Tomorrow, the House Financial Services Committee is expected to vote on an amendment proposed by Representative Maxine Waters (D-Calif.) on proxy access. The amendment seeks to clarify that the Securities and Exchange Commission ("SEC") has the legal authority to issue proxy access rules. The Waters Amendment is in reaction to the question first raised by the Chamber last April questioning the authority of the SEC to issue any rules in this area.

The Chamber has sent several letters to members of the House Financial Services Committee outlining our opposition to the Waters Amendment and the adverse impacts this legislation will have on businesses and the American economy. But you don't have to take our word for it. Dr. Laura D'Andrea Tyson, former Chair of the Council of Economic Advisors for President Clinton and a former Dean of the London School of Economics, wrote to the SEC this past summer opposing a federal right to proxy access.

Dr. Tyson's concerns are that federal proxy access rights will undermine the powers of shareholders and thwart majority rule:

"Whether the majority of shareholders wish to establish a stricter or more liberal proxy access rules, they should be free to do so in accordance with their own views of the best interests of the company. It is inconsistent to rely on a majority vote of shareholders to elect directors and yet to countermand that majority vote in establishing the bylaws governing such elections. If shareholders are competent for the former—and I strongly believe they are—they are competent for the latter as well."

Also, Dr. Tyson states that proxy access will promote short-termism and focus a myopic managerial style that will harm companies and shareholders alike:

"I am concerned that the proposed new rules—with their low ownership threshold and short holding period will encourage hedge funds and other short-term speculators to attempt to influence corporate policy in favor of short-term profits rather than long-term shareholder value and the best interests of the company. This is exactly the wrong direction to take corporate policy and is contrary to the state goal of the SEC to encourage Boards to manage for the long-term well being of their companies."

Proponents of proxy access claim that it will empower shareholders and promote long-term performance. It looks like one expert thinks that it will do the exact opposite.