Today, Senator Schumer is introducing the "Shareholder Bill of Rights". The title is in quotes for a reason; the Bill should called by its true name—The Haranguing Activists Right to Abuse Shareholders Statute (HARASS).

For the past two centuries Corporate Governance has been regulated by states. This has led to diverse corporate structures that have served the economy well and employed countless numbers of workers. Shareholders provide capital and trust the Board of Directors and management to make the right calls.

Under this system, all of the parties involved must work together to increase the value of the company. If the relationship works well, everyone wins. If not, a shareholder can sell their shares, or under extraordinary circumstances, if allowed by state law, replace management or Board members. The laws vary by state and this has allowed for broad diversity in corporate structures. After all, variety is the spice of life.

The Schumer bill will junk that system which has worked so well; it would mandate:

• Say on Pay votes;
• Shareholder Access to the Proxy;
• Majority Voting for Board members;
• Separate the duties of CEO and Board Chairman; and
• Create separate risk management committees.

Some of these reforms are not controversial and in fact companies have been implementing some of them as they deem appropriate. If that’s the case, what’s wrong with the Schumer bill? Plenty.

The Bill isn’t about establishing better corporate governance, it is about liberalize the rules so that Activist investors can more easily engage in proxy fights and elect their own directors. Activist special interest investors, including some unions, have sought to use the proxy voting system as leverage to advance other agendas. The recent Navigant Consulting study released by the Chamber found no evidence of improvement of stock performance resulting from activist shareholder proposals.

If Directors and management have to spend their time fighting special interest agendas, they can’t manage a company. Sales will be lost, profits disappear and jobs destroyed. One has to wonder about a pension fund that wants to play politics, rather than increase retirement benefits for its members.

The Chamber supports good ideas for governance reform, if those proposals are proven to produce better outcomes for shareholders. We will fight to stop proposals that advance special interest agendas and do nothing to improve effective corporate governance.  Abusing shareholders during the worst economic crisis in 75 years isn’t a path to recovery.

If you think this is bad, let’s check in and see what the SEC does tomorrow.