The Handbook of Board Governance: A Comprehensive Guide for Public, Private, and Not-for-Profit Board Member is now in available. I contributed Chapter 21, The Individual’s Role in Driving Corporate Governance. Events CorpGov.net publisher James McRitchie will attend:
I continue my review of The Handbook of Board Governance: A Comprehensive Guide for Public, Private, and Not-for-Profit Board Member. With the current post, I provide comments on Part 5 of the book, The Unsolved Governance Problem: Performance Measurement and Executive Pay. Talk to any of your acquaintances outside the corporate governance industrial complex and they will all have an opinion regarding CEO pay. This is a part of the book everyone can relate to.
See prior introductory comments and those on Part 1, Part 2, Part 3 and Part 4. As I have indicated before, The Handbook of Board Governance will soon be the most popular collection of articles of current interest in the field of corporate governance.” It is already ranked 10 at Amazon (although ranking fluctuates daily, like a thinly traded stock). Continue Reading →
Stock Buybacks: Directors Identify Four Reasons Stock Buyback Programs
Stock Buybacks: What Directors Say
Believes That Immediate and Meaningful Change Is Required to Ensure Reed’s Is Being Run in a Manner Consistent with the Best Interests of All Shareholders
States That the 2016 Annual Meeting Represents a Critical Opportunity for Shareholders to Elect Independent, Highly Qualified Directors
Believes That Now is the Moment for Shareholders to Send a Clear Message to Chairman and CEO Chris Reed That the Value-Destroying Status Quo is Unacceptable
Cam C. Hoang, a Partner at Dorsey & Whitney LLP, warns that Staff denial of H&R Block Inc.’s request to exclude my proxy access proposal “discourages thoughtful, comprehensive discussions at the outset, since proponents may revisit the issues in subsequent years.” (SEC Denial of H&R Block’s Request to Exclude Proxy Access Proposal, The Harvard Law School Forum on Corporate Governance and Financial Regulation)
In the interest of “thoughtful discussions” on proxy access, I offer some additional points on Ms. Hoang’s post that I hope will be helpful to companies and shareholders alike. I’ll try to address them in the order Hoang raised them. Yes, I’ll be repeating her name frequently below, mostly so I can easily go back and find this post in the future, since I have so many posts on the basic subject of proxy access. Continue Reading →
Full-time fiduciary counsel sought by CalPERS to provide specialized fiduciary advice to the system’s board and staff.
CalPERS announce that former(?)/current(?) fiduciary counsel Robert Klausner can bid for the same contract he’s being pushed out of… where he quoted the lowest price per hour of the finalists.
Concerned Shareholders of Reeds: Formed
The Concerned Shareholders of Reeds, Inc., led by Edwin R. Lozano, today announced formation of a committee to rescue Reeds, Inc. The committee delivered an open letter to Reeds Founder/CEO/Chairman and the Reeds Board of Directors expressing significant concerns with the company’s poor financial performance, problematic corporate Governance practices and weak oversight. The Concerned Shareholders of Reeds believe immediate and meaningful change is required to ensure Reeds is being run in a manner consistent with the best interests of all shareholders. Although leaving open the possibility of negotiating with the Board, having been initially rebuffed, the letter indicates the Concerned Shareholders of Reeds, Inc. intends to commence a proxy contest by nominating a slate of highly qualified director candidates for the 2016 Annual Meeting.
Concerned Shareholders of Reeds: Breadsticks Anyone?
Reeds Board (REED); is it functional? As indicated in a previous post, it might be useful to try and apply the recently announced Commonsense Principles of Corporate Governance to Reed’s Inc. and their board of directors. This will probably be something of an exercise in futility with mostly blank spots, since Reeds is a very small company, with little coverage and I don’t know much about what the Reeds Board actually does, only something about what they should be doing. I’m not a very large shareholder, so it isn’t financially worth a major effort for me to mount a challenge to the current Reeds Board or management. However, I am hoping this exercise may be helpful to others considering such a challenge or even just a simple books and records request at Reeds or elsewhere.
The business leaders who authored the Commonsense Principles hoped that, “at the very least, these principles will serve as a catalyst for thoughtful discussion.” That’s the intent here. I hope that my very quick review of the Commonsense Principles might be a catalyst for discussions between the Reeds Board and concerned shareholders. I don’t have time to go through all the Commonsense Principles, so I will just highlight a few that seem relevant to the Reeds Board. Like the authors of the Commonsense Principles, my hope is that this post and other communications will lead to thoughtful discussions between the Reeds Board and the shareholders of Reeds Inc. Continue Reading →
Gadflies at the Gate: Why Do Individual Investors Sponsor Shareholder Resolutions? is the catchy title of a new paper (8/2006) by David F. Larcker and Brian Tayan. Its part of the Stanford Closer Look Series from the Corporate Governance Research Initiative. While I am happy to see a more objective view the role retail shareholder advocates play in corporate governance than the nonsense presented by Steven Davidoff Solomon, I’m not sure what Gadflies at the Gate really adds by raising questions without advancing answers. I suppose, like many academic papers, it is pointing out the need for further research, like a cobbler calling for more shoes. I advise further reading that is more action oriented.
