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100 Million Reasons Why We Need Governance Changes Now: Join USA

The number of people who own stock in this country, through individual accounts, mutual funds and others, is higher than it ever has been, an estimated 100 million people.

So it logically follows that what is good for stockholders is good for at least a third of the nation, which is a huge constituency. But it is more - when people buy stock, it benefits companies that sell the stock, which helps them create jobs and drive more commerce in goods and services.

Stronger companies in turn generate more tax revenue for government services from which we all benefit, including the military, schools, roads, healthcare, etc. In short, strong companies benefit the nation.

It is therefore in our collective self-interest that we promote strong and well-managed companies.

The problem we face today, however, is that too many of our companies are clearly mismanaged by entrenched and self-serving boards and managers. And there are many laws that have allowed these directors to perpetuate this tyranny, often against the wishes of shareholders, the owners of companies.

The most obvious recent result of this is the wholesale meltdown in the financial sector, a result of executives' lemming-like drive into risky and little understood investments like mortgage-backed securities, many of which blew up, causing a global stock and credit market meltdown.

Now we all are paying the price with the multiple failures of long-established Wall Street firms. Tens of thousands of people lost jobs and life savings, the government has been forced to borrow and pay out hundreds of billions of dollars and commercial banking services have ground to a halt in many cases. The entire economy is suffering from the acts of a very few.

This colossal meltdown is a travesty of mismanagement and greed. We could be paying the price for years to come. And to add insult to injury, while billions of dollars were lost and thousands have lost jobs to recover nothing, the top managements have mostly gotten off scot-free, just like the owner of the Titanic. We as an economic nation will get through this, eventually. But our job is to learn from this experience. The question is, how can we make our companies better managed to prevent future systemic meltdowns?


United Shareholders of America, an advocacy initiative I am spearheading, believes the solution is simple: we need to change laws so that it is easier for shareholders to organize and remove errant and entrenched managements and boards. It was, after all, the managements that got us into this mess overseen by boards that apparently did little.

Unfortunately, there are many state and federal laws that impede stockholders from having greater power over managements. We intend to work to change many of them and propose new rules that are more shareholder-friendly. But it is only when great numbers of people get behind such a move will it happen. Here are a few for starters:

1. The "poison pill." This device, which is permitted in many states, allows a company to issue a plethora of new stock when a potentially hostile investor acquires a large stake, such as 15 percent. The provision has the effect of blocking any offer for a company, no matter how beneficial it may be for shareholders. According to the Corporate Library, nearly one-third of U.S. public companies have a poison pill in place, but others can simply institute them if they face a threat.

2. The staggered, or "classified" board. This device, also permitted in many states, allows a company to hold elections for only a minority of board members each year, effectively blocking stockholders from removing an entire board and instituting change.

3. "Advance notice" provisions. These corporate bylaws allow companies to demand an array of often arbitrary and irrelevant data from any investor wishing to propose a resolution for vote at a company’s annual meeting, including board candidates or resolutions on director pay, etc. These demands can be significant hurdles for any shareholder wishing to propose resolutions and often are simply pretexts for company to deny a vote on a proposal.

4. The "right of domicile" provision. We are proposing a new rule that would allow a majority of shareholders to have the ability to approve moving a company’s legal domicile to another jurisdiction, such as a different state. In many states, it is the sole right of management to determine where a company is incorporated, meaning they often domicile in management-friendly jurisdictions.

5. Division of CEO and chairman role. The CEO is the chief manager of a company, while the chairman is the main representative of stockholders. Unfortunately on many boards, this role is occupied by the same person, which often poses a conflict of interest.

6. Supermajority vote provisions for major transactions. These rules generally require that well over a majority of shareholders must approve major transactions like mergers or charter amendments, which is often an onerous impediment to change. A simple majority is sufficient for all such changes.

Altering these and other laws would be a huge step in giving shareholders more power to influence their companies. And most importantly, it will make "do nothing" boards more accountable in the companies they oversee.

Too many board members believe their main responsibility is to take the corporate jet to the Super Bowl or the World Series and soak up lavish pay and perks. This is wasteful and irresponsible and contributed to the economic crisis we face today.

