The news is free; purchases from Amazon through the site helps pay the bills. Search: All Products Books Popular Music Classical Music Video Toys Consumer Electronics Keywords: ABF Europe Valeur Actionnariale to Open In January 1998, ABF launched the first quantitative Pan-European fund driven by shareholder value and corporate governance, the brainchild of International Corporate Governance Network (ICGN) co-founder Andre Baladi. According to Governance (Sept. 2000), ABF will open its doors to new investors in January 2001. Unlike activist funds, which use the rights of shareholders to lobby poorly performing companies to improve performance, ABF relies on investments in firms that have already adopted good corporate governance practices. Governance issues considered in screening investments include: reporting, voting rights, board makeup, strategic focus, remuneration policies, regulatory framework and corporate citizenship. Of course, operating performance, shareholder returns and comparative peer stock valuations are also considered. The fund has beaten the FT Europe Index by about 8%. see ABF Europe Valeur Actionnariale Entrepreneurship Education Pays A recent study by Thomas Phillips, Wendy Guillies, and Diana Hunter reveals that entrepreneurship education program alumni start more new businesses, develop more products, and are more likely to be involved in high technology endeavors than their peers. They also make more money and their firms grow more rapidly, relative to other business school alumni. (see press release) Fund Democracy Former SEC attorney, Mercer Bullard, has begun Fund Democracy to advocate on behalf of shareholders. His, and other organizations, are urging the SEC to require more frequent disclosure of holdings by mutual funds than the current twice a year requirement. Listen to a symposium which Fund Democracy sponsored on October 12th. See also recent Fund Democracy articles. Better to Stay Close to Home Institutional Investors are more likely to understand local companies, according to a survey of 86 U.S. and Canadian fund managers by the Frasier Institute. Companies in Mid-western states away from financial hubs find attracting investment difficult. New York, North Carolina California and Massachusetts had the best policies to foster investment. According to the study, most institutional investors said that lower taxes were the most important government incentive for investment, more important than subsidies. A second major factor was a good regulatory infrastructure. Investor Relations Business (10/23) Stock Options Dilute EPS 6% S&P 500 shareholder earnings-per-share experienced dropped 6% due to dilution, according to a Bear Stearns report sited by Investor Relations Business (10/23), up from 4% in 1998 and 3% in 1997. Investors in the semiconductor industry were hurt the hardest, with a 43% aggregate decline due to stock options. Computer network companies' EPS fell an average of 29%. The author, Pat McConnell reported the reason for the disproportionate use of stock is two-fold: all money is needed for research so stock options have been used to attract qualified individuals; last year's dotcom mania meant that options often became worth for more than had been initially expected. Nitwits in Pinstripes vs Barbarians at the Gate James Shinn, of Princeton University, has an interesting article by that title in the September edition of Corporate Governance International. "Barbarian" investors are using competitive capital markets to tame self-serving blockholders and entrenched managers, "nitwits in pinstripes," as they are called in a German bestseller on corporate control. Shinn rattles off statistics concerning the rapid growth of foreign equity holdings, which in the U.S shot up from $200 billion in 1989 to $2 trillion in 1999. Foreigners now hold 16% of listed equities in Japan (up from 5% 10 years ago), 16% of listed German equities (up from 8% in 10 years) and 20% of Korean equities (up from 3% 10 years ago). According to Shinn's analysis, all three states exhibit characteristics of a "corporatist" bargain between business owners and organized labor which created governance institutions that allow blockholders to expropriate the property of minority shareholders in exchange for providing employment stability. Family blockholders in Germany outnumber bank blockholders by 3:1. In Korea 68% of firms are controlled by a single blockholding family, whereas Japanese firms are largely held by passive institutional investors. A study of economic value added found that EVA returns after the cost of capital were negative 1.8% in Japan between 1989 and 1996. "In effect, Japanese managers have been extracting agency costs from stockholders of roughly three trillion yen (US$30 billion) per year in these 255 firms. In Germany, studied firms returned only a positive 1.4%. While similar data did not exist from Korea, anecdotal examples of sacrificed