality voting, and is a measure many companies are starting to work into their policies.
Even more heartening, some companies are pioneering "say on pay," which gives shareholders a non-binding vote on compensation policies. It wasn't long ago that Blockbuster (NYSE:BBI) joined the ranks of several companies that have embraced "say on pay," and Aflac (NYSE:AFL) recently held its very first "say-on-pay" vote.
Shareholders are indeed owners, and that should mean having a voice and advocating for change as needed. Momentum is building, and hopefully a return to such principles will result in an overall return to common sense and long-term, sustainable values in corporate strategy.
For related Foolishness, see the following articles:
