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Review Essay: Citizens DisUnited

, April 24, 2013 ,

Citizens DisUnited: Passive Investors, Drone CEOs, and the Corporate Capture of the American Dream both delights and informs as only Robert A.G. Monks can. No one else writes so well about topics like “How CEOs and the Business Roundtable Hijacked the World’s Greatest Wealth Machine” and those in the current volume because no one else has been as engaged in corporate governance as Monks with such depth from so many angles.

A serial entrepreneur, public official, director, prolific author and long-time agitator, his lifework has been delineating the underlying dynamics of corporate power and devising system that integrate wealth creation with the interests of society. Citizens DisUnited is a clear call to action. I hope my review advances that call by emphasizing the need for every investor, every citizen to get involved. Continue Reading →

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CalSTRS Furthers ShareOwner Revolution With Announcement of Disney Vote

, February 14, 2013 ,

CalSTRS announced its vote at the March 6, 2013, Walt Disney Company annual shareholder meeting. CalSTRS voted against several directors and management proposals, and voted for shareholder proposals to allow proxy access and separate the CEO and chairman positions. What is significant about the announcement is that it went over each director candidate and issue on the ballot and not only disclosed how CalSTRS voted but why. Here’s the thrust of their press release. Continue Reading →

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Corporate Directors Forum – Day 2

, February 14, 2013 ,

This is the last in my series on the Corporate Directors Forum 2013. See materials, slideshow, Corporate Directors Forum 2013: Bonus Session, and Corporate Directors Forum 2013 – Day 1, Part 1, and Corporate Directors Forum: Day 1, Part 2. 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. I throw in a lot of opinions. Some are those of panelists, some are mine, and some came from the audience. Continue Reading →

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Corporate Directors Forum: Day 1, Part 2

, February 13, 2013 ,

Below are some relatively quick notes I took at the Corporate Directors Forum 2013, held on the beautiful campus of the University of San Diego, January 27-29, 2013. See materials, Corporate Directors Forum 2013: Bonus Session, and Corporate Directors Forum 2013 – Day 1, Part 1.

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. I throw in a lot of opinions. Some are those of panelists, some are mine, and some came from the audience.  I still get a little lost in some of the financial discussions but think we need to raise public understanding, so I don’t shy away from trying to learn or from offering opinions. I had fun, learned from various perspectives, renewed acquaintances and made some new ones. If corporate governance is your thing, I hope to see you there in 2014. Continue Reading →

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Corporate Directors Forum 2013 – Day 1, Part 1

, February 11, 2013 ,

Below are some relatively quick notes I took at the Corporate Directors Forum 2013, held on the beautiful campus of the University of San Diego, January 27-29, 2013. See materials. 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.

I throw in a lot of opinions. Some are those of panelists, some are mine, and some came from the audience.  I learned a few things, renewed acquaintances and made some new ones. If corporate governance is your thing, I hope to see you there in 2014.

First, a quick shout out to Linda Sweeney, executive director, Corporate Directors Forum; Larry Stambaugh and Michael J. Berthelot, program co–chairs; James Hale and Anne Sheehan, meeting co–chairs, as well as all the others who made CDF such a great experience, including valets, cooks, wait staff, student volunteers and many more. Continue Reading →

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Corporate Directors Forum 2013: Bonus Session

, February 7, 2013 ,

Below are some relatively quick notes I took at the Corporate Directors Forum 2013, Bonus Session, held on the beautiful campus of the University of San Diego, January 27, 2013. For a list of conference materials, see the Forum’s official site. My site, Corporate Governance (CorpGov.net) is unaffiliated.

The program was subject to the Chatham House Rule, so there will be little in the way of attribution. Don’t expect complete sentences or thoughts either. The links are mine but don’t represent an endorsement by me. They just seemed relevant in a split second decision of how to add a little value to the conversation. Opinions will differ. I throw out lots of opinions. Some are those of panelists, some are mine, and some came from the audience.  I learned a few things, renewed acquaintances and made some new ones. I hope this provides readers with some sense of the discussion. That’s my main objective. Continue Reading →

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Call for Papers – Journal of Corporate Finance

, January 9, 2013 ,

Since the Cadbury Report was published in 1992 in the UK, there has been increasing emphasis not just by UK regulators but also by regulators from other countries, including the USA and Continental Europe, of the role of boards of directors in corporate governance. However, 20 years down the line it is still uncertain whether boards of directors are able to fulfill the important role they have been assigned by regulators. Continue Reading →

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Turkey’s e-GEM Beats Broadridge at Shareowner Communication

, November 8, 2012 ,

Turkey became the first country to require issuers to offer electronic proxy voting with the 1 October inauguration of a voting platform from MKK called e-GEM. The system will stream annual general meetings (AGMs) real time and let shareowners communicate with each other, vote before the meeting, and even change their vote as an annual meeting occurs. Other markets have e-voting but do not require it of all listed companies. Expect other markets to keep an eye on this development.  (Corporate Governance Roundup: New Rules in Canada, Switzerland, Continue Reading →

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Expect a More Active Proxy Season

, November 7, 2012 ,

The 2012 edition of Shareholder Activism Insight sees increasing opposition from shareowners during the next proxy season, according to 78% of respondents. Fully 84% predict an increase in the number of shareholder proposals with the financial services sector hit the hardest. One quarter of corporate executives think 30% or more of shareowner proposals will obtain a majority vote.