profits for employment stability are common. He goes on to cite recent examples of reform in each country and then hones in on four causal candidates: Relative prices Lobbying by technical professional communities State-to-state official negotiations Domestic politics Then he systematically examines the evidence from each. For example, with regard to relative price, he looks at the premium or discount assigned by foreign portfolio investors (FPIs) and finds a country-based premium of 20-40% based on, in descending order: compliance with international accounting standards independent, reputable auditors detailed disclosure of financial results performance-based management compensation active market for control, with fair rules for "buyout" of minority investors independent boards of directors He then cites an analysis by Todd Mitton that found evidence of a 12% premium valuation for firms in East Asia that had voluntarily adopted corporate governance measures and he discusses the market for corporate control in each country (more developed in Germany). Similar analysis is provided for each of the other three factors. He concludes that relative prices induced changes in financial disclosures. That gave rise to more sophisticated third-party analysis. Technical professional, particularly accountants, lobbied states to adopt international accounting standards. International financial organizations extracted commitments, especially from Korea, to bring governance institutions more in line with global best practices. When combined with domestic political forces, these reforms undermined the "corporatist coalitions" in each state and led to a "fitful but steady convergence towards the Anglo-American model. "Contrary to the received wisdom whereby private firms adopt best practice where they can and then drag governments after them, formal governance institutions, (such as legally-mandated accounting standards), or insider trading rules, changed faster than informal institutions, (such as the use of outside directors or management incentive compensation.)" He also concludes that Germany and Korea are likely to change faster than Germany because they have blockholders who can profit from conforming with the global standards, whereas Japan does not. Back to the top Internet Activist takes on Luby's Cafeterias Les Greenberg, an arbitrator for the National Association of Securities Dealers, filed documents with the SEC to formalize a proxy fight to get himself and four others elected to Luby's 12-member board in January. A 10/24 Wall Street Journal article, "Online Grousing Over Luby's Escalates to Proxy Solicitation," indicates no previous proxy solicitation organized over the Internet has ever reached the SEC stage before. The dissident slate and supporters met on a Yahoo Internet board and includes two former Luby's vice-presidents, a daughter of one of the companies cofounders and an investment manager. CalPERS to Have Fairer Elections Thanks to the efforts of this editor, California unions, an editorial in the Sacramento Bee, and new members on the board, a committee of the California Public Employees' Retirement System discussed a proposal to make several positive changes to its own election rules. Among the most important reforms: There would be a runoff if no candidate gets a majority. Board members have previously been elected with as little at 6% of the vote because of the large number of candidates. CalPERS staff would be prohibited from using their official position to favor one candidate over another. They were accused of helping an incumbent in a recent election. Candidate statements going to the electorate would expand from 100 to 300 words and would be able to include "scandalous" information, if true. Candidates would be able to address the fact, for example, that a current board member has declared personal bankruptcy twice and that many members of the Legislature have called for his resignation. Election disputes would be decided by arbitrators appointed by the board, instead of CalPERS staff. Protests could be upheld if the election rules have been substantially violated and the outcome would "reasonably likely have been different." Currently, a protester must prove the outcome would have been different...an impossibility in many circumstances, such as in the last contested election where the incumbent was allowed to change his candidate statement to address issues raised by a challenger (the editor of CorpGov.Net). The board is expected to vote on the reforms next month when they meet in Los Angeles. They certainly are more positive than those initially proposed in 1999 which would have prohibited candidates from including any information in their statements about why they are running, where they stand on the issues or what positions the other candidates have taken. An editorial by the Sacramento Bee noted the rules previously approved by the board for public notice "muzzles challengers in ways that risk creation of a permanent board: unaccountable, untouchable and isolated from the people who elect it." See CalPERS looks to change rules for its elections, Sacramento Bee, 10/19 and CalPERS muzzles critics: Ballot rules protect board, keep others in the dark, Sacramento Bee, 5//25/99. Overhang Grows; NYSE Faces Opposition The New York Stock Exchange (NYSE) faces growing opposition for its appeal to the SEC for a 3 year extension on a pilot rule allowing broad based employee stock option plans without a shareholder vote.  