In a recent Forbes article entitled Warren Buffett, And His Board, May be Too Old to Run Berkshire Hathaway, Francine McKenna makes the case for both greater vigilance by Berkshire investors (including the author) and a different concept of corporate governance. Ms. McKenna may well be right as to her ultimate conclusion, although Berkshire’s performance […]
Archive | August, 2011
CEOs: Not the Best Directors
James McRitchie, 08/30/2011 ,
The new 2011 Corporate Board of Directors Survey from Stanford University’s Rock Center for Corporate Governance and Heidrick & Struggles has uncovered surprises about who makes the best board directors: it’s not necessarily the current CEOs that most companies seek out. “The popular consensus is that active CEOs make the best board members because of […]
The Mind of an Institutional Investor
James McRitchie, 08/29/2011 ,
Great to see Jon Lukomnik, managing partner of Sinclair Capital, now blogging at The Mind of an Institutional Investor, and now added to our blogroll. Lukomnik’s first two topics are Debunking Myths About ISS and Irrational Short-Termism in Investing. One of Lukomnik’s arguments with regard to ISS is that they are as much a follower […]
India Against Corruption
James McRitchie, 08/27/2011 ,
Employees replaced their jackets with white tees imprinted with “India Against Corruption” slogan. On 24 August 2011, Bangroleans formed a 17-kilometer human chain on outer ring road to protest against corruption. Finally, the middle class Indians have discarded their cloak of apathy. Passion, enthusiasm and commitment to change the system is replacing cynicism, skepticism and […]
Video Friday: Who's Watching the SEC?
James McRitchie, 08/26/2011 ,
A longtime SEC staff attorney has blown the whistle on the agency, and has accused them of destroying investigative documents, WSJ’s Jenny Strasburg (more…)
Which Law Classes?
James McRitchie, 08/25/2011 ,
A George Washington Law School survey that asked alumni which elective courses had proven the most useful to them and which electives they wish they had taken. Here are the top 3 ranked courses on usefulness: (more…)
Slight Shift Away from Independent Directors in India
James McRitchie, 08/25/2011 ,
Quality independent directors are hard to find today. Ask Azim Premji. India’s third-largest IT company, Wipro, is about to join the horde of companies violating Sebi norms by keeping independent directors beyond the suggested nine-year maximum tenure. After the Storm: The Unregulated Effect of a Corporate Governance Crisis (more…)
Students Don't Know the Grammar of Google
James McRitchie, 08/25/2011 ,
The ERIAL (Ethnographic Research in Illinois Academic Libraries) project — a series of studies conducted at Illinois Wesleyan, DePaul University, and Northeastern Illinois University, and the University of (more…)
Make Auditors Work for ShareOwners: Take Action
James McRitchie, 08/24/2011 ,
The Public Company Accounting Oversight Board (PCAOB) published a concept release that asks for public input on how to get auditors to become more independent, more objective, and more skeptical – and especially whether a mandatory rotation system for audit firms would achieve that objective. While mandatory rotation has been considered and dismissed in the […]
When the CEO Really Must Go
James McRitchie, 08/24/2011 ,
It is often said that “the most important function of a board is to hire and fire the CEO.” Yet the experience of many is that boards do a pretty good job on the hiring front and a not-so-good job on the “exit.” The Silicon Valley Chapter of the National Association of Corporate Directors will hold a […]
Don't Miss Chance to Shape ISS Policy
James McRitchie, 08/23/2011 ,
Many press reports attribute 20% of voting power at some companies to recommendations made by ISS. That makes them sound like one of the most powerful entities in the world. However, much of their “power” is based on their annual survey, which helps ISS shape its recommendations to meet the voting preferences of its customers. […]
HP's Loss Offers Lessons
James McRitchie, 08/23/2011 ,
When I put on my law teaching hat for the first time all summer, in preparation for my fall term class at DePaul University College of Law, it became apparent that the unfolding situation at Hewlett Packard is going to be a case study for many law and business school courses. A fortiori, this means […]
Medtronic: How I Voted
James McRitchie, 08/22/2011 ,
Medtronic (MDT) is one of the stocks in my portfolio. Their annual meeting is coming up on August 25. I voted yesterday using the MoxyVote.com platform. However, it is too late to do that today, so you’ll have to use ProxyVote.com. MoxyVote.com had recommendations from seven “good causes,” which included two consolidations. ProxyDemocracy.org had only two participating funds (more…)