In the second quarter of 2012, Schulte Roth & Zabel commissioned mergermarket to interview senior corporate executives and activist investors regarding their experience with shareholder activism and their expectations for the upcoming 12 to 24 months. Continue Reading →

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USPX Suspends Central Activities

, October 29, 2012 ,

As many readers may know, a few months ago I joined the board of the United States Proxy Exchange (USPX). I’ve long been impressed with the work of USPX’s volunteer executive director, Glyn Holton. We worked closely  on several sets of comments to the SEC, Model Shareowner Proposal for Proxy Access and subsequent no-action responses, Shareowner Guidelines for Say-on-Pay Voting, the Amicus Curiae in the case of Apache Corp. v John Chevedden, etc. I could go on and on. Continue Reading →

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Video Friday: Shareholder Empowerment vs. Board Authority

, December 23, 2011 ,

Delaware Chief Justice Myron T. Steele sponsored by The Arthur and Toni Rembe Rock Center for Corporate Governance on Nov 15, 2011. Steele has published over 300 opinions resolving disputes among members of limited liability companies, and limited partnerships, and between shareholders and management of both publicly traded and close corporations. Watch the video. Continue Reading →

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Board Service: A Great Gig… Especially @ Apple

, December 19, 2011 ,

Looking for work-life balance? Work from home (at least part of the time). Set your own pay – $1,000 per hour and up. No threat of layoffs or workforce cutbacks. Part-time hours and multiple positions available. Excellent way to supplement your retirement income. No application necessary…

The term “chemistry,” or your ability to work collegially with the other members, is often used in board searches, and it can make or Continue Reading →

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Science of Stock Manipulation

, November 22, 2011 ,

Unless current shareowners suffer a penalty for having CEOs who engage in earnings manipulation and insider trading they are likely to encourage such unethical and damaging behavior, finds a study by Ramy Elitzur, since choosing less ethical managers may be in the best interests of current shareholders, but not future ones.

Many accountants believed that markets are efficient and as such, Continue Reading →

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Boards of the Future: A Conversation With Richard W. Leblanc

, November 3, 2011 ,

Professor Richard W. Leblanc recently posted an article to his blog titled The Boardroom of the Future: Changes that will reshape corporate governance that merits wide exposure. Leblanc is a tenured, award-winning teacher and researcher, consultant, lawyer and specialist on boards of directors… a recipient of Canada’s Top 40 Under 40™ award. His research expertise is in corporate governance, specifically in the effectiveness of boards of directors.

At first read, I loved the post… but then got thinking the devil is in the details. My questions and comments are in italics. Professor Leblanc is a provocateur, setting us thinking and perhaps taking necessary action now. A day later, here is an updated version with Leblanc’s responses below my questions and comments.

Democratization of governance

Your shareholders will nominate and elect your directors by electronic voting Continue Reading →

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Proxy Access for the 99% – Open for USPX Member Comment

, October 30, 2011 ,

The time has come for shareowners to be allowed to include their own nominees for corporate boards in the proxy materials their corporations send out every year—so-called “ballot” or “proxy access.”

The current system—that only allows shareowners to vote for candidates nominated by the current board—is absurd. The SEC has finally reaffirmed shareowners’ right to submit proposals to corporations that, if adopted, would allow proxy access for those corporations’ shareowners.

A number of such proposals will be submitted for votes at 2012 annual Continue Reading →

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GMI & Si2 Offer Combined ESG Proxy Research

, October 11, 2011 ,

GMI and Si2 announced a strategic partnership to provide seamless
subscription access, account management and special pricing to the firms’ ESG Board Briefing Research, Shareholder Proposal Analysis, and Executive Pay Scorecards. The combination of GMI’s compensation analysis with Si2’s expert insights into key environmental and social issues and proposal analysis may create a vital new resource for Continue Reading →

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Current Monopoly Costs Shareowners Millions

, October 3, 2011 ,

The Securities Transfer Association (STA) released a study, 2011 Transfer Agent Survey to Estimate the Costs of a Market-Based Proxy Distribution System, that evaluates the costs to public companies of beneficial owner proxy processing services over providing those same services to registered shareowners.

The study concluded that public companies could save more than 42% if proxy services were subject to free market competition instead using a Continue Reading →

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Shareowners Too Busy But Hamermesh Offers Wrong Solutions

, September 28, 2011 ,

Lawrence A. Hamermesh, Widener University School of Law, Wilmington, Delaware gave the Keynote Speech to the Practical Law Institute’s Ninth Annual Directors’ Institute on Corporate Governance on September 7, 2011. In Too Busy to Think, Spread Too Thin to Matter: Making a Rational Stockholder Voting System an Agenda Item for Management/Investor Dialogue, he runs over some interesting territory and concludes we need to limit the number of shareowner meetings and votes to make them more meaningful.