Gadflies at the Gate: Possible Misrepresentations
I continue my review of The Handbook of Board Governance: A Comprehensive Guide for Public, Private, and Not-for-Profit Board Member. With the current post, I provide comments on Part 4 of the book, The Rise of Shareholder Accountability. As a shareholder advocate, this is my favorite part of The Handbook of Board Governance. See prior introductory comments and those on Part 1, Part 2 and Part 3. I suspect The Handbook of Board Governance will soon be the most popular collection of articles of current interest in the field of corporate governance.”
The Handbook of Board Governance: The Happy Myth, Sad Reality
Robert A.G. Monks warns, capitalism without owners will fail. The chapter is a condensed and updated version of Citizens DisUnited: Passive Investors, Drone CEOs, and the Corporate Capture of the American Dream, which I reviewed here. Continue Reading →
Starting fiscal years beginning in January, companies must disclose CEO pay ratios to the median compensation of their employees. Companies have flexibility with regard to sampling and other methodologies, according to how the SEC has interpreted the Dodd-Frank Act. In preparation, PayScale and Equilar surveyed employee sentiment on CEO pay ratios.
CEO Pay Ratios: Employees Surveyed
Do employees know what their CEO earns? If so, do they think it’s fair? If they believe it’s not fair, does it negatively affect their perception of their employer? And, finally, does CEO pay have any effect on the ability of a company to retain its employees? Additionally, they asked some CEOs to weigh in with their thoughts on the SEC rule and their approach to employee communication as it pertains to executive pay.
Equilar provided pay data for some of the the highest-paid CEOs in the U.S. and PayScale provided median worker pay data for those same companies. They then calculated the CEO pay ratios between the CEO at each company and their employees. Many CEOs do receive substantial stock/option grants and perks as part of their compensation, but the firms don’t currently have similar data available for employees, so they looked solely at cash compensation to calculate ratios for this report. However, they did provide the Equilar data on Total CEO Pay as well, so that it’s clear how much of each CEO’s pay is in the form of cash vs. stock/options/perks. Continue Reading →
The so-called Commonsense Principles of Corporate Governance are posted here mostly for my future reference, since I don’t know how long others will keep them on the internet. The authors are no radicals, but are a group of 13 executives from the country’s largest public companies and institutional investors… very much mainstream CEOs. Almost half hold both CEO and chair positions, a practice many investors consider bad corporate governance. The Commonsense Principles are supposed to “provide a basic framework for sound, long-term oriented governance” at public companies. Continue Reading →
I continue my review of The Handbook of Board Governance: A Comprehensive Guide for Public, Private, and Not-for-Profit Board Member. With the current post, I provide comments on Part 3 of the book, Risk Governance, Assurance and the Duties of Directors. See prior introductory comments and those on Part 1 and Part 2. I suspect the book will soon be the most popular collection of articles of current interest in the field of corporate governance.
The Handbook of Board Governance: The Rise and (Precipitous, Vertiginous, Disastrous) Fall of the Fiduciary Standard
Nell Minow starts us out in Part III with a brief essay: The Rise and (Precipitous, Vertiginous, Disastrous) Fall of the Fiduciary Standard. Yes, she’s unhappy with a deteriorating fiduciary standard. Most readers will agree. Minow is not only the ‘queen of good corporate governance,’ according to BusinessWeek, but is also known at the Movie Mom. Nowhere else in The Handbook of Board Governance are you likely to find references to superheroes and kryptonite.
There will be no rush to binding proxy access proposals, thanks to a July 21 denial of a no-action request filed by H&R Block. Corporations (HRB) continue with Wile E. Coyote type plots to derail genuine proxy access. See this incoming no-action request from Microsoft (MFST). However, in the case of H&R Block we foiled the latest plot to keep corporate governance a democratic-free zone without resorting to binding proxy access proposals. Continue Reading →
Chief Actuary position open at the California Public Employees’ Retirement System (CalPERS). Search underway for a new Chief Actuary to lead its Actuarial Office. Incumbent will provide independent counsel to CalPERS leadership and Board on actuarial valuations, assumptions and policies, rate structure, and funding of the CalPERS System and related funds.
This search is being led by New York-based Heidrick & Struggles. View a full description of the Chief Actuary career opportunity, including the ideal candidate profile and professional competencies.
Interested parties may contact: Continue Reading →
I continue my review of The Handbook of Board Governance: A Comprehensive Guide for Public, Private, and Not-for-Profit Board Member. With the current post, I provide comments on Part 2 of the book, What Makes for a Good Board? See prior introductory comments and those on Part 1. I suspect the book will soon be the most popular collection of articles of current interest in the field of corporate governance.
The Handbook of Board Governance: Director Independence, Competency, and Behavior
Dr. Richard Leblanc‘s chapter focuses on the above three elements that make an effective director. Regulations require independence but not industry expertise; both are important elements. Leblanc cites ways director independence is commonly compromised and how independence ‘of mind’ can be enhanced. He then applies most of the same principles to choosing external advisors. Throughout the chapter he employees useful exhibits that reinforce the text with bullet points, tables, etc. for quick reference. Continue Reading →