Leave it to Delaware: Why Congress Should Stay out of Corporate Governance
James McRitchie, 08/21/2011 ,
The Delaware Journal of Corporate Law recently announced their hosting of the 27th Annual Francis G. Pileggi Distinguished Lecture in Law with the above topic by Professor Jill E. Fisch. The lecturer is a leading voice in the field of corporation law, and the lecture provides the Delaware Bar, particularly the members of the bench on both […]
Bad Rule Adopted on IR
James McRitchie, 08/20/2011 ,
The US Securities and Exchange Commission (SEC) has approved a New York Stock Exchange (NYSE) rule opposed by investor relations service providers who fear the measure will harm their ability to compete. The SEC’s Division of Trading and Markets approved (PDF 95KB) new Section 907.00 of the Listed Company Manual, which will result in the […]
India: Independence of Boards at Risk
James McRitchie, 08/20/2011 ,
Boards have become larger but controlling for other things, less independent (have fewer independent directors) after the crisis. Much of this seems to be the result of a “supply shock” in which independent directors have become more aware of the risks associated with board positions. In the three weeks of January 2009 after the Satyam […]
"Video" Friday: Dave Lynn and Marty Dunn on Proxy Access
James McRitchie, 08/19/2011 ,
No video today but borrowing a recent installment from TheCorporateCounsel.net. Oops, you’ve got to be a member to listen to the Dave & Marty radio show discussing the DC Court of Appeals decision in the proxy access case and the implications for the SEC. Another good reason to signup for their great service. Here’s CNBC’s coverage. PwC’s perspective. […]
The Potentially Binding Nature of Say on Pay
James McRitchie, 08/18/2011 ,
Say-on-pay, somewhat hollow on its own, could be used as a gatekeeper of sorts for corporate waste claims, argues Steven C. Caywood in Wasting the Corporate Waste Doctrine: How the Doctrine Can Provide a Viable Solution in Controlling Excessive Executive Compensation, 12/2010. A revitalized corporate waste doctrine would allow shareowners to have some meaningful power […]
CSX Decision May Encourage Use of Social Media by Shareowners
James McRitchie, 08/17/2011 ,
In a guest post on Active Investing, Phil Goldstein notes the importance of the Second Circuit’s CSX opinion is not about swap contracts. See Blog Post on CSX Decision More important is that it reduces the fear that mere communication between like-minded shareowners generates the need to form a 13d group. Merely alleging “concerted action” is […]
Monitoring the Supreme Court
James McRitchie, 08/17/2011 ,
I don’t know if the SEC will appeal the proxy access decision to the U.S.Supreme Court but if they do, or if you are following other issues that go before that body, you might want to load up a couple of free apps for iOS and Android OS devices: OyezToday tracks the current business of […]
Review: Business Ethics and Corporate Sustainability
James McRitchie, 08/16/2011 ,
Business Ethics and Corporate Sustainability contains fourteen essays examining mainstream business models with the aim of designing more sustainable systems with regard to corporate responsibility issues, such as the environment and human rights, while reducing overall risk profiles and increasing legitimacy. Christopher J. Cowton, for example, examines the moral status of corporations, their collective responsibility […]
Review: Your Billable Life
James McRitchie, 08/15/2011 ,
This isn’t a book about corporate governance but since a large number of attorneys read this blog I thought I’d post a quick review of Your Billable Life: A Law Firm Survival Guide for New Attorneys by Bruce F. Dravis since I recently reviewed his excellent book The Role of Independent Directors in Corporate Governance. […]
The Role of Independent Directors in Corporate Governance: A "Must Have" Reference for Every Corporate Director
James McRitchie, 08/15/2011 ,
When I reviewed the first edition of The Role of Independent Directors after Sarbanes-Oxley by Bruce F. Dravis I called it an entire reference library in a thin volume. For the second edition, entitled The Role of Independent Directors in Corporate Governance, the number of pages has gone up from about 170 to 250 and […]
Google Book Bibliography Updated
James McRitchie, 08/14/2011 ,