Shareholder groups see it as a stalling tactic, especially as stock set aside by companies for future grants grows. A recent report by William M. Mercer, which studied 350 firms, found that medium set-asides have grown from 8% five years ago to 12% today. At technology companies, the average is more than 22%. "Options plans rarely are rejected by shareholders, but the right of shareholders to vote and approve such plans is considered a basic tenet of good corporate governance," according to Peter Clapman of TIAA-CREF. CalPERS to Divest Tobacco Tobacco stocks will be divested by the California Public Employees' Retirement Systems' $177 billion pension fund. The decision was a split one. Members of the Investment Committee (the full board) voted 7 to 5 in favor, with state Controller Kathleen Connell abstaining. see Sacramento Bee, 10/17. Back to the top Lawndale Board Independence Proposal Andrew Shapiro's groundbreaking Board Independence Proposal, as presented recently to the Council of Institutional Investors’ Fall Conference, has been added to the CorpGov.Net Commentary section. Take a look. This is a proposal worth copying again and again at many companies. Key features include: Supermajority independent composition Mandated independent "executive session" Independent Chairman elected by independent directors (note, this secondarily achieves separation of chairman from CEO) 100% independent Nominating Committee Tight definition of independence with exemptions fully disclosed No amendment without majority shareholder vote Best Synopsis to Date on Rise of Fiduciary Capitalism Hawley, James P. and Andrew T. Williams, The Rise of Fiduciary Capitalism: How Institutional Investors Can Make Corporate America More Democratic, University of Pennsylvania Press, 2000. Many have chronicled the shift from owner-founders to managerial capitalism and on to fiduciary capitalism but Hawley and Williams are among the first to spend the majority of a book on the implications of fiduciary capitalism and where this recent development might lead. In 1945 corporate equity was valued at slightly less than $120 billion; more than 90% was owned by individuals and about 4% by institutions. The value of corporate equity has grown enormously to $7.8 trillion in 1998. While the share of individuals has fallen to 44%, the proportion owned by institutions has risen to 48%. State and local pension funds owned about 1% of outstanding corporate equity in 1969; by 1998 they owned more than 10%. Ironically, although the Employment Retirement Income Security Act has been interpreted by the Department of Labor to require proxy voting by ERISA funds on behalf of beneficiaries, the authors point out that the Employment Retirement System Act (FERSA), established for federal employees, provides that voting rights are delegated to the administrator, appointed by the trustees. We don’t trust our federal trustees to vote the shares of what is likely to become the world’s largest institutional investor. Fortunately, other funds, such as the California Public Employees Retirement System (CalPERS), are not under the same restrictions and have become effective owners whose monitoring has added value. Hawley and Williams review the record of corporate governance interventions. A few of their observations are as follows: Board independence does matter for some tasks such as replacing poorly performing CEOs and not overpaying for acquisitions. Visible and aggressive activism results in substantial increases to shareholder wealth but quieter activism doesn’t yield the same results. Binding bylaw amendments are potentially one of the most important new tools for institutional investors. Tying director compensation closely to firm performance may have the unintended consequence of making the board more risk adverse and deferential to the CEO because, unlike the typical diversified shareholder, board members will be subject to the fortunes of one firm. So, where are we headed? Ideas include: Institutions could slim down their portfolios. Holding larger proportions in each firm would encourage further monitoring and a sharing of such responsibilities. Shareholders could encourage corporations to purchase the services of monitoring firms to provide an independent analysis of proxy issues (see the Corporate Monitoring Project). Split chair and CEO