Many studies over the years have found a direct correlation to good governance rules and corporate success. And over the coming months, I will be working tirelessly to change and improve corporate governance laws in this country.

But it is only when great numbers of people rise up to demand these changes can we be effective. That is why I am asking that thousands of people join this cause. You have nothing to lose and everything to gain.

Sign up for United Shareholders of America on my blog, The Icahn Report.


Can non-US citizens join? I am a Swede,living in Sweden, with American stocks in my own portfolio.

Appreciate your efforts and the blog.

Keep up your good spirit!


I concur with Mr. Icahn's call for better governance. In conjunction with the changes he advocates, why not stipulate stiffer personal liability for board members. Taking one or two Lehman directors out and "shooting" them (long jail terms) may go some distance in focusing governance efforts in all public companies.

Good article.

One thing I would like to add is that only with the majority of Americans at work, will our economy take off and thrive.

I personally am sick and tired of hearing how our corporations cannot find jobs, so I have put a challenge on my web site to these same corporations offering to fill ALL of their positions, not just a few.

You can read this challenge by going to and clicking on the link titled "The Challenge"

If you believe as I do that Americans thrive on adversity and that it is the duty of all of us as Americans to help out our fellow Americans, then please help me to spread the word about this challenge so that we can put Americans back to work and see our economy thrive again.



It is very clear that the legal barriers to overthrow entrenched boards and CEO's are insurmountable for the average investor. It seems that making this ability more easily attainable to making proposals for all shareholders to vote might be a hindrance at times for the company. The company would also pay to analyze the proposals and present them to all of the shareholders. If it were as simple as sending a message to the investor relations department, we just might find ourselves voting on nearly every topic relevant to the company. It would seem voting on key issues are necessary, but I feel special interest groups, like, say, environmentalists with an agenda, could push their priorities over on the rest of the company to its detriment. I think a more focused agenda is in order. Specifically, one that allows shareholders to both vote on: 1) Executive Pay and 2) Who is seated on the board nominated by the shareholders, not by the current board. I like the idea of increasing our voice to those in charge of the companies we invest in, but I do not want to see it become a circus for minority interests as is the case with our own government. I follow the blog regularly, and keep up the good work.

Of course all the management entrenchment devices Mr. Icahn mentioned are important. However, we are unlikely to prevent "board capture" until shareowners can get access to the corporate proxy.

Sarbanes-Oxley attempts to deal with the board "problem" by requiring several committees composed of "independent" directors. Yet, studies show no correlation between independent directors and performance. "Independence" does not resolve the problem of board capture. Directors are dependent on management, not shareowners, for rewards and reputations. Dissident slates are far less susceptible to capture, since their allegiances lie with shareowners.

Les Greenberg, of the Committee of Concerned Shareholders, and I petitioned the SEC in the summer of 2002 for equal access to the corporate ballot for shareowner board nominees. More that six years later, the SEC is still bowing to the Business Roundtable, whose members want to retain CEO dominance.

The SEC will probably take up proxy access once again next year, if it isn't addressed by Congress. The Council of Institutional Investors appears to have settled on a needed shareowner threshold of 3% to get on the proxy. This might work at larger companies that are mostly owned by institutional investors. However, many of the worst governed companies have few institutional investors. Therefore, it would be nearly impossible for small retail shareholders to meet proposed 3% thresholds.

Key for any future access proposal are provisions allowing any group of 100 shareowners to put forward nominees, as they can in the UK. Mr. Icahn, will United Shareholders of America carry the water in Washington necessary to get this change?

Additionally, there are two important projects being developed to help shareowners vote by "brand." I'd like to see Icahn announce votes in advance and become a brand on Additionally, I'd like to see his help with where we are attempting to develop a self-regulated proxy exchange that would allow retail shareholders assign proxies to aggregators, such as Icahn, hedge and mutual funds. Will United Shareholders of America consider accepting voting assignments from retail shareowners? I'd love to see the group involved.

Keep up the great work, Carl.

I'm on board with this agenda 100 percent.

I've been sending out invitations to my entire circle of business contacts to join USA.