Digital Scholarship has released version 7 of the Google Books Bibliography, which presents over 325 selected English-language articles and other works that are useful in understanding Google Books. It primarily focuses on the evolution of Google Books and the legal, library, and social issues associated with it, especially the Google Book Settlement. To better show […]
Governance Roadshows Prepare for Proxy Season
James McRitchie, 08/13/2011 ,
Francis Byrd, Laurel Hill Advisory Group, Jeffrey Morgan, National Investor Relations Institute and Kenneth Wagner, Peabody Energy Corporation, discussed the governance roadshow idea at the Society of Corporate Secretaries and Governance Professionals conference in June. Now might be the time to begin preparing to engage shareholders with such an effort – especially since the recent […]
Risk Managers Needed on Audit Committees
James McRitchie, 08/13/2011 ,
Overall, the number of U.S. Foreign Corrupt Practices Act (FCPA) enforcement actions increased by 85% in 2010. Over the course of the year the U.S. Department of Justice brought 48 criminal cases and the SEC filed 26 new actions. The trend has continued in 2011. In February, 2011, Tyson agreed to a $5.2M settlement. A […]
Video Friday: Fault Lines – the Top 1%
James McRitchie, 08/12/2011 ,
Video from Al Jazeera on how the US got so stratified. Sometimes an outside perspective is (more…)
Federal "Agency Judgement" Rule Needed
James McRitchie, 08/11/2011 ,
Roger Coffin, associate director of the Weinberg Center for Corporate Governance, argues the D.C. Circuit Court’s recent decision to vacate SEC Rule 14a-11 requires a rethinking of the APA and its intersection with the requirements of the law adopted by Congress in 1995 requiring enhanced cost/benefit analyses. A better approach, and one the SEC should […]
Trading on Emotions
James McRitchie, 08/10/2011 ,
Investors’ previous experiences with a stock affect their willingness to repurchase the stock. Using detailed trades data from two brokers, Michal Strahilevitz, Terrance Odean, and Brad M. Barber document that investors are reluctant to repurchase stocks previously sold for a loss and to repurchase stocks that have risen in price subsequent to a prior sale. They […]
Support Women on Boards: 20% by 2020
James McRitchie, 08/09/2011 ,
Three college degrees for every two earned by a man. 85% of purchasing decisions. Nearly 50% of the workforce. And yet, the tiniest of chips in the glass ceilings of boardrooms across corporate America with women holding just 18% of corporate board posts at S&P 100 companies. What’s wrong with this math? Aditi Mohapatra, Senior […]
Support Rulemaking Petition on Corporate Political Spending
James McRitchie, 08/08/2011 ,
A group of ten very prominent corporate and securities law experts submitted a formal rulemaking petition to the SEC last week urging the Commission to develop rules requiring public companies to disclose the use of corporate resources for political activities to shareowners. Please take a few minutes to join with me writing an e-mail to the SEC in […]
Stock Picking Undervalued Low CorpGov Risk Companies
James McRitchie, 08/07/2011 ,
Great to see another article by Kapitall at Seeking Alpha that factors corporate governance ratings into stock picking. In this case we’re looking at companies where the P/E ratio has fallen at the same time earnings have risen — to find cases where earnings may not be fully priced into undervalued stock. The screen also […]
Stakeholder Engagement Improves Valuation
James McRitchie, 08/06/2011 ,
Wharton Professor of Management Witold Henisz and two co-authors researched the role that stakeholder events played in companies’ efforts to maximize profits. Their paper, Spinning Gold: The Financial Returns to External Stakeholder Engagement, found the value of stakeholder relationships worth twice as much as the value of physical (more…)
Bilbrey Wins CalPERS Board Seat
James McRitchie, 08/05/2011 ,
Michael Bilbrey is the apparent winner of a special runoff election to fill a vacancy on the 13-member CalPERS Board of Administration. According to the unofficial vote count, Bilbrey received 117,034 votes, while Richard Ross received 78,718 votes. The result is not official until certified by the California Secretary of State’s Office. Bilbrey and Ross were […]
Bilbrey Wins CalPERS Board Seat
James McRitchie, 08/05/2011 ,
Michael Bilbrey is the apparent winner of a special runoff election to fill a vacancy on the 13-member CalPERS Board of Administration. According to the unofficial vote count, Bilbrey received 117,034 votes, while Richard Ross received 78,718 votes. The result is not official until certified by the California Secretary of State’s Office. Bilbrey and Ross were […]