positions. Include suppliers, employees and other key stakeholders more directly as shareholder and on boards. Revise SEC rules to loosen barriers to collective action. SEC, banking and state insurance regulators should impose a "statement of obligations" with respect to proxy voting similar to the Department of Labor’s Avon letter and subsequent guidance. Ban broker voting. Non-votes would not be counted. Guarantee full proxy-voting rights to employees in ESOPs by amending ERISA. Hawley and Williams argue that many large funds have become "universal owners," since 1/3 of the assets of the 200 largest defined benefit funds are invested in indexed portfolios. As such, they should not only be concerned with monitoring individual firms but also with portfolio-wide effects. Universal owners will still need to pay attention to the alignment of manager and shareholder incentives but that won’t be enough. For example, the authors argue that universal owners have a responsibility, derived from the duty of care, to oppose policies that create negative externalities, like pollution, and support policies that produce positive externalities, such as corporate education and training programs. In contrast to single firms who may find it advantageous to throw off the costs of pollution to society, universal owners will suffer the costs of cleanup through deteriorating infrastructures, higher taxes and other costs to their other holdings. At the same time, universal owners are able to capture nearly the full benefit of positive externalities, like corporate training programs, because even if trained employees subsequently leave the firm where training occurred, they are likely to find new employment with another universally owned firm. Since the size and breadth of universal owner portfolios expose them to economy-wide risks and rewards, their programs must increasingly be concerned with the long-term growth and economic efficiency of national and world economies. Universal owners who want to maximize shareholder value will need to develop "public policy" positions to ensure a well-trained labor force, effective infrastructure, legal and regulatory environment, as well as monetary and fiscal policy. They want to ensure the corporate environment encourages efficiency and doesn’t externalize costs. The authors provide several examples of such public policy activities, most of which appear to be drawn from CalPERS. These include: policy guidelines on issues such as the environment; surveys of firms on particular policies, such as high-performance workplace issues; monitoring the lobbying efforts to ensure one firm doesn’t put others at a competitive disadvantage; grading portfolios on particular issues, such as adherence to corporate governance guidelines; targeting firms on specific issues, such as the controversy surrounding logging ancient forests or producing defective products. They envision that institutional investors will develop areas of expertise and "coat tail" off each other to create a more efficient division of labor. Of course any volume on the cutting edge is bound to raise as many questions as it resolves and The Rise of Fiduciary Capitalism is no exception. Their troubling conclusion discusses the problem of who will watch the watchers. While a growing professionalism at corporate boards and institutional investors may prevent the most egregious abuses, the authors believe that trustees holding tremendous power and wealth may soon face a tremendous backlash from the public if such power is perceived as being abused. They end with a series of unanswered questions concerning the growing concentration of wealth in the hands of a relative few professional owners. Who will monitor the monitors? Government? The market? How do we protect beneficiaries from institutional abuse? Is fiduciary duty enough to assure appropriate behavior? These are important issues that we are likely to grapple with for the foreseeable future. While government certainly has a role in monitoring the monitors, it is too often a captive of the very interests it is monitoring. As for the market, it doesn’t respect ecological and other needs ignored by current pricing structures. While some, like myself, believe the impetus to act as universal owners will probably come from the ultimate beneficiaries, Hawley and Williams have their doubts. They see beneficiaries rising up and demanding more input as unlikely, since beneficiaries are "even more diffuse, disinterested, and disenfranchised" than the traditional Berle-Means shareholder. "Thus it is unlikely that beneficiaries as a group will ever be able to effectively ‘watch’ the fiduciary institutions." Our "best hope for effective monitoring is transparency coupled with competition between the institutions." Visionaries, such as Robert Monks and Mark Latham, have proposed a heightened role for proxy monitoring firms to monitor and provide guidance to the