I would argue that employees have a larger stake than contractors and vendors. They would also want to do the right thing by the company. The whole idea is to broaden the idea of governance to more stakeholders than just the owners. It would certainly give guys like Carl Icahn pause. On the other hand, perhaps sometimes what he does needs to be done, and this would make it harder. That's why the employees should only have a partial say, but enough of one so that they are a legitimate threat if an activist investor can't muster very much support on the board.
Employees have no reason to do the right thing by the company - the best thing an employee can do for himself is get paid all the money. It's hard to see why their stake is higher than a vendor. In both cases, they have rendered a service in return for money and have no further stake in the company.
Overall, employee involvement in decisionmaking creates significant principal/agent problems. Consider this article, which suggests many employees care so little about shareholder value that they will sacrifice the latter for petty revenge against third parties (their boss): http://www.nytimes.com/2015/06/21/opinion/sunday/is-your-bos...
You're right about the vendor thing. I have a hunch that changing a job under duress is more stressful than finding a new customer (vendor), and thus employees would be somewhat more inclined to have long term stability, but I certainly can't prove it and I'm not entirely convinced of it.
As to the idea that employees will sacrifice shareholder value (of which they have, roughly, zero) in order to feel better about working (revenge feels good, after all), perhaps that is not unexpected. In my scenario, the employees would have another outlet: they could make it clear to the board that they won't tolerate toxic managers. As things stand, a smart board (I would argue) understands this today, but things get awfully muddy in the real world.
What the proposal does is broaden the conversation from just considering shareholders to another group of stakeholders.
