Shareholders generally have no real choice in the election of Directors as they almost always run unopposed. Even if an overwhelming majority of Shareholders oppose a Director, that person will still serve as Director so long as he or she gets one vote. The real election for Directors occurs within the boardroom, with Shareholders relegated to a rubber-stamp process of affirmation.

 

To counter this undemocratic process, HII votes "withhold" or "against" management's self-nominated slate of directors. The exception is when the advisor believes that management has performed exceptionally in terms of financial, environmentally and social criteria. In rare circumstances, HII will vote exclusively for female and/or minority director nominees to emphasize the need for added diversity of the corporation's board of directors.

 

 

Today, accounting firms are large and few in number due to numerous mergers and acquisitions of smaller firms. Many of these firms provide investment banking, expensive consulting and accounting services on top of their auditing duties, which may lead to serious conflicts of interest and financial irregularities. Such concerns were recently addressed by the U.S. Securities and Exchange Commission (SEC).

 

Many large accounting firms also encouraged employee "revolving door" policies, in which senior accountants for corporate clients are hired, providing accounting services to their former employer. By the same token, employees of large accounting firms are hired by corporate clients to provide accounting services within the corporation. This "revolving door" encourages conflicts of interests and an "old boy" network which may result in a violation of fiduciary duty, or other non-professional conduct, and close relationships between employees of accounting firms and employees of their customers because of their relations, may prevent them from being objective, and not truly represent shareholder interests.

 

Because it is hard to determine the extent to which auditing firms are also providing business services, HII generally votes "against" or votes "abstain", to approve annual auditing firms.