Wayback Machine: December 2007, 2002 & 1997

Time to step into the way back machine to see what we were writing about 5, 10 and 15 years ago.

Five years ago in 2007 major charitable foundations, with the notable exception of the Gates Foundation, are initiating or strengthening efforts to harmonize the social and environmental effect of their endowment investments with their philanthropic goals, according to a report in the LATimes. (Foundations align investments with their charitable goals, 12/29/07)

Nice overview in the January/February 2008 issue of Corporate Board Member, Foundations Join the Ranks of Shareholder Activists. Mentioned are the two foundation members of CII: the Lens Foundation for Corporate Excellence, founded by veteran shareholder activist Robert A. G. Monks specifically to promote corporate responsibility, and the Nathan Cummings Foundation, which is funded from the estate of the founder of the company now known as Sara Lee Corp. and has some $575 million in assets.

A new Fitch Ratings report, Evaluating Corporate Governance, emphasizes the following five overarching categories: Board Effectiveness, Board Independence, Management Compensation, Related Party Transactions, Integrity of Accounting and Audit.

Sixty-one percent of defendants sentenced in the Bush administration’s crackdown on corporate fraud spent no more than two years in jail. In the past five years, 28% of those sentenced got no prison time and 6% received 10 years or more, according to a review of 1,236 white-collar convictions.

Bill Baue’s SEC Sacrifices Shareholder Rights to Achieve Temporary Certainty (SocialFunds.com, 12/11/07) nicely summarizes the SEC’s recent action to withdraw proxy access rights from shareowners, especially with regard to Chairman Cox’s rationale. One revelation for me, in reading Baue’s article, is that in an 11/16/07 letter to the SEC, AFSCME laid out several relevant requirements they have included in their proxy access proposals that could have served as the template for similar disclosure rules by the SEC. AFSCME concludes:

If the Commission believes that neither the requirements of the proxy access proposals nor the language of Rule 14a-8(i)(3) provides sufficient assurance that proxy access would not permit an “end run” around the Commission’s disclosure requirements applicable to contested elections, the Commission could amend the Election Exclusion to allow exclusion of proxy access proposals that do not satisfy those Schedule 14A requirements. Doing so would allay the Commission’s concerns about the adequacy of disclosure in a proxy access regime while preserving shareholders’ rights under state law to alter the procedures by which directors are nominated and elected.

It now appears Cox had everything he needed if his real concern was protecting shareowners from potential conflicts of interest. That leaves his decision even more baffling. J. Robert Brown came up with an explanation that may make sense for those at the SEC who want to keep making the rules as they go along, without public input. “The Commission is using the non-access issue to sneak into Rule 14a-8 language that will make it far more difficult for shareholders to propose other types of changes connected to the election/nomination process, a substantial change in the status quo.”

Ten years ago in 2002 House Financial Services Chairman Oxley and Capital Markets Subcommittee Chairman Richard Baker called on the SEC to require the disclosure of votes cast on behalf of mutual fund shareholders as well as the policies and procedures for proxy voting.

Karma Banque encourages protesters to short offending companies. The six-month old site offers a platform for activists to inform each other and organize boycotts against companies they perceive to be irresponsible. “Karma Banque is at the center of a new movement that combines the civil disobedience of Gandhi with the financial savvy of George Soros to change the economic and political landscape of the world!”

Time Magazine has named whistleblowers Coleen Rowley, Cynthia Cooper, and Sherron Watkins as “Persons of the Year” “for believing – really believing – that the truth is one thing that must not be moved off the books, and for stepping in to make sure that it wasn’t.”

Michael Flaherman, outgoing chair of the CalPERS Investment Committee, will join the New Mountain Capital Group as senior adviser in January.

A new record has been set for the number of comments received for a rulemaking. The old record was 6,000 but, as of 12/9 they had tallied over 10,482 comments on the Mutual Funds Disclosure/Investment Advisors rulemakings.

Les Greenberg, of Concerned Shareholders, and James McRitchie, editor of Corpgov.Net, filed SEC Rulemaking Petition File No. 4-461 on August 1st to allow shareholder proposals to be used to nominate directors who would be truly accountable to the owners of corporations and independent of management. This was followed on September 24 by another SEC petition, File 4-465, by Deborah Pastor, Portfolio Manager, eRaider.com. The eRaider proposal appears a little more vague with regard to the shareholder nominating process but it also seeks to stem broker voting on behalf of clients who do not receive specific voting instructions from beneficial owners. With the announcement by AFSCME on November 26th that they will submit binding bylaws resolutions directly to corporations, the movement is gaining momentum.

Fifteen years ago in 1997 CWA announced that Walt Disney Co agreed to declassify their board. Disney failed in their request for a no-action letter from the SEC. Business Week, recently ranked Disney as the nation’s worst corporate board.

John Gilbert is interviewed. At 83 he’s cut back from 75 meetings every year to “only” about 35 or so. Charles Elson, professor of corporate law at Stetson Law School discusses the Gilbert brothers role in the landmark 1947 case, S.E.C. vs. Transamerica, that helped define shareholder rights.

Women now hold almost 9% of board seats in the Fortune 1000 (up from 6% in 1992 and 7.6% in 1994), according to Directorship.

Directors & Boards editor James Kristie has created the first corporate governance timeline with 100+ entries. Sure to be a useful reference, the timeline starts with Morgan’s appearance at the Pujo hearings of the U.S. Congress in 1912 and ends with this year’s SEC’s announcement of potential significant modifications to its shareholder proposal rules.

Stephen Davis, of Davis Global Advisors, reports that in a 1996 survey of European shareholders “none of the respondents – including those who said they vote up to 100 per cent of their domestic securities – cast ballots for more than 10 per cent of the shares they hold in outside markets.”

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