I was delighted to see the influential trade publication, Pensions&Investments, endorse a petition to the SEC sent by the Council of Institutional Investors to amend its rules to allow a complete list of board candidates to be included in corporate proxies. (Better Way to Elect Directors, 2/3/2014: subscribe) Continue Reading →
Tag Archives | CII
Below are some notes I took during the morning sessions at the Corporate Directors Forum 2014, held on the beautiful campus of the University of San Diego, January 26-28, 2014. This year, I was only able to attend on January 27th. The program was subject to the Chatham House Rule, so there will be little in the way of attribution below but I hope to provide some sense of the discussion. Continue Reading →
The Council of Institutional Investors (CII) filed a rulemaking petition with the Securities and Exchange Commission (SEC) asking that it amend its rules for contested elections so that “shareholders can vote for any combination of management and dissident nominees they wish to represent them.” I hope readers will join with me in sending e-mails in support of the petition to the SEC. Instructions on how to do so can be found at the bottom of this post.
This petition is a followup to action they took on July 23, 2013 when the Policies Committee of CII approved a draft proposal for a Universal Proxy. Key, was addition of the following sentence to their policy on director elections:
To facilitate the shareholder voting franchise, the opposing sides engaged in a contested election should utilize a proxy card naming all management-nominees and all shareholder-proponent nominees, providing every nominee equal prominence on the proxy card. Continue Reading →
In mid-July I e-mailed investor relations at Reeds Inc. $REED (IR@reedsinc.com) asking if REED had a classified board or plurality requirements for director elections. Can shareowners call a special meeting or act by written consent? What supermajority requirements are in place re M&A or other actions? No response. This surprised and disappointed me since they were prompt in answering previous e-mails: Make kombucha; we’re already working on it. Try one with coconut water and ginger; good idea. Where can I find Reeds Kombucha in Sacramento?; here’s a list.
According to FactSet Research Systems, “insider/stake ownership” at REED is 33.5% of the company’s float. Being almost a controlled company, maybe they don’t feel the need to respond to inquiries from ‘outside’ shareowners about the firm’s corporate governance. They not only didn’t answer me, they blocked me from following their Twitter feed. Maybe management and the current board think the less outside shareowners know, the better for them? Continue Reading →
In the fall of 2013, the Boards of both PNC Financial Services Group ($PNC) and Bank of New York Mellon ($BK) amended their company’s bylaws allowing them to end in-person stockholder meetings and instead hold their annual meetings virtually in cyber space. (PNC and BNY Mellon amend bylaws to allow for ‘virtual’ shareholder meetings) The Needmor Fund, a foundation based in Toledo, Ohio, filed a shareowner’s resolution asking the board of PNC to preserve the tradition of the physical stockholders meeting so that investors could ask questions and engage management and the Board on key issues. An individual investor filed a similar proposal at New York Mellon. Both are are clients of Walden Asset Management. Continue Reading →
In a recent Stanford “Closer Look” publication (How ISS Dictates Equity Plan Design), Ian D. Gow (Harvard but graduated from Stanford), David F. Larcker, Allan l. Mccall, and Brian Tayan argue ISS dictates pay equity plans. ‘Nonsense,’ was my first reaction. ISS policies generally reflect the will of its customers. The authors have a point but they miss the main problem. Their arguments begin in familiar territory. Continue Reading →
Mr. Norton previously served as corporate secretary of The New Economy Fund and SMALLCAP World Fund, Inc., two of Capital’s retail mutual funds, as well as American Funds Insurance Series, which serves Continue Reading →
On September 22, the HLS Forum on Corporate Governance and Financial Regulation posted an article (The Promise of the Enhanced Broker Internet Platform) from John Endean, President of the American Business Conference, a coalition of CEOs of mid-cap companies. I attempted to post a comment on the HLS Forum but it appears to have fallen through the cracks. Mr. Endean begins as follows:
A breakthrough for improved corporate democracy is languishing at the Securities and Exchange Commission. The breakthrough, called the Enhanced Broker Internet Platform (EBIP) is a technological innovation that would make it vastly easier for shareholders to participate in corporate elections for directors and shareholder resolutions. This is important because the rate of individual or “retail” shareholder voting is pitifully low. For example, in fiscal year 2012, the rate of retail positions voted was less than 14%.
