What’s the Definition of Insanity, Again?
As I read the Wall Street Journal’s account of Wells Fargo’s annual meeting earlier this week, this bit caught my eye.
[A] shareholder proposal for an independent chairman at Wells Fargo received 17% of votes in favor, according to estimates from the bank. That is among the lowest percentage in recent years, and the 11th year in a row such a proposal has failed. [Emph. added.]
I have a question. What exactly is the point of wasting a bunch of time and effort putting forth these sorts of initiatives? A few thoughts: first, there is no evidence I know of that suggests that splitting the CEO’s role from the chairman’s improves either governance or corporate performance. Many (probably most) of the best-run, best-performing companies combine the two jobs. Second, 17% is not very high percentage of the vote; Wells Fargo shareholders seem to have made their mind up on this particular matter. Third, you’d think that after losing for eleven years in a row on the issue, the people who put forth crazy proposals like this would have gotten the message.
But they haven’t. The reason why, I suspect, is because they don’t care so much about good governance or enhanced shareholder returns as they do about rather signaling their own virtue.
Why, there’s a whole industry on Wall Street devoted to just that. Unfortunately, the whole business is a useless scam. Requiring repeated votes on issues like separating the CEOs job from the chairman’s becomes, at some point a waste of time. Eventually, their advocates ought to decide to move on.
What do you think? Let me know!
2 Responses to “What’s the Definition of Insanity, Again?”
You are right on with your thoughts on Wells Fargo and others who actually consistently increase shareholder value. However, when you look someone like Comerica you find a completely different story and result; terrible performance over the last ten years with Chair/CEO/President combo. Maybe if the board/shareholders had split these positions some productive insight/leadership might have produced acceptable results.
Juggernaut has made a good point. I feel there are wasted issues to vote on with some corporations, but it does seem that the inefficient ones do not give its shareholders the ability to change or propose change for the better.
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