Author Archive | James McRitchie

Whole Foods Proxy Access: Proxy Score 82

Whole Foods Proxy Access - Give Us the Key

Whole Foods Proxy Access – Give Us the Key (cartoon from Pensions & Investments)

Whole Foods Proxy Access, we have another chance to vote to make proxy access real before the annual meeting on February 17.

Whole Foods Market, Inc. (NASD:WFM) is a retailer of natural and organic foods and is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of four funds when I checked and voted.  Whole Foods Market (WFM)

I voted FOR Whole Foods Proxy Access and the report on Food Waste; AGAINST director Jonathan Sokoloff because of his poor attendance record. I voted with the Board’s recommendations 82% of the time. View Proxy Statement via iiWisdom. Continue Reading →

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Anti-Hypocrisy Proposals: Franklin Resources

Anti-Hypocrisy Proposals at Franklin Resources

Support Anti-Hypocrisy Proposals at Franklin Resources

Anti-hypocrisy proposals could be the most important ones of the season. I purchased shares on Franklin Resources (BEN) so that I could file anti-hypocrisy proposals, of the same variety we get to vote on at the February 15, 2017, annual meeting. I had not owned my shares for a year as of the filing deadline last year, so did not submit a proposal. Fortunately, other shareholders have submitted exactly the type of anti-hypocrisy proposals I would have put forward. I will concentrate on the first anti-hypocrisy proposals and will cover the other items only briefly.

Votes at funds, like Franklin Resources, are especially important since the votes these funds cast at annual meetings drive the outcomes. We can’t expect to win important issues like Majority vote provisions to elect directors, requested reports on climate change activities or voting down outrageous pay packages until huge funds like Franklin Resources vote with us. Large commercial funds, such as Franklin Resources, often have a built-in conflict of interest. They want to service corporate clients, so do not want to offend corporate managers. At the same time, as investors in their funds, we want them to monitor management and be critical when that is in our best interest. These resolutions seek better alignment between the interest of investors in funds offered by Franklin Resources and the proxy positions taken by those funds. Continue Reading →

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Directors Forum 2017 & Trump – Part 1

Linda Sweeney - Eec Director - Directors Forum 2016

Linda Sweeney – Exec Director – Directors Forum 2016

Directors Forum 2017 in San Diego was billed as Directors, Management, & Shareholders in Dialogue. Sure, all well and good, but I went there also hoping to learn more about President Donald J. Trump. He is the subject of a huge portion of tweets, Facebook posts and much of the news, so I expected Trump to also be the center of attention at Directors Forum 2017.

Directors Forum 2017 - iJoan B. Kroc Institute for Peace Justice

Directors Forum 2017 – Joan B. Kroc Institute for Peace Justice

I know what those in my immediate circles in Sacramento are saying. Clinton got 58% of the vote to Trump’s 34%. My news silos are much the same. At Directors Forum 2017 were directors and managers from companies, large and medium (the focus is rarely on small companies, although the Forum does better than most). Investors representing trillions of dollars in assets were in the room and on stage. What was the speculation on Trump and his impact on what we do? Continue Reading →

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Equilar GDI: Board Gender Parity 2055

Equilar GDI - gender parityThe new Equilar GDI (Gender Diversity Index) found it will take nearly 40 years for Russell 3000 boards of directors to reach gender parity. If the current rate of growth remains the same, Russell 3000 boards would reach 50% male and 50% female representation in Q4 2055.

Diversity Forum

I urge readers 5/10 join CalPERS & CalSTRS at this year’s Diversity Forum, an all-day event in Sacramento. We do not have to wait for 2055 to obtain gender parity. Join us to learn strategies that should move us forward at a substantially quicker pace. MoDiversity Forum 2017re information:

Equilar GDI: Research

The Equilar GDI is an index that measures 50% representation of both males and females on Russell 3000 boards as “1.” As of December 31, 2016, Russell 3000 boards were at 0.30 on the index, nearly one-third of the way toward parity. The data reflects that 15.1% of board seats at Russell 3000 companies were occupied by women as of year end. This represented an increase from 13.9% at the same point in 2015, which was up from 13.2% in 2014.  Continue Reading →