Mr. Endean purports to speak for retail shareowners, but employs only a thin disguise. Continue Reading →
Sorry to be late and abbreviated in getting out my coverage of this great forum. Be sure to check out the Forum’s photo gallery, which contains many more and much better shots than what I took between notes and conversations.
The second panel discussed the growing issue of dual-class stock structures. While there was considerable debate, my sense is that most in the room see the advantages of such structures do not outweigh the disadvantages. I would like to see more discussion in the broader press about these issues when dual-class companies are going public. Maybe the discount would be even steeper. Continue Reading →
Years ago, the DC Court’s decision to vacate the SEC’s Rule 14a-11 had me thinking of possible approaches under Rule 14a-8 but also working around the whole access issue. With regard to short slates, I wavered between “field agents” attending annual meetings with “proxy assignments” to allow more wide-spread vote splitting to consideration of amendments needed to SEC rules. These were the primary papers involved in my intellectual mash-up but now my back-burner project has been taken up by CII and the SEC-IAC. More on their efforts below. Continue Reading →
Inside Investor Relations (IR) had an important article on July 30th, On the Way to the Investor Forum that raised the question: do companies really want to encourage their shareholders to chat about them in online forums? Wouldn’t it create a lot of work for investor relations officers (IROs) “who are responsible for monitoring these online groups, responding to any misinformation posted on them, dealing with legal and other consequences?” Continue Reading →
TK Kerstetter, Chairman, NYSE Governance Services – Corporate Board Member interviews Scott Cutler, EVP, of NYSE Euronext. Continue Reading →
I urge readers to support the June 20th petition by the Council of Institutional Investors (CII) to the NYSE and Nasdaq for the exchanges to require listed companies to elect directors by majority vote in uncontested elections. CII’s letters to both exchanges are posted here. Continue Reading →
Bartlett Naylor, Financial Policy Reform Advocate, and Taylor Lincoln, Research Director, both with Public Citizen’s Congress Watch division, wrote an excellent post recently, Looking for Conflict in All the Wrong Places. They criticize the the Congressional hearing entitled “Examining the Market Power and Impact of Proxy Advisory Firms.”
Instead of proxy advisors, Congress should be looking at the JPMorgan proxy vote, where $5 million of the company’s money – shareholders’ money – was used to contest the resolution to split the CEO and chairman roles. And, of course, our money – the money of shareholders – is also being used right now to lobby Congress to weaken our rights. Continue Reading →
Has the Council of Institutional Investors (CII) turned over a new leaf or am I only beginning to notice because they recently came out publicly agreeing with me? Three years ago a group of us petitioned the SEC to clarify that the same rules that apply to proxies also apply to voter information forms, VIFs. The group included Glyn Holton, Mark Latham, Eric M. Jackson, James P. Hawley, Andrew Williams, Andrew Eggers, Bradley Coleman and Erez Maharshak.
Recently, CII wrote to the SEC in support of that position, without explicitly citing our earlier petition. In their April 5 letter, concerned with a proposed rule’s incentives to create “enhance brokers’ internet platforms (EBIPs), CII reminded the SEC that key to the stated intent of the rule was to provide benefits to investors and corporate governance generally. Before moving forward on EBIPs, CII recommends action or clarification on the following: Continue Reading →
SEC Is Pressed to Revamp Executive Trading Plans. Letter from CII (May 9, 2013) suggests excess profits of executives is not coincidental. They suggest the SEC provide “interpretive guidance or amendments” to existing rules to prevent potential abuses. Continue Reading →
In light of the IPOs and subsequent performances of Facebook, Groupon, Zynga, etc., there has been renewed discussion in Silicon Valley. When two classes of common stock that place control of the board in the hands of the founders and not the investors, do investors benefit or does it just entrench management? One argument in favor of two classes of common stock is that it allows the founders to run the company without interference from activist shareholders who are “short-termers.” One argument against is that a founder who is a poor CEO cannot be removed by the board — and hiring and firing the CEO is the raison d’etre of a corporate board. SVDX‘s panel of seasoned experts hold divergent views on this topic. This program, like all SVDX programs, was subject to the Chatham House Rule. I’ve added a few links that might be helpful. Continue Reading →
My proposal to declassify the board at United Natural Foods, Inc. ($UNFI) passed by an overwhelming margin of 87.89%:
- 38,086,048 for
- 5,248,963 against
See their 8-K filing. Text (pdf) of proposal and opposition. Of course, the margin would have been even higher without insider holdings and blank votes going to management. Have we turned the corner on declassification measures to the point where companies might as well throw-in the towel and declassify when faced with such proposals? Continue Reading →
