According to The Wall Street Journal , some shareholders dissatisfied that shareholder resolutions are nonbinding, are turning to amending company bylaws to tighten corporate governance. The article mentions that the California Public Employees' Retirement System is proposing bylaw amendments at three companies in 2006 and the American Federation of State, County and Municipal Employees (AFSCME) pension fund is pushing for bylaw changes at four others. So far, U.S. industrial machinery manufacturer United Technologies Corp. has accepted a bylaw change requiring a majority vote for directors. AFSCME director of pension and benefit policy Richard Ferlauto says that the move to bylaw amendments "is really the wave of the future for corporate-governance activists." Out of the eight bylaw amendments that Harvard University law professor Lucian Bebchuk has proposed, three companies - American International Group Inc. (AIG), Bristol-Myers Squibb Co. and Time Warner Inc. - have accepted them. The other five companies oppose his amendments, and face a shareholder vote on them at their upcoming annual meetings. AIG spokesperson Chris Winans says the company accepted a version of Bebchuk's proposal because the change represented "an example of AIG's commitment to good corporate governance." Hurdles exist for shareholders wanting to make changes to company bylaws, including some U.S. state laws that only empower boards to make such changes and the requirement by some companies for a majority shareholder vote to change bylaws.
Thanks to The Wall Street Journal (www.wsj.com)