Do you have AAA insurance? I do, and for the most part I have loved them as an insurer. If you have AAA insurance, and you are in an accident, you will find they are a strong advocate on your behalf. So I was surprised when I read the proxy statement they mailed to me this week.
I am referring to the Northern California, Nevada, and Utah region, which is the area I live, as AAA is not an homogenous national organization. The proxy asked (as they all do) that I allow management to vote on my behalf. Then I read what they were proposing.
The insurance arm of AAA is run by a board referred to as the Insurance Board. The California Insurance Code requires that rules governing selection of that board be determined by the subscribers. So management wants the members of that board to be voted in, by the members of the Insurance Board. How's that for corporate governance in the interests of the stakeholders?
What you would have is a closed loop system, where management determines who management will be. Do you see anything wrong with this picture? Corporate America is filled with corporations whose primary loyalty is to entrenched management at the expense of the shareholders. I liked to think that AAA was better than that, but I guess I need to rethink my position.
So, if you are insured by AAA and the Northern California, Nevada and Utah region, don't sign the proxy. And if you can, go to the meeting (August 7th, 3055 Oak Road, Walnut Creek, CA at 11:00 AM) and vote against it. And raise a little bit of Hell while you're at it.
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