management of portfolio firms. Maybe the rise of such institutions will provide the competitive core that Hawley and Williams see as the best hope for effective monitoring. My own assessment is that such new institutions will play an important role but that we also need to rebuild our fiduciary institutions so they are more democratic. CalPERS provides an excellent model of an institution that legitimates the enormous power of its fiduciaries by holding them accountable to members and stakeholders. Six of its 13 board members are nominated and elected directly by its members and beneficiaries. Four others serve as ex officio members based on their position as State Treasurer, Controller, Director of the Department of Personnel Administration and a designee of the State Personnel Board (SPB). Two members are appointed by the Governor, an elected official of a contracting public agency and an official of a life insurer. One is appointed jointly by the Speaker of the Assembly and the Senate Rules Committee. CalPERS is far from perfect in providing mechanisms to let its members hold the board accountable – incumbents have several advantages over challengers, such as use of CalPERS funds for traveling to meet constituents while campaigning, and members have no initiative or referendum process. However, it is far more democratic and participatory than most institutional investors…and more successful. While many large institutional investors have become universal owners, CalPERS is one of the few to begin to look at the larger policy issues that Hawley and Williams argue will make corporations more democratic. The Rise of Fiduciary Capitalism provides perhaps the best synopsis to date of how fiduciary capitalism developed but less of a guide concerning the difficult subject of "how institutional investors can make corporate America more democratic" than its title might imply. Still, the book is important as one of the first to recognize that fiduciaries, acting on behalf of universal owners, have a duty of care that extends to influencing public policies in order to generate both wealth and a healthy environment. Wide circulation of The Rise of Fiduciary Capitalism could accelerate that recognition and the ultimate shift towards more democratic corporations. Back to the top Corporate Monitoring Proposal Draws Attention and Fire The Dow Jones Newswires carried a piece on Mark Latham's shareholder proposals aiming to prompt companies to hire proxy advisory firms so their shareholders have analysis independent of management for proxy issues. (10/4) My proposal, the first using Latham's model, won 8.9% of the vote at Whole Foods Market. I believe that demonstrates strong initial support, especially considering that Whole Foods has been a good performer. This year, I expect even higher votes when the proposal is made at underperforming firms. Many shareholders want an independent analysis but each cannot afford to individually hire proxy monitor firms like ISS, IRRC and Proxy Monitor. The cost of such services would be reduced if shareholders hired such services through the firms they collectively own. In the Dow Jones article, Patrick McGurn of ISS is quoted as saying that Latham's plan is the "corporate governance equivalent of the Clinton health care plan." I'm not sure what was meant by that statement. However, I found it interesting that when The ISS Friday Report took note of the Dow Jones item they added the following statement: "Critics argue that Latham's proposals are self-serving and too radical, especially when his campaign is focused on companies in which he or his comrades own shares." What is "radical" about shareholders coming together to purchase proxy analysis, rather than doing so individually? Is insurance also a radical idea? In addition, to say the proposals are self-serving because they are aimed at companies where those who support the proposals own shares is absurd. Of course the resolutions are aimed at firms where supporters own shares; you have to own shares in order to get a resolution on a company's proxy. While I don't believe the corporate monitoring proposal offers a complete solution to the difficult problem of shareholder apathy, it would provide another point of reference for those who too frequently throw their votes away...resulting in broker votes in favor of management. The Latham proposal makes it easier for lazy or busy shareholders to vote in ways that are more likely to be in their own interest. The need to monitor management is a valid concern that isn't resolved by telling investors they undermine their own long-term interests unless they dig in and figure out how to vote in corporate elections. I live in California and was a lobbyist, helping to write laws for a decade. However, I don't thoroughly analyze all the ballot issues in civil elections. I look to see who supports/opposes and why. Often that brief review will provide me