Author Archive | James McRitchie

Key Votes Survey Released by AFL-CIO

AFL-CIO Key Votes Survey 2015The AFL-CIO Key Votes Survey is designed to help pension fund trustees fulfill their fiduciary duty to monitor the proxy voting performance of investment managers. Good corporate governance matters to shareholders and proxy voting is the most direct means for shareholders to exercise oversight in relation to the corporations they own. (Read the full report.)

Proxy Votes Must be Cast in Your Interest

In 1988, the U.S. Department of Labor advised pension fund trustees that under the Employee Retirement Income Security Act (“ERISA”), the voting rights attached to company stock are “plan assets” that must be managed according to ERISA fiduciary standards. The Department of Labor requires investment managers to “maintain accurate records as to proxy voting” and permit trustees to “review the actions taken in individual proxy voting situations.”   Continue Reading →

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Norges Bank: Responsible Investment

Norges Bank responsible-investment-2015Norges Bank published their second annual report on responsible investment of the Government Pension Fund Global. They clarified expectations towards companies in 2015 and are creating a model I hope many will follow

The report provides a comprehensive review of work by Norges Bank on responsible investment in the management of the fund. Key areas of this work include developing and promoting international standards and principles, expressing expectations towards companies, and being an active owner.

Norges Bank expects companies to address a broad set of long-term risks in their strategies, investment plans, risk management and reporting.  They updated expectations with regard to children’s rights, water management and climate change in 2015, and today they are also publishing their expectations for how companies manage human rights. Monitoring environmental, social and governance risks in the portfolio is an important part of Norges Bank Investment Management’s work on responsible investment. Continue Reading →

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Directors Prepare for Shareholder Activism

Directors Prepare for Shareholder Activism

Directors Prepare for Shareholder Activism Before the Panel

How should directors prepare for shareholder activism? That was the underlying question addressed by last week’s SVDX / Rock Center for Corporate Governance joint event – Shareholder Activism: The Good, the Bad or Just Ugly.  Shareholder activism is in the news almost every day. How does it play out in Silicon Valley? Is activism beneficial to (some) shareholders in the short-term but harmful to the company (especially Silicon Valley companies) in the long-term?

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Vanguard’s Political Disclosure Vote: Wrong!

Vanguard's Political Disclosure Vote is Wrong (2nd from bottom on graph)

Vanguard’s Political Disclosure Vote is Wrong (2nd from bottom on graph)

VanguardLet’s change Vanguard’s political disclosure vote. Our nation’s largest mutual fund voted against all resolutions submitted by shareholders asking for companies to disclose their political spending. Shouldn’t we have the right to know what candidates our investments are supporting?

Vanguard’s Political Disclosure Vote Needs Changed

Join more than 59,000 American’s who have already petitioned Vanguard to change their proxy voting behavior. Support shareholder resolutions that seek disclosure of political spending at companies where Vanguard owns a shares. If Vanguard votes with us, instead of against us, it won’t be long before other large funds like BlackRock start doing the same. Within a few years, we could actually begin to know what companies are funneling how much money to which candidates. Vanguard’s political disclosure vote can be changed – with your help. Sign the petition by U.S. PIRG to change Vanguard’s political disclosure vote. Continue Reading →

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Employee Participation and Ownership Award

Employee Participation and Ownership: Award Program

Employee Participation and OwnershipThe Foundation for Enterprise Development announced their annual award program for promising research by emerging scholars in the domain of broad-based employee participation and ownership. The purpose of the award program is to identify innovative research in management or management-related disciplines that considers high-impact ideas in the context of business and society’s needs for employee empowerment, participative workforces, and wealth creation through broad-based equity and profit-sharing mechanisms. Research that has broad implications for practice and/or policy, and that addresses pressing economic and/or social problems are especially appropriate for this award. Continue Reading →

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Costco Wholesale: Proxy Score 57

Costco WholesaleCostco Wholesale Corporation (COST), together with its subsidiaries, operates great membership warehouses. Costco Wholesale is one of the stocks in my portfolio. Their annual meeting is on January 29, 2016. ProxyDemocracy.org had collected the votes of four funds when I checked. I voted against two directors and for proxy access, therefore with the Board’s recommendations 57% of the time. View Proxy Statement. Continue Reading →

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Who Withdraws Shareholder Proposals?

Withdraws Shareholder Proposals

Withdraws Shareholder Proposals

Who Withdraws Shareholder Proposals and Does It Matter? An Analysis of Sponsor Identity and Pay Practices is the title of an import study in the November 2015 issue of Corporate Governance: An International Review. Examination of this topic is long overdue. Companies constantly take full credit for corporate governance reforms, such as the addition of proxy access bylaws, when they are doing so only to avoid a vote on a more robust shareholder proposal. Continue Reading →

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Sonoco Fails to Limit Democracy to the 2%

SonocoSonoco Products ($SON) recently sought no-action relief from the SEC to omit a proxy access shareholder proposal by William Steiner. The Division of Corporation Finance denied their request. The 1% now owns as much worldwide as the 99%, so why should Sonoco limit shareholder proposals and presenters to the 2%?