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Investor Stewardship Group: 1 Share, 1 Vote

Investor Stewardship Group logoInvestor Stewardship Group Launches Stewardship Framework for 2018

The Investor Stewardship Group (link), a collective of some of the largest U.S.-based institutional investors and global asset managers, along with several of their international counterparts, announced the launch of the Framework for U.S. Stewardship and Governance, a historic, sustained initiative to establish a framework of basic standards of investment stewardship and corporate governance for U.S. institutional investor and boardroom conduct.one share one vote

My own impression is that this group has been carefully constructed, probably stemming from many discussions at ICGN and CII. They have certainly started with an impressive group. Although most of the principles are relatively ‘safe,’ I am delighted to see their position that “shareholders should be entitled to voting rights in proportion to their economic interest.” That one recommendation alone is huge. I hope they continue to build on their initial consensus items.

Internet Roadblock

Of course, the internet changes everything. Companies used to go public to raise money for factories, staff, etc. Now, they raise funds from private equity funds and scale all the way because they can build out through the internet with coding and algorithms. They go public only when founders and initial supporters want to cash out a portion of their investment. Continue Reading →

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Governance Lessons from Wells Fargo

Governance Lessons From Wells Fargo

Governance Lessons From Wells Fargo

Tone at the Bottom: Governance Lessons from Wells Fargo

That was the advertised title for the program co-sponsored by the Rock Center for Corporate Governance and the Silicon Valley Directors Exchange. (Sign up to be on the SVDX mailing list.) After the program, I am still not convinced the real governance lesson from Wells Fargo (ticker: WFC) is not more about lack of oversight from the top, rather than the tone at the bottom.

It was another great panel of corporate governance, legal, and public relations experts for the deep dive into what went wrong. As usual, it was Chatham House Rule, so I’m mostly providing a little more background and some commentary on the presentations. I am sure others drew different conclusions than I did. The panel focused on issues ranging from public disclosure requirements, whistleblower policies and mechanics, compensation policies (including the board’s use of claw-back provisions), company policies regulating employee conduct, and the negative publicity suffered by the bank. Here were some of the advertised questions:

WFC panel

WFC panel

What happens when you have a well-meaning and talented board and a CEO who was regarded within the industry as one of the best managers with a stellar reputation? Was it inevitable that the CEO would be forced to step down by an outraged Congress and populist sentiment? What governance lessons from Wells Fargo are applicable to the non-banking industry, with special attention to Silicon Valley-based tech companies?

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Gadfly Proposals Reduce Value?

Deal Professor Envisions Corporate Gadfly

Starting with Corporations

Gadfly proposal on your corporate proxy? One implicit conclusion from a recent academic study is that you should short the company as soon as the SEC disapproves the company’s no-action request, since a proposal from a gadfly is likely to reduce the company’s value. Even though their intent is primarily to show why managers generally oppose proposals, that is the takeaway investment strategy one might conclude from a paper by John G. Matsusaka, Oguzhan Ozbas and Irene Yi entitled Why Do Managers Fight Shareholder Proposals? Evidence from No-Action Letter Decisions. (Why Do Managers Fight Shareholder Proposals, pdf)

Investors Skeptical of Gadfly Proposals

Researchers found a statistical correlation between Securities and Exchange Committee (SEC) staff decisions to block a no-action request and negative abnormal returns over the period of 2007-2016, “suggesting that investors agree with managers that these proposals are value-destroying.” “[O]ur main finding is that the market responded positively to the granting of a no-action letter.” “Investors are not particularly skeptical of proposals by unions and public pensions, but appear to view proposals by individual ‘gadfly’ shareholders as value-destroying.” Continue Reading →

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Trump: Draining the Swamp

Kevin Siers cartoon on Trump Draining the Swamp

Kevin Siers cartoon on Trump Draining the Swamp

CPA Statement on President Trump’s Silence on “Draining The Swamp” in Money and Politics

Bruce Freed, president of CPA, issued the following statement about President Trump’s failure to address campaign finance reform and corporate political disclosure and accountability in his Inaugural Speech:

President Donald Trump made ‘draining the swamp’ a centerpiece of his presidential campaign. However, the swamp will only deepen with his failure to even mention one of today’s critical issues – campaign finance reform – in his Inaugural address. This is a tremendous missed opportunity. As a steadily growing number of America’s leading companies are adopting transparency and accountability for their political spending, the President could have endorsed their effort and given it a big boost. Instead, his silence only heightens the risks that political spending poses to companies. So sad.

