Frank Aquila and Scott Crofton Co-Author Article on Regulatory Response to the Decoupling of Economic and Voting Interests

February 2012

Mr. Aquila and Mr. Crofton co-authored an article titled, “Decoupling Economic and Voting Rights: Regulators Respond” in the February issue of The Activist Report. In the article, the authors discussed the decoupling issue where stockholders’ voting decisions are not based on economic interests. Mr. Aquila and Mr. Crofton noted that securities regulators and corporate governance authorities have become concerned with the phenomenon of “empty voting,” a phrase coined by two law professors, due to the concern that it causes the “stockholders to vote in a manner that protects the [individual’s] interests rather than in a manner that enhances the value of his or her investment in the corporation.” This would essentially, as the authors also write, “undermine the stock-holder value-maximization theory upon which the stockholder franchise is based.” The SEC is looking to minimize empty voting and improve regulations surrounding the issue by requiring a transparency of economic interests before voting occurs.