Recently, we closed down the first fourteen years of posts on the Corpgov.net website and are currently in the very slow process of posting many of the old pages to the new blog. You can find these under the Pre-2010 tab at the top.
Ten years ago at CorpGov.net a few highlights reported were as follows:
- Gerald F. Davis and Michael Useem make a convincing case for convergence, not among nations but among firms with higher stock market valuations. To survive global industry consolidations, many such firms will seek a listing on American stock exchanges, and will thereby become subject to US legal standards. In their paper, “Top Management, Company Directors, and Corporate Control,” the authors point to the need for further research in five key areas.
- Progress is being made by shareholders. One small measure of success is the recent favorable votes on shareholder sponsored resolutions. During the 1999-2000 season they garnered an average 22.6% vote, compared to an historical average of 5%. Governance related proposals won an average of 36.5%. (Strategic Compensation Research Associates, as reported in the November edition of Directorship)
- Years ago the Department of Labor (DOL) ruled that, since proxy voting can add value, voting rights are subject to the same fiduciary standards as other plan assets (see “Avon” letter). According to a recent article in Institutional Investor Magazine (10/1) pension funds are Passing the Buck on their responsibilities. “More than one third say they believe that voting doesn’t make a difference.” “Only 4.2 percent of funds polled say that they have ever tried to place an issue on a proxy ballot, and just 1.6 percent indicate that they have ever voted in favor of a social issue.” According to Institutional Investor Magazine, pension funds could “find themselves liable if a socially motivated action proved costly. Respondents unanimously say that social issues are not a shareholder’s responsibility.”
Five years ago a few highlights:
- The Securities & Exchange Board of India, or SEBI, Friday said it wouldn’t extend the date for complying with Clause 49 of the Listing Agreement, a new guideline which requires listed companies to have at least half of their board members as non-executive directors. To date, only 20 companies of the 5,000 that are listed have complied with norms on corporate governance.
- Broc Romanek’s TheCorporateCounsel.net Blog notes that Coca-Cola adopted a policy of obtaining shareholder approval for its severance arrangements with senior executives if the payout exceeds 2.99 times the sum of the executive’s annual base salary and bonus.
- Specific Investment And Corporate Law by Margaret M. Blair and Lynn A. Stout argues the proper purpose of the public corporation is not maximizing shareholder wealth, but promoting long-term, value-creating economic production under conditions of complexity and uncertainty, in a fashion that provides surplus benefits not only to shareholders but to other groups that make specific investments in corporations as well. This corporate objective is difficult to measure, much less maximize. Nevertheless, it may provide a better gauge of good corporate governance than the simplistic rubric of shareholder wealth.
- Democracy and the Evolution of Corporate Governance by Pierre-Yves Gomez and Harry Kornine finds that corporate governance has indeed evolved to make increasing use of democratic procedures. Viewed over the long-term of two centuries of capitalist development, corporate governance is seen to have successively incorporated enfranchisement, separation of powers and representation. In conclusion, they consider the implications of basing the study of corporate governance on the question of stakeholder consent and the practice of corporate governance on the procedures of democracy.
- The Shareholder Activism Handbook, by Jay Eisenhofer and Michael Barry is the most comprehensive guide to shareholder activism that I have ever seen. Yes, the book provides a fairly comprehensive chapter on filing shareholder resolutions – discussing the history and evolution of rule 14a-8, how to file, what types of resolutions can be excluded, no action letters, cases, proxy solicitation, communications between shareholders, bylaws amendments, etc. Yet, that’s only one chapter out of 16.