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The Shareholder Action Guide

The Shareholder Action GuideThis could be the most important book you will read in 2017, For more than twenty years, I have been posting to corpgov.net, thinking I should write a book. The closest I got was The Individual’s Role in Driving Corporate Governance, a chapter in The Handbook of Board Governance. Now it is too late. Andrew Behar has stolen my thunder with The Shareholder Action Guide: Unleash Your Hidden Powers to Hold Corporations Accountable. Behar tells better stories and takes a more practical approach than I probably would have. He even has one of my favorite cartoons right before the Contents page.

yes-the-planed-got-destroyed

My task now is to help him get more readers, so they can join in our good work.  Buy the book at Amazon.com.

Want to make misbehaving corporations mend their ways? You can! Behar tells you how in this guide for good corporate citizenship. I teach an occasional seminar at a local university, hoping to inspire mostly retirees to use their investments as a tool to make corporations accountable. Behar covers much the same ground I do but in great detail, beginning with a few examples of bad corporate behavior and a brief explanation of corporate power.
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Trump’s LL Bean Political Contributions

LL Bean LogoDo not make the same mistake as LL Bean. The last thing I want is to turn CorpGov.net into another social media outlet on Donald Trump. However, the advice offered today by Bruce Freed, president of the Center for Political Accountability (CPA), is something public company boards should be discussing as they try to stay on the good side of President-elect Donald Trump, without being ethically challenged.

While, the advice flowed out of the controversy over President-elect Donald Trump’s endorsement of LL Bean following a contribution to a political action committee supporting Mr. Trump from a Bean family member, it closely tracks advice CPA has been giving for years.  Continue Reading →

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US SIF Comments on DOL Guidance Update

DOLThe Department of Labor (DOL) rescinded Interpretive Bulletin 2008-2 relating to the Exercise of Shareholder Rights and replaced it with Interpretive Bulletin 2016-01 which reinstates the language of Interpretive Bulletin 94-2 with some modifications. US SIF supports this change as IB 2008-2 was not only inconsistent with prior guidance, but may have discouraged ERISA plan fiduciaries from exercising their shareholder rights.

The guidance appropriately notes the positive role fiduciaries play through the exercise of shareholder rights. Additionally, this guidance also reinforces the language of IB 2015-1 on economically targeted investments which clarified that environmental, social and governance (ESG) impacts can be intrinsic to the market value of an investment. Continue Reading →

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Nell Minow: Advice for Shareholders

Nell Minow

Nell Minow

What better way to bring in the new year than to get advice from Nell Minow, the Queen of Good Corporate Governance, especially with the Trump Administration about to begin? In the talk below, Minow addresses an audience sponsored by the Center for Study of Responsive Law, which held its second four-day conference on securing long-overdue democratic solutions in Washington, D.C. from September 26-28, 2016.

In her brief talk, Nell Minow offers several simple strategies for retail shareholders on how we can impact corporate boards. Ready to roll up your sleeves but need some help? I highly recommend two practical guides:

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Vanguard: Review Climate Change Voting

Vanguard Asked to Report on Climate Change VotingWalden seeks co-filers for resolutions asking Vanguard to review and report on its proxy voting policies and practices related to climate change.

It is rare when investors file a resolution with a mutual fund since most funds don’t hold regular annual meetings. Nonetheless the act of filing puts the fund on notice that participants are concerned about their voting record on issues like climate change. Tim Smith shared this new resolution with Vanguard, which as many know signed onto the UN’s PRI.

It is significant that investors are questioning their proxy voting record on issues like climate change. Continue Reading →

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