with enough information to vote with reasonable intelligence. What's wrong with providing the same type of analysis for corporate elections? SEC Approves MSICs The SEC has given its approval to a new breed of funds, "managerial strategic investment companies." The applicant, XSource, Inc. (caution: Internet site under that name are pornography sites), is an indirect wholly-owned subsidiary of Millicom International Cellular and holds majority equity interests in nine firms engaged in electronics, media, integrated networking, and Internet networking businesses. Millicom’s application has taken more than 5 years to process and their approval to proceed indicates they must do so within the next 3 years. Unlike a business development company, the MSIC will not be restricted to purchase in private placements. It can also acquire holdings as a result of providing other direct financial assistance to companies. However, it will have to have at least 50% of its assets in greater than 25% holdings in companies to which it makes available significant managerial assistance. Under the agreement with the SEC, XSource would take large long-term stakes in several companies and then apply their experience to help manage the companies through board representation, serving as officers or consultants and by providing direct financial assistance. According to a report in The ISS Friday Report (9/29), the concept behind the MSIC is that "the more you help a company by working closely with it, the more the value of your investment in that company will profit." The SEC application also states that the MSICs management would like to attract talented managers by offering them equity-based incentive compensation in the form of options and appreciation rights plans. We wish them good luck. It looks like they have designed a structure that closely aligns the interests of management with those of shareholders but also provides for more effective monitoring than the usual mutual fund structure. see SECLaw.Com SEC Exclusions Going Overboard Shareholder activist John Chevedden wonders, will the SEC repeat in 2001 its marginal determinations of 2000? According to Chevedden, at AMR Corporation the SEC ruled that since AMR already had a (weak) standard of independence for directors on key committees, a proposal to adopt the Council of Institutional Investors higher standard of independence, could be excluded. At the Boeing Company, the SEC ruled that a proposal, to adopt the Council of Institutional Investors higher standard of independence for directors on key committees, could be excluded because it was supposedly beyond the power of the board to implement. At Southwest Airlines, the SEC ruled that a proposal submitted by 2 separate cosponsors could be excluded because one of the cosponsors did not have good cause why they did not present a proposal at the previous annual meeting. The 2nd cosponsor was not involved in any way with the previous year proposal. Chevedden believes the cure should have been to remove one cosponsor and allow the proposal to go forward on shoulders of the 2nd cosponsor. At Northrop Grumman, the SEC excluded the resubmittal of 3 resolutions that received 49%, 63% and 64% shareholder approval in 1999. The SEC ruled that because the resolutions contained a few words before RESOLVED, all 3 resolutions could be excluded. This issue could have been settled by giving the proponents 7 days to reduce the word-count. At TRW, the SEC completely excluded the annual election of all directors proposal because a supplementary part of the resolution, concerning reinstatement of a staggered board, could violate state law. The resolution could have been cured by replacing three words. The SEC had determined the supplementary acceptable for the 1999 TRW proxy after TRW raised the same argument in 1999. Chevedden's key point is that the SEC should allow such resolutions to be cured, rather than allowing their total exclusion. I couldn't agree more and have had similar experiences. One of the most absurd recent actions was at Comshare where the SEC granted no action on a stock option disclosure proposal under rule 14a-8(i)(7) as relating to its ordinary business operations where Comshare had been net canceling non-executive employee stock options while net issuing executive employee and director stock options. Aaron Brown later wrote to the SEC "Stock option disclosure is important. Half the S&P 500 companies have more outstanding stock option value than book value. Think of the enormous resources that go into reporting book value, and the reams of rules and regulations on the subject, then realize that option disclosure may actually be more important to a working investor." Back to the top Upcoming Seminars Journey of Equity Sharing: a three-hour introduction to equity compensation that is structured for CEOs, entrepreneurs, executives and human resource professionals. October 