Corpgov Bites

The Vote is Cast: The Effect of Corporate Governance on Shareholder Value by Cuñat Martinez, Vicente, Gine, Mireia and Guadalupe, Maria (February 17, 2010). Available at SSRN: Results show that passing a corporate governance provision generates a 1.3% excess return on the day of the vote. This implies the value of a governance provision is 2.8% of market value. They also find evidence of changes in investment behavior and some long-term performance improvements.

‘Selling Us Short: The Limits of Markets (and Governments)’, with Joe Stiglitz and Jim Chanos, a 6/4/09 video posted by New Deal 2.0 brought to my attention by SimoleonSense. This is still well worth watching.

Drive me to the moon. Astronomical Pay: Schlumberger and Smith Acquisition, posted on’s blog, 3/22/10, finds what might be termed a match made in heaven. It compares the outrageous pay packages given to both CEOs. Schlumberger CEO Andrew Gould could have could have bought more than 19,832,868 gallons of regular gasoline with his pay.  He could have driven to the moon and back more than 2,075 times with a Toyota Prius (assuming those great cars could fly to the moon at the same 50 mpg it takes here on earth). Former Smith “CEO Douglas L. Rock received a base salary of $1,175,000 in 2007 and $1,347,115 in 2008, when his total realized compensation was $15,844,792. That’s enough for him to tailgate Mr. Gould in his own Prius for more than 640 round trips.” More analysis and more on target regarding specific concerns can be found in TCL’s Board Analyst profiles. (Disclosure: In what may have been a first at Schlumberger, my Say on Pay proposal received 39.8% of votes last year. Why is Schlumberger is incorporated in the Netherlands Antilles? Of course, “tax purposes.” It also minimizes shareowner involvement.)

Slate’s Will Evans warns that the “World’s Most Ethical Companies” list issued by Ethisphere may have some validity and credibility issues. (Consider the Source — “Independent” Judges of Pay and Ethics,’s blog, 3/21/10)

Also worth reading, the Blog is running a series of posts on key issues: Human Rights, Corporate Political Spending, and Climate Change. The series is in conjunction with the Sustainable Investments Institute (SI2), a Washington-based nonprofit research group.

Business Roundtable’s letter to Senators Dodd and Shelby on the Dodd bill.

The proxy access provision represents an unwarranted federal intervention into state corporate law and could exacerbate the short-term focus that is widely considered to be a contributing factor in the recent financial crisis; the derivatives provision would unnecessarily tie up capital at corporations across the country; the resolution authority title would drain companies of resources in order to create a new fund, possibly years or decades before it is ever needed; and the clawback and say-on-pay provisions adopt an inflexible, one-size-fits all approach.

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