Prof. Lawrence A. Hamermesh

One option is to “require a stockholder vote on the election of directors once every three years, unless owners of more than, say, 3% of the voting power demand a meeting in the meantime.” Another would be to “dispense with annual meetings” but substitute “some enhanced stockholder right to ballot access and to convene stockholder meetings.”

I agree there are problems but these “solutions,” especially the first, could lead to even less accountability than we have now. Hamermesh reminds his audience of Chancellor William T. Allen’s 1988 opinion in Continue Reading →

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Audio Friday: BBC Discussion on Corporate Governance

, September 16, 2011 ,

Peter Day asks what’s wrong with corporate governance. Business leaders make a lot of fuss about corporate governance, but the scandals keep on coming. In this programme, Peter Day hears from some leading authorities who makes several observations concerning nonexecutive directors, ownerless corporations, and the need for shareowners to sit on the nominations committees, a stewardship proposal for shareowners, and ratcheting CEO pay even when a company isn’t paying the cost of its capital. The program, entitled Bad Company, hit a number of topics quite squarely.  Well worth a listen.

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Support Rulemaking Petition on Corporate Political Spending

, August 8, 2011 ,

A group of ten very prominent corporate and securities law experts submitted a formal rulemaking petition to the SEC last week urging the Commission to develop rules requiring public companies to disclose the use of corporate resources for political activities to shareowners. Please take a few minutes to join with me writing an e-mail to the SEC in support of their petition and the important issue seeks to address.

The petition was submitted by the Committee on Disclosure of Corporate Political Spending, co-chaired by Lucian A. Bebchuk, Professor of Law, Economics, and Finance at Harvard Law School and Robert J. Jackson, Jr., Associate Professor of Law at Columbia Law School. Bebchuk and Jackson are co-authors of Corporate Political Spending: Who Decides?, and prior posts about the subject of Continue Reading →

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Will Netflix Listen to Shareowners?

, June 30, 2011 ,

eBay moved to eliminate supermajority requirements in its bylaws at its first regularly scheduled meeting after shareowners approved a ballot measure by John Chevedden. So far, no real word from Netflix on whether or not they will heed the will of shareowners.

It is great to see this issue covered by Bocco Pendola in Seeking Alpha.

This push to move from a supermajority to simple majority vote came after shareholder activists, led by John Chevedden, got the proposal on the ballot at eBay’s recent annual meeting of shareholders. If you follow the link to the official SEC filing of eBay’s proxy statement, you’ll see that the company opposed the proposal. eBay shareholders, however, voted in favor of it, prompting the eBay board to adopt the proposal just two months after it held the meeting.

This move by eBay puts considerable pressure on Netflix (NFLX)… Netflix notes it “will consider” ratifying the proposal ” in due course.” Like an online auction, the clock is ticking.

via Will Netflix Follow eBay’s Lead in Heeding Its Shareholders? – Seeking Alpha, June 29, 2011.

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Ouch! Don't Sue Me

, June 1, 2011 ,

Bob Verdun, the former publisher of the Elmira Independent has been ordered to pay $650,000 as a result of a defamation suit.

In 2004, Verdun alleged Robert Astley’s involvement with the Clarica Life Insurance Company and its role in the development of a controversial recreation complex made him unfit for the board of BMO Financial Services.

After denouncing Astley at shareholders’ meetings and in emails to BMO executives — among other places — things turned about as bad as they could for Verdun, the recipient of a prestigious Michener Award for meritorious public service journalism in 1990.

The jury found Verdun acted with malice.

via Bank director wins $650,000 in defamation suit against shareholder activist – Toronto Star, 5/31/2011.

Ouch! To borrow from Abraham Lincoln, concerning whatever statements I make on the CorpGov.net blog, I now adopt the following policy:

With malice toward none, with charity for all, let us strive to finish the work we are in, … to do all which may achieve and cherish a just and lasting form of corporate governance.

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Directors Should Thank Dodd-Frank

, May 28, 2011 ,

Eleanor Bloxham, a contributor to Fortune magazine, tells readers Why corporate directors should thank Dodd and Frank. With investors focused on “say-on-pay,” ISS recommendations against directors are down substantially.

Ture, but this isn’t likely to last. Most institutional investors seem to be taking a year off from voting against compensation committee members, giving them a free pass this year. Personally, I haven’t joined them. In fact, this is the first year I’ve been conscientiously voting against pay enabling compensation committee members. Expect an increase in such votes by institutional investors next year if companies ignore “say-on-pay” votes this year.

Directors should thank Dodd-Frank, not for temporarily distracting investors but for bringing better focus to their jobs… requiring that compensation committees be composed solely of independent directors and reducing conflicts of interest in compensation consultants, among many other reforms.

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