Empowering Shareholders in Directors' Elections: A Revolution in the Making

45 Pages Posted: 24 Feb 2010 Last revised: 12 Apr 2010

See all articles by Marco Ventoruzzo

Marco Ventoruzzo

Bocconi University - Department of Law

Date Written: February 24, 2010

Abstract

In the last few years, also in the light of the financial crisis in which the world has plummeted, the concern for self-referential and unaccountable boards has gained momentum and prompted several important reforms aimed at enhancing shareholders’ democracy. The reforms recently implemented or currently under consideration both at the state and federal levels, focusing on proxy access, might however prove to be too timid to exorcise this specter. This Article discusses the limits of the latest legislative and regulatory initiatives and advances a new, bold if not heterodox, proposal to empower shareholders and better align the composition of the board to the interests of all the owners of the corporation. The core of the proposal is a proportional voting system called "list voting." Building also on a brief comparative analysis, the Article advocates that "list voting" is superior to the traditional U.S. "cumulative voting" both from the point of view of directors, managers and controlling shareholders, and of minority shareholders.

Keywords: Unaccontable Boards, Shareholders’ Democracy, Proxy Access, List Voting, Cumulative Voting

JEL Classification: G38

Suggested Citation

Ventoruzzo, Marco, Empowering Shareholders in Directors' Elections: A Revolution in the Making (February 24, 2010). Penn State Legal Studies Research Paper No. 4-2010, Bocconi Legal Studies Research Paper No. 01-10, ECGI - Law Working Paper No. 147/2010, Available at SSRN: https://ssrn.com/abstract=1558467 or http://dx.doi.org/10.2139/ssrn.1558467

Marco Ventoruzzo (Contact Author)

Bocconi University - Department of Law ( email )

Via Roentgen, 1
Milan, Milan 20136
Italy

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