You're absolutely right. If we can organize America's 100 million shareholders, we can move this agenda forward and everyone from shareholders to employees to customers to executives with real talent will benefit.

Only managements than have proven they can not perform will take the hit and they should be stepping aside anyway... as in lead, follow or get out of the way.

We have competition at the hourly worker and middle management levels. We should have a free market for corporate control and competition at the C level as well.

What you are trying to do is about as patriotic as one could be. Corporations run the United States and have far more influence than the elected officials since they feed at the hands of the lobbyists. Corporations do not need to be reelected every four years. They just grease whoever is in power. The current corporate structure is truly "taxation without representation." As a stockholder I get no voice in how my country is run. If GE, for example, (in which I have lost a pile of money) wants to pay a lobbyist I get no choice in the matter. I pay the lobbyist as an owner and the government does something I may not approve of, or any stockholder, for that matter. If GE decides to pay its ex CEO an outrageous sum and provide a corporate jet I get no say even though history has proven the strategy used by Welch was short term.....that fee for the jet is taxation without representation.

Corporations should return to their original purpose which was to provide some element of public benefit in return for the substantial state benefits they receive.

Keep up the good work.

Dear Carl Icahn,

Behind the idea of the United Shareholders of America there may be a solid business model that fills a void in the web-based networking marketplace.

Right now small, individual shareholders lack a vehicle which would allow them to participate in corporate decisions on a large scale, in unison. There is no website or portal where individual shareholders can congregate and vote on a meaningful scale that would have the potential to shift the outcomes of corporate decisions.

Online social networking is clearly the new unifier of people. Websites like facebook, linkedin, and MySpace are the most discernable examples. As we shift towards "cloud computing" - which indicates a reduction in capital expenditure and an increase in software as a service - the web is redefining itself as a utility, not unlike electricity or water.

Such a website or portal would provide a service to a worldwide community of shareholders. It would encourage value investment and active shareholding. It would be an ambitious undertaking - the litigation needed to create such a portal would be staggering, and there are a multitude of other obstacles. However, it just may be that a need for such a service does exist.

I am definitely delighted to see the discussion turn toward the recognition of the individual investors in this country and the appropriate representation of such. It is time to stop the declaration of war (Americans vs. Americans) on good hardworking people investing their savings, only to lose it all due to bad management, greed, manipulation, bankruptcy exit plans, lack of transparency and the good ole buddy system.

I just hope the plan is genuinely interested in the fair representation of very seldom considered individual investors who are trying to invest in the American dream, only to awake to a nightmare of modern day Robber Barons. Being informed only thru late news reports that their life savings have been dissolved and only a select few are protected thru elite board member voting practices.

Mr. Icahn, I am delighted to see a man of your caliber take the bull by the horns and educate common people/Americans and promote fair representation. You are definitely a person in a position to lead by example for others to follow, your actions will stand as the ultimate example for others to mentor themselves after young and old for years to come. I am profoundly on board and look forward to more adult learning experiences.

Americans Unite...Declare the TRUCE!

Unfortunately it does not matter how many laws are on the books if they are not enforced. For instance, Sarbanes & Oxley Act supposedly allows employees to go to higher management in the company or to the government with reporting issues without retribution or losing their jobs. I know first hand this is not true.
Had this law actually been enforced everything that has occurred could have been minimized. In small towns attorneys are too close to businesses and their integrity is compromised. Hell, "Integrity" is pretty much non existent in today's businesses. Until people realize there are real consequences for insider trading, attorneys selling out clients, etc., you can have as many laws as you want and they will continue to be ignored.

God Help Us All!!!!!!!!!!!!!


It is so refreshing to find that there is an organization of investors/shareholders/concerned citizens that share my outrage at the lack of good corporate governance on Wall Street. Inept, incompetent, and unaccountable management, supported by rubber-stamping boards that never take the time to "look below the surface", has become a disease of epidemic proportion throughout corporate America. I have found that the problem is further exacerbated by so-called "wall street analysts" who have become little more than uninformed cheerleaders for the companies that they "cover".