I attended a virtual-only meeting of United Natural Foods, Inc. yesterday and was pleased that a majority of shares were voted in favor of my proposal to declassify the board. That, combined with a move to majority vote requirements for directors a few years ago, helps move UNFI ($UNFI) into the center of the pack with regard to corporate governance. However, I am very disappointed with the lockout style annual meeting. They said they are open to change. Of course, that may depend on shareowners providing feedback. I hope you will join me in requesting changes. I tell you how at the end of this post and I make it a painless cut and paste exercise. Continue Reading →
A new study finds that controlled companies – particularly those with multiple classes of shares – generally underperform over the long term. As compared to companies with dispersed ownership, controlled companies experience more stock price volatility, increased material weakness in accounting controls, more related party transactions, and offer fewer rights to unaffiliated shareholders. The study results challenge the notion that multiclass voting structures benefit a company and its shareowners over the long term. Continue Reading →
Time to step into the way back machine to see what we were writing about 5, 10 and 15 years ago. Five years ago @ Corporate Governance, I was pleading for readers to send comments to the SEC on their proxy access proposals. 30,000 letters wasn’t enough, in my opinion.
A shareholder proposal calling for a “say-on-pay” vote by shareowners on executive compensation at Activision Inc. (ATVI) filed by As You Sow received 69% of the vote at the company’s annual meeting held in Beverly Hills, California. This may be the highest vote result so far of about 50 say-on-pay proposals voted on by shareowners this year. Activision is a publisher of video games including Quake, Doom and Guitar Hero, and is currently all the news for its purchase of Bizarre Creations Ltd., the UK studio behind the popular Project Gotham Racing title. (Activision to Purchase U.K.’s Bizarre Creations, WSJ, 9/27/07) Conrad MacKerron, Director, Corporate Social Responsibility Program at the As You Sow Foundation, criticized the company for providing outrageous perks like paying the mortgages, Medicare taxes, and even pet-sitting for executives. Continue Reading →
Earlier today, I posted a note about Anne Simpson going onto the board of the Council of Institutional Investors (CII). Now I see that Anne Sheehan, director of corporate governance at CalSTRS, was elected chairwoman of CII and Michael McCauley, Continue Reading →
CalPERS announced on Monday, April 2nd that Anne Simpson, who heads their corporate governance efforts, has been elected to the Board of the Council of Institutional Investors (CII). Continue Reading →
Of the 16 proxy access proposals filed by proponents in 2012 and listed on the ISS Checklist, eight are being challenged at the SEC. Ferro, Hewlett-Packard, Nabors Industries, CME Group, Pioneer Natural Resources, Staples and Charles Schwab have not sought no-action relief from proposals at the commission, according to data from ISS. Conversely, Bank of America, Chiquita Brands International, MEMC Electronic Materials, Sprint Nextel, Textron, Goldman Sachs, Western Union and Wells Fargo have asked the SEC for permission to omit the proposals. Continue Reading →
Reuters reports that “Chevron Corp. and eight other corporations were sued by shareholders on Tuesday for adopting a bylaw that requires common types of shareholder lawsuits be brought exclusively in Delaware’s Chancery Court.” Continue Reading →
Glyn Holton, the executive director of USPX, once again expresses his concerns over efforts by Broadridge Financial Solutions to make virtual meetings palatable to shareowners. I urge you to Continue Reading →
These are some relatively quick notes that I’m sharing from the Corporate Directors Forum 2012, held on the beautiful campus of the University of San Diego, January 22-24, 2012. This post may be a cryptic… not complete sentences bt hopefully mor intelligible thN txt msgN. Continue Reading →
Equilar, the leading provider of executive compensation benchmarking and research solutions, announced the release of its Pay-For-Performance Analytics suite yesterday, along with the fact that the Council of Institutional Investors (CII), whose members hold $3 trillion in assets, has signed on as the first client. According to the press release:
By combining an innovative market-based algorithm to identify peer companies with a realizable pay methodology using long Continue Reading →
I’m somewhat heartened by a recent CII announcement on access proposals:
We welcome the changes to Rule 14a-8(i)(8). We encourage Council members and other long-term shareowners to consider using this new tool in a focused and consistent manner that enhances the U.S. corporate governance model and Continue Reading →
A group of 43 House Democrats is urged the SEC to require public companies to disclose their political contributions. The Council of Institutional Investors also sent a comment letter on a petition (File Number 4-637) filed by prominent law professors.
