What is Corporate Governance?

Niamh Brennan

Niamh Brennan

In this guest post, first published by Business and Leadership on July 28Niamh Brennan of the University College Dublin (UCD)  explains what the term corporate governance means. I’ve added a few links to her original. We have a host of other definitions for corporate governance in our Library but I like Professor Brennan’s reference to etymology and her point about the centrality of limited liability.

The word governance comes from a Latin word – gubernare – which means to steer. Cicero wrote “he that governs sits quietly at the stern and scarce is seen to stir”. Thus my colleague, Dr Collette Kirwan, has conceptualised the board as being the navigator of the company. Continue Reading →

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Florida SBA Increases Shareowner Value Through Active Ownership

FloridaSBA

Mike McCauley

Michael McCauley

The State Board of Administration of Florida (Florida SBA) is the fourth largest public pension fund in the US and was early to announce their votes in advance of annual meetings. Those announcements can be found on the Florida SBA site, as well as on Proxy Democracy. The following is from a press release that Florida SBA issued out last week on their accomplishments during the recent proxy season. They certainly did a lot to  shift us to more democratic forms of corporate governance. Congratulations to Ash WilliamsMichael McCauley and all those working at Florida SBA. Continue Reading →

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Review: Handbook of Organizational and Managerial Innovation

Organizational and Managerial InnovationHandbook of Organizational and Managerial Innovation (Elgar Original Reference) edited by Tyrone S. Pitsis, Ace Simpson, and Erland Dehlin.

Innovation is never free of its social context, its resistors, enablers, recalcitrants, champions and the like. Indeed, innovation can be thought of as the very stuff of social relations, as in the case of Hannah Arendt’s (1958) idea of innovation being integral to democracy and vice versa. Wherever there is an absence of democracy, Arendt argued, there is also the decline of innovation.

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Chris Mackin on Employee Ownership: Our Video Friday Feature

Christopher Mackin

Christopher Mackin

Laura Flanders interviews Christopher Mackinthe founder of Ownership Associates, an advisory firm for broad-based employee ownership based in Cambridge, MA‎. Mackin is also an Adjunct Lecturer at the Rutgers School of Management and Labor Relations and a member of the core faculty of the Harvard Trade Union Program based at Harvard Law School. See a previous guest post by Mackin on corporate governance and employee ownership, Hobby Lobby and Rented Humans. I met Mackin about 35 years ago when we were both graduate students. He was at Harvard; I was at Boston College.

In this video, Flanders and Mackin explore employee ownership and, more broadly, democratic workplaces. Mackin points out: Continue Reading →

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Hain Celestial to Adopt Majority Vote Standard

HAINLast month, with the help of fellow ‘economy class investor’ John Chevedden, I submitted a proposal to Hain Celestial (HAIN) to adopt a full majority director election standard. Majority voting has become a widely prevalent practice in the S&P 500 index, with only 14% of companies failing to adopt this standard. Hain is in the S&P 600 mid-cap index where only 47% have adopted a majority vote standard. Most maintain a plurality standard. So, we were attempting to move this good governance standard downstream to mid-caps. Continue Reading →

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NACD Directorship 100 Released

NACD-DirectorshipThe National Association of Corporate Directors (NACD) announced the 2014 NACD Directorship 100, the annual list that recognizes leading corporate directors, corporate governance experts, policymakers, and influencers who significantly impact boardroom practices and performance. NACD has recognized individual directors who serve as role models in promoting exemplary board leadership, oversight, and courage in the boardroom for more than 37 years. Continue Reading →

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Federico Buenrostro Pleads Guilty

Federico Buenrostro

Federico Buenrostro

It is good to see former CalPERS CEO Federico R. Buenrostro finally pleading guilty, with “sources” telling Pensions & Investments that “his admissions could result in expanded criminal charges for his codefendant… Alfred Villalobos,” as well as possible “indictments against two former CalPERS board members, Kurato Shimada and Charles Valdes.” (Guilty plea opens new chapter in CalPERS story and Former CEO of CalPERS pleads guilty to fraud, corruption charge, LATimes). Continue Reading →

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Proxy Voting Services Sought by LACERS

LACERS logoThe Los Angeles City Employees’ Retirement System (LACERS), a $13.9 billion public pension fund, is requesting information from vendors with expertise in providing proxy voting services with a full range of proxy analysis and reporting capabilities. I expect they will hear from the dominant proxy voting services providers, ISS and Glass Lewis, but this also seems like a real opportunity for firms that are smaller, newer and/or based outside the United States to provide proxy voting services to a large public pension fund.

LACERS encourages smaller firms to apply for this RFI. Continue Reading →

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Income Inequality: Video Friday with John Oliver

John Oliver photo

John Oliver

John Oliver, the HBO comedian, discusses income inequality in America. How do you talk about income inequality without being accused of fomenting class warfare.  pointed out in an epic rant on Sunday night, that optimism is woefully misplaced when it comes to the subject of severe income inequality. America’s biggest losers in the income inequality game are not about to win the lottery. Ain’t gonna happen. The game is rigged. Continue Reading →

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GMI Ratings Offers Webinar on Emerging Market Ratings

GMI RatingsGMI Ratings, the leading provider of research, data and analytics on environmental, social, governance (ESG) and forensic accounting risks affecting the performance of public companies, is introducing Accounting and Governance Risk (AGR®) ratings on over 9,000 companies in nearly 60 emerging market countries. GMI’s AGR ratings capture a variety of accounting irregularities and corporate governance weaknesses associated with negative events. With the addition of the emerging market companies, GMI now offers AGR ratings on nearly 29,000 companies worldwide. Continue Reading →

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Cairn India Limited: Corporate Governance Alert

cairnCairn India is an oil and gas exploration and production company, headquartered in Gurgaon, India. It is a subsidiary of Vedanta Resources. Cairn India is one of the largest independent oil and gas exploration and production companies in India.

InGovern, India’s first independent proxy advisory and corporate governance research firm. reports that Cairn is giving loan of USD 1.25 billion to a group company, a foreign subsidiary of Sesa Sterlite Limited, at Libor plus 300 basis points for a 2-year period. The company has already disbursed $800 million, even before informing the shareholders. The disclosure is being made post hoc.
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Buybacks

CFO‘s recent CFO article, Rethinking Buybacks, should give directors pause before jumping on the bandwagon. In the first quarter of 2014, S&P companies repurchased an estimated $159.5B of their own shares. However, the performance of the S&P 500 Buyback Index, which tracks 100 stocks with the highest buyback rations, is lagging the return of the overall S&P 500 by nearly one percentage point, after beating it by 10% in 2013. Continue Reading →

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Evasive Shareholder Meetings: Foxhole Contest Continues

Yuanzhi Li discusses Evasive Shareholder Meetings

Yuanzhi Li

David L. Yermack discusses Evasive Shareholder Meetings

David L. Yermack

When a company moves its shareholder meeting to a remote location, it is often associated with bad news, according to Evasive Shareholder Meetings (NBER Working Paper No. 19991) by Yuanzhi Li and David Yermack. The study finds that “companies are more likely to announce unfavorable quarterly earnings in the aftermath of long-distance meetings, and these firms’ stock prices significantly underperform market benchmarks over the six months following the meeting date.” After examining nearly 10,000 annual meetings held between 2006 and 2010, the authors find that a company that holds a shareholder meeting 1,000 miles away from its corporate headquarters has an average abnormal cumulative return of -3.7 percent on its stock during the ensuing six months. Continue Reading →

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