I was happy to play a small role in helping John Chevedden present Mr. Steiner’s case. This was not a great victory destined for the annals of history. However, if Mr. Steiner had lost to Sonoco, it might have meant the beginning of the end of shareholder proposals as a mechanism of shareholder democracy. A similar case was fought sixty years ago. Continue Reading →

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Financial Economics of Climate Change

Norges BankResearch proposals on the Financial Economics of Climate Change are being sought by Norway’s sovereign wealth fund (Norges Bank). Proposals are due March 13, 2016. Norges recently awarded two research grants, one for a project on portfolio choice for long-term investors and another for an investigation of the effectiveness of engaged ownership. The objective of the Norwegian Finance Initiative (NFI) research program is to facilitate research of the highest academic standard in areas of particular relevance for the long-term management of the Government Pension Fund Global (GPFG). Continue Reading →

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LeBlanc on Key Steps to an Effective Board

Dr. Richard LeBlanc

Dr. Richard LeBlanc

A North American board governance guru, Dr. Richard LeBlanc is put on the hot seat to discuss key steps to creating a great board—and how investors can know how effective their board really is. LeBlanc and host TK Kerstetter talk about board leadership, board assessments, board recruitment and composition.Inside the Boardroom by Richard LeBlanc

Kerstetter also quizzes LeBlanc about his book, Inside the Boardroom: How Boards Really Work and the Coming Revolution in Corporate Governance. The two discuss his predictions and whether a corporate governance revolution he projected in 2005 actually transpired. Continue Reading →

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Rethink Resource Extraction

Norway’s Resource Extraction

Plundered Nations? Successes and Failures in Natural Resource Extraction

Plundered Nations?: Successes and Failures in Natural Resource Extraction

The Government Pension Fund Global (Norges, the Norwegian sovereign wealth fund), is one of the world’s largest funds initially funded by resource extraction.  Learn about its history, objective and management in the video clip below. The fund is saving for the future generations in Norway; where is the American equivalent?

To achieve broad exposure to global economic growth, Norges invests widely in most markets, countries and currencies outside Norway. The largest geographic exposures are to Europe and North America, followed by developed markets in Asia and Oceania and emerging markets. At the end of 2014, the fund’s holdings related to 75 countries and 47 currencies. Continue Reading →

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Directors Forum 2016: Directors, Management & Shareholders in Dialogue

Directors Forum 2016: Set for Opening Reception

Directors Forum 2016: Set for Opening Reception

Directors Forum 2016 is a ‘must’ in an increasingly complex and volatile environment with expanding investor and stakeholder activism, geo-political unrest and 24/7 political campaigning, boards and management facing unprecedented demands. “Directors Forum 2016: Directors, Management & Shareholders in Dialogue,” hosted by Corporate Directors Forum on January 24-26, 2016, provides a forum for three constituencies who seldom share the stage – directors, shareholders and management (and regulators) – to express their divergent and sometimes contentious perspectives on these and other issues. Get the special corpgov.net discount when you Register. Use promo code: discount16. Continue Reading →

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Investors to Oil: Disclose Climate Lobbying

Influence Map to Disclose Climate Lobbying

Influence Map to Disclose Climate Lobbying

Disclose Climate Lobbying: Resolutions Filed at Oil and Gas Companies

Encouraged by the forward‐looking actions addressing climate change at the Paris Climate Conference (COP21) in December, investors have filed shareholder resolutions at 11 oil and gas companies asking them to disclose climate lobbying activities. The resolutions urge the companies to fully disclose their lobbying activities and expenses (direct and indirect through trade associations) and to review their public policy advocacy on energy policy and climate change. Let’s get oil and gas companies to disclose climate lobbying! I sincerely hope readers of Corporate Governance (CorpGov.net) will vote in favor of these resolutions as they appear on corporate proxies. Monitor how others are voting at Proxy Democracy. If you own stock in other oil and gas companies, consider filing similar resolutions. Don’t know how? Check out our Shareowner Action Handbook. Take Action! Continue Reading →

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John Mackey & Whole Foods in Spotlight

John Mackey and Marc Gafni Talk Success on YouTube

John Mackey and Marc Gafni Talk Success on YouTube

In the wake of a New York Times story by Mark Oppenheimer about Whole Foods Market CEO John Mackey’s relationship with former rabbi and alleged sex offender Marc Gafni, the company has come under scrutiny. (A Spiritual Leader Gains Stature, Trailed by a Troubled Past)

On December 25th, The Times story reported Gafni saying of one of his alleged victims, “She was 14 going on 35.” Continue Reading →

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Zombie Director Voted Out at Reed’s – Again

Reed'sOnce again, Reed’s (REED) zombie director Daniel S.J, Muffoetto was voted off the board by shareholders at the annual meeting. This time, it has impact. The board, or at least the controlling founder Christopher Reed, got the message.

As I have noted previously, neither Mr. Muffoetto nor Michael Fischman (who was reelected) report owning any stock in Reed’s. Neither earn enough through Reed’s to incentivize active monitoring. Assuming they put in average director hours, as reported by NACD, Mr. Fischman got paid about $3.62/hour for his board work, while Mr. Muffoletto earned about $44.78/hour. How much monitoring and advice would you provide under such circumstances?   Continue Reading →

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