Rep. Gary Ackerman (D., N.Y.) and 42 other House colleague argue the high court’s ruling in the case, Citizens United v. Federal Election Commission, was “misguided” and left shareholders “completely in the dark, unaware that their money could be funding political attack ads.”
Shareholders cannot hold corporate management accountable for decisions the shareholders never knew were made. The present system is undemocratic and untenable.
Shortly after the decision, Rep. Gary Ackerman (D-NY) introduced the Corporate Politics Transparency Act, which would require corporations Continue Reading →
The SEC will not challenge the decision of the U.S. Court of Appeals for the District of Columbia Circuit, No. 10-1305, which struck down the agency’s rule to make it easier for shareowners to nominate directors to corporate boards.
The announcement, made late on Tuesday by SEC Chairman Mary Schapiro, marks a major blow to large investor advocacy groups. In a statement, Schapiro said the SEC has no plans to seek a rehearing before the appeals court or a Supreme Court review. But she said she remains “committed to finding a way to make it easier for shareholders to nominate candidates to corporate boards.” (SEC will not seek rehearing on proxy access rule, 9/6/2011)
Given the composition of the DC Circuit and the Supreme Court, perhaps such an appeal would have had little chance. However, by letting the decision stand the SEC now faces a bad precedent. As a letter from the Council of Institutional Investors pointed out:
It is well-settled “that ‘a court is not to substitute Continue Reading →
I recently got this from an anonymous member (here are related thoughts from Cydney Posner and Marty Lipton):
You may have seen the stories regarding ISS’ recommendation that shareholders withhold against the entire Hewlett-Packard nominating committee for the way new directors were selected. I haven’t seen the ISS report, but the news stories (eg. WSJ article) probably describe it pretty well.
At issue seems to be the fact that five new directors of H-P were identified by an ad hoc committee, which according to H-P’s proxy statement “consisted of the CEO and three non-employee directors, which was formed in November 2010 to assist in identification of new director candidates and to facilitate the process of evaluating those candidates as potential directors.”
ISS and Glass Lewis criticize the addition of the CEO to this committee, since only the independent directors of the Nominating and Governance Committee are supposed to responsible for director nominations. While CEOs play a role in nominations, it does seem unusual to formally include the CEO on the search committee. It likely also didn’t help that, as according to this Bloomberg article, many of the new directors had connections to the CEO. None of those relationships are disclosed in the proxy, as much of it relates to the CEO’s former company.
In additional soliciting materials filed on Friday, H-P responds to ISS’s recommendation. (How You Find New Directors: “True Independence” Under the Microscope – TheCorporateCounsel.net Blog, 3/14/2011)
Go to theCorporateCounsel.net/Blog article to read the links. I highly recommend the one by Cydney Posner. Personally, I come down on the side of ISS on this one, although their action might have been better with some warning. At least now other companies have it. Don’t involve your CEO in a search committee pre-screening candidates. And some people wonder why shareowners favor split chair/CEO positions and proxy access.
Taking a quick glance at CII corporate governance policies, the action at H-P appears to be at least an attempt to circumvent:
2.5 All-independent Board Committees: Companies should have audit, nominating and compensation committees, and all members of these committees should be independent. The board (not the CEO) should appoint the committee chairs and members…
7.2 Basic Definition of an Independent Director: An independent director is someone whose only nontrivial professional, familial or financial connection to the corporation, its chairman, CEO or any other executive officer is his or her directorship. Stated most simply, an independent director is a person whose directorship constitutes his or her only connection to the corporation.
Much more from J. Robert Brown Jr. on this subject at theRacetotheBottom.org under “The Myth of an Independent System for Nominating Directors” in several posts.