The result is a systemic lack of accountability throughout the food chain, making investing in stocks more akin to a "pull of the slot handle" than to a prudent, rational process. Left to it's own devices, the system will only get worse unless shareholders can begin to reintroduce accountability throughout the system.

Kudos to you for your efforts. We're behind you all the way.

In the early days of the 19th century, the renowned French political philosopher Alexis de Tocqueville visited America, and made many observations. One of his observations was that “the surface of American society is covered with a layer of democratic paint, but from time to time one can see the old aristocratic color breaking through.” This quote is from the book that Tocqueville wrote about his travels and observations in America in the 1830s, but it seems to ring true still to this day, almost 180 years later. In this day and age, we have candidates both hopeful and incumbent that are clamoring for the end of cash advances, claiming they are a detriment to the people. Some have gone as far as to propose outlawing the industry outright, such as Ted Strickland, governor of Ohio. His new laws, if it passes, will all but ban the industry outright and put upwards of 6,000 people on the unemployment line. To make it worse, both Presidential candidates both voted to pass a law that banned the lending of cash advances to military personnel. Obama has pledged even further intrusion into the industry, by pledging to support measures that would make normal business operation impossible for short-term lenders. Aristocracy is a political system in which a ruling class makes decisions on behalf of the rest of the population. Let’s hope that they don’t get to make all of our decisions for us when it comes to our financial options.
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Why create legal provisions for anything that is sometimes bad for a company? If it is bad for the company in many instances, why not let management and shareholders discover the consequences? Isn't it possible that your provisions will stop a lot of good things from happening too? Let's become smarter investors, and smarter businessmen, not greater advocates for laws. Legal provisions only encourage us to rely on law rather than individual wisdom. Let people get smarter--not more dependent, Mr. Icahn!

The solution must encompass legislation to require shareowner votes on executive compensation matters and MOREOVER, also require fiduciaries (read mutual funds) to report it's votes on all governance issues, including compensation.

To get this done, team up with the American Association of Investors. Together, this might produce the scale and leverage needed.

Your heroic efforts to reform the corrupt relationships between corporate boards, CEO's, lobbyists, lawmakers and corporate licensing authorities deserves the support of all investors and those who manage large amounts of the "average" investor's life savings. When you read about the excessive and senseless pay packages and golden parachutes for the privileged few, it makes you sick. When the typical rank and file worker is laid off due to the reckless application of corporate capital "his" golden parachute is the courtesy of a "Friday" dismissal so that he can enjoy his weekend - ha! He is also immediately handed a venemous health insurance snake known as a "COBRA". Under the surface, the seemingly acquiescent retail investor is frustrated and angered by the transformation of the stock market into a massive Las Vegas style casino. If we can get streaming stock quotes over the internet, why are we stuck with the anachronistic mine field known as the quarterly report? Something tells me that if we had a lot more transparency and executive pay packages were a metric that could be easily accessed and compared with other companies we would have a more stable market that would inspire more confidence in even the most pedestrian of investors.

Lynn Tilton (CEO of Patriarch Partners) was on CNBC Squawk Box on Friday…relevant insights to this discussion…Fixing the Financial Crisis: The truth of the situation can be ignored no longer (http://

This is the same woman who predicted the financial crisis on Bloomberg TV back in 2006 (http:// so perhaps she’s worth listening to now. She proposes direct lending to businesses through a new “Provisional Federal Bank (http://”…Liquidity must be made available not solely to big banks where Treasury-injected capital has been amassed to fill the cavity left by gambling losses, but rather expressly to deserving American companies and their people who will reignite our sputtering economy. A provisional Federal Bank must be initiated to foster enterprise and to provide job opportunities for every American.”

I have personally confronted all the absurdities that Mr. Icahn is organizing against in corporate Board Rooms. I sold my company to a public company and watched as it was being destroyed by bad management. I was nominated to the board by a stockholder, and having conducted a campaign to get elected (a near impossibility), the final insult was that a stockholder had to be present at the Annual Stockholder's Meeting to vote for me. But they could mail in their vote for the Board's picks. I lost my bid to be on the Board. That company failed within 2 years.

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Only with numbers can we create change in Washington. Remember shareholders vote.

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