11-31, California, Washington and Virginia locations. The Global Reporting Initiative: a symposium November 13-15 in Washington to look at "Leveraging Investment, Corporate Accountability, and Disclosure to Advance Sustainability." Public Sector Corporate Governance: November 2 -4 in Amsterdam. The joint organizer are the Fédération des Experts Comptable Européens (FEE) and the Koninklijk Nederlands Instituut van Registeraccountants (Royal NIVRA). Asian Elite Milks Minority Shareholders Some Asian business groups controlled by a tiny elite of ultimate owners have used extensive corporate pyramids to systematically siphon wealth from minority shareholders and control 25% of listed firms, a study by researchers Larry Lang and Leslie Young at the Chinese University of Hong Kong has found. The study traced ownership and control of 2,603 companies in nine East Asian countries and found evidence of "systematic expropriation" of outside shareholders. The authors conclude there is a need for greater transparency, regulatory and legal reform. see South China Morning Post, 9/20 Asian Institute of Corporate Governance Explored The Japanese Ambassador to India HE Hiroshi Hirabayashi called on the Secretary, Department of Company Affairs, Dr. P.L. Sanjeev Reddy and discussed a proposal for setting up an Asian Institute for Corporate Governance. Dr. Reddy said the institutes of Chartered Accountants, Cost Accountants and Company Secretaries would provide necessary support. The Japanese Ambassador said that his country would provide training. M2 Communications, 9/25 CalPERS Urges Bright Line Test for Auditors A letter to the SEC from the California Public Employees' Retirement System (CalPERS), on proposed Auditor Independence rules urges "if a firm is providing audit services to a client, it should not simultaneously provide non-audit services." "Under a bright-line test such as what we recommend, audit firm professionals will continue to be able to provide the full range of non-audit services - just not for their audit clients." The SEC has held second and third round hearings over whether auditors should be allowed to sell consulting services to the same company or whether partners and employees of audit firms can invest in the companies their firm audits. Improving Shareholder Relations Improving Shareholder Relations will be the subject of the Canadian Corporate Shareholder Services Association's October 19-20th conference. The conference will open with keynote luncheon speaker, Stephen Sibold, Chairman of the Alberta Securities Commission discussing "Corporate Governance - Who's on Board?" Themes that will be explored include shareholder communications, regulatory updates, securities legislation, unclaimed property legislation, increasing shareholder value and technology. CalPERS Reports on Proxy Votes The California Public Employees Retirement System released a report of its proxy votes for fiscal 1999-2000. CalPERS voted on proxies for 1,950 domestic companies with a total market value of $76 billion and 684 international companies with a total market value of $33.8 billion. CalPERS voted against 19% of management proposals, and in favor of 54% of shareholder proposals. For comparison, CalPERS voted against 18.3% of management proposals and in favor of 52.2% of shareholder proposals in fiscal year 1998-99. CalPERS voted against 43% of the Executive Stock Option Plans presented in 1999-00. This compares with 35% voted against in 1998-99. The costs of proxy voting amounted to $400,000 for the period. California's Government Code, section 6901 requires every state agency to "vote the proxies of the stock that it owns." IRRC Roadshows Proxy Voting & Socially Responsible Investing Workshops: Guidelines, Issues and Trends is the subject of a series of workshops by the Investor Responsibility Research Center to be held in Chicago, San Francisco, Houston, and New York. I'll be at the San Francisco workshop. Registration is free, but hurry because space is limited. Guidance on Regulation FD The SEC's Regulation FD takes effect 10/23. As we have reported previously, trade associations and others have expressed concern about how to comply and avoid SEC enforcement proceedings. Weil, Gotshal & Manges has released an excellent special edition of their publication, The Corporate Charter, with a focus on Regulation FD. Covered subjects include: what companies are covered, what types of communications, officials, information recipients, excluded and non-excluded communications, materiality, what constitutes adequate disclosure, when, how, limitations on liability and what FD means for communications with analysts, money managers and other market participants. Back to the top with the Corporate Governance NETwork! Contact: jm@corpgov.net All material on the Corporate Governance site is copyright ©1995-2000 by Corporate Governance and James McRitchie except where otherwise indicated. All rights reserved.