A major Web-based campaign to save the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) from the impact of proposed budget cuts will be launched at 1 p.m. Wednesday (February 16, 2011) by ShareOwners.org in cooperation with the Consumer Federation of America (CFA) and the Council of Institutional Investors (CII).
The U.S. House is currently looking to slash budgets of the SEC and CFTC, which would be forced to scale back operations and dismiss hundreds of employees at the same time they are seeking to implement pro-investor reforms mandated by the last Congress in the wake of the recent U.S. financial crisis.
The new campaign, spearheaded by ShareOwners.org, will mobilize small and large investors to get actively involved in urging Congress to avoid making cuts that would cripple the leading federal agencies responsible for ensuring that America’s financial markets operate in a fair and open fashion. The new effort by ShareOwners.org is one of a number of emerging pushes by a variety of important groups to protect investors and the integrity of the capital markets by shielding the SEC and CFTC against unwarranted budget cuts. (ShareOwners.org To Launch Major Campaign To Save SEC, CFTC in the Face of Budget Cut Proposals – FierceFinance)
News event speakers will be:
- Tracy Stewart, executive director, ShareOwners.org;
- Barbara Roper, director of investor protection, Consumer Federation of America; and
- Jeff Mahoney, general counsel, Council of Institutional Investors.
Phone-based news conference (with full, two-way Q&A) at 1 p.m. EST on Wednesday, February 16, 2011 by dialing 1 (800) 860-2442. Ask for “Save the SEC/CFTC Campaign” news event. A streaming audio replay of the news event will be available on the Shareowner’s Website as of 4 p.m. EST on February 16, 2011. Please join in this important effort to keep the SEC and CFTC strong. Regulations mean little, without enforcement.
The Council of Institutional Investors filed a brief strongly supporting the Securities and Exchange Commission’s (SEC) “proxy access” rule, rebutting claims of business groups seeking to overturn the rule.
The Council’s CII TIAA-CREF et al amicus brief 01-27-11, filed with TIAA-CREF and 14 other pension funds, was submitted January 27 in the U.S. Court of Appeals for the D.C. Circuit, in Business Roundtable and Chamber of Commerce of the United States of America v. Securities and Exchange Commission.
“Proxy access will make companies more responsive to their shareowners and more vigilant in their oversight of management,” said Ann Yerger, executive director of the Council of Institutional Investors, an association of public, union and corporate pension funds with combined assets in excess of $3 trillion. “This basic shareowner right is widely accepted in many countries. U.S. investors deserve this same, fundamental protection.”
Proxy access gives shareowners a meaningful voice in corporate board elections by letting them place their nominees for director on the company’s proxy card when they are dissatisfied with the board and want to run their own candidates. This allows investors to avoid the often-prohibitive cost of distributing their own proxy materials to other shareowners. The SEC last August approved a rule granting certain long-term investors proxy access at U.S. public companies. But the rule was not put into effect because of the Business Roundtable-Chamber lawsuit.
The Council’s brief argues that the benefits of proxy access far outweigh the costs, citing enhanced communication between investors and management in countries where proxy access is permitted. The increased dialogue “keeps directors in touch with market sentiment which strengthens board independence, reduces risk surprises and improves corporate governance,” the Council and pension funds contend. The brief also dismisses business claims that the proxy access rule will saddle corporate boards with special-interest nominees
See also, CalPERSattachment-CIIpublicationEqualAccess (an attachment to a CalPERS Board meeting agenda from years ago).
Boardmember.com is a great source for corporate governance videos every week. TK Kerstetter, President, Corporate Board Member does a good job with his interviews, such as the 11/11/2010 one with Thomas Quaadman, VP, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce. (This Week in the Boardroom – 11/11/10 – Boardmember.com) However, the guests and chatter too frequently reveal a bias towards management.
Directors are elected by shareowners, yet on This Week in the Boardroom we are much more likely to hear from the Chamber of Commerce than from the Council of Institutional Investors. Isn’t it about time than shareowners had access to the boardroom? Access to the proxy has been delayed. That’s no reason to delay access to this important weekly news show.
See also Corporate Board Member’s recent discussion with Brian Cartwright, former general counsel of the Securities and Exchange Commission and senior advisor, Latham & Watkins LLP, about the 2011 proxy season and what boards can do to prepare for the possible passage of proxy access. (Talking Points: Proxy Access Stalled But Still Important for Boards to Consider)