Archive | December, 2011

FCPA Liability

Two recent developments bring the potential for individual criminal liability under the U.S. Foreign Corrupt Practices Act (“FCPA”) back into the spotlight. These developments underscore the extensive reach of the FCPA, which can extend criminal liability to U.S. and non-U.S. citizens alike and to circumstances where an individual does not have actual Continue Reading →

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Boards, Plumbing, Broadridge & footnoted*

The Changing Profile of Board Recruitment, in the November/December issue of The Corporate Board by Bonnie W Gwin of Heidrick & Struggles, discusses a continued risk aversion among the leadership of the Fortune 500.

Companies seeking to fill directors’ chairs with only current or former CEOs will find it nearly impossible to increase diversity on the board. This may create a conundrum for corporations who want to do both.

Companies are torn between the safety and reliability of veteran leadership but also Continue Reading →

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Complexity Theory & Corporate Governance Failures

Catching up on a couple of noteworthy reviews from recent issues of Corporate Governance: an International Review.

Corporate Governance and Complexity Theory by Marc Goergen, Christine Mallin, Eve Mitleton-Kelly, Ahmed Al-Hawamde and Iris Hse-Yu Chiu.  Reviewer Diane Denis was hoping the application of complexity theory would lead to insights concerning how and where problems arise, allowing corporations to manage more effectively. Instead, according to Denis, the authors use complexity theory to advocate stakeholder governance. Like other such efforts, they fail to Continue Reading →

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Reflections On 2011

The United States Proxy Exchange (USPX) is a experiment premised on the notion that a grass roots movement—by individual shareowners, for individual shareowners and funded entirely by dues of individual shaeowners—can improve corporate governance and address financial abuse. It is too early to say for sure, but based on what we achieved in 2011, the experiment appears to be working. Accomplishments included: Continue Reading →

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Video Friday: Shareholder Empowerment vs. Board Authority

Delaware Chief Justice Myron T. Steele sponsored by The Arthur and Toni Rembe Rock Center for Corporate Governance on Nov 15, 2011. Steele has published over 300 opinions resolving disputes among members of limited liability companies, and limited partnerships, and between shareholders and management of both publicly traded and close corporations. Watch the video. Continue Reading →

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Two Proxy Access Proposals From Daniel Rudewicz

Daniel Rudewicz

Interview with Daniel Rudewicz who submitted proxy access proposals at Paragon Technologies and KSW.

James McRitchie

McRitchie: How about giving our readers a little personal background?

Daniel Rudewicz: During the day, I am the managing member at Furlong Financial, LLC. In the evenings, I am a law school student.  I have lived all over the US, but right now I live, work, and study in Washington, DC.  I am also a CFA charterholder.

McRitchie: What got you interested in corporate governance and proxy access? Continue Reading →

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Fracking Done Right: Guide from IEHN and ICCR

The Investor Environmental Health Network (IEHN) and the Interfaith Center on Corporate Responsibility (ICCR), two shareholder coalitions committed to social and environmental justice, released a guide intended to help increase disclosure and mitigate the impacts of natural gas operations using hydraulic fracturing (commonly referred to as “fracking”).

Responding to growing public concern about the environmental and social Continue Reading →

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An Irrationally Exuberant Christmas

My mother used to recycle Christmas cards. This was back in the 1950s before recycling was fashionable. No, she didn’t put them in a recycle bin, she would send one relative or friend another’s card and include a “dear folks” letter giving everyone the “news” of our family.

Her rationale was that her relatives and friends should get to know each other. Of course, I just blamed it on being cheap but now see it was an early form Continue Reading →

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Board Service: A Great Gig… Especially @ Apple

Looking for work-life balance? Work from home (at least part of the time). Set your own pay — $1,000 per hour and up. No threat of layoffs or workforce cutbacks. Part-time hours and multiple positions available. Excellent way to supplement your retirement income. No application necessary

The term “chemistry,” or your ability to work collegially with the other members, is often used in board searches, and it can make or Continue Reading →

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SEC Appeals Citigroup Decision

The Securities and Exchange Commission’s Director of the Division of Enforcement, Robert Khuzami, today made the following statement on the Citigroup case:

Last month, a federal district court declined to approve a consent judgment because, in its view, the underlying allegations were ‘unsupported by any proven or acknowledged facts.’ As a result, the court rejected a $285 Continue Reading →

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Funds Should Attend More Annual Meetings

The Financial Reporting Council (FRC), UK’s independent regulator “responsible for promoting high quality corporate governance and reporting to foster investment,” is also in charge of the Stewardship Code for institutional investors.

The FRC, 230 pension schemes, fund managers and service-providers have  signed up for the Stewardship Code, including “most of the major investors in UK equities.” According to Financial News (Shareholders: Turn up to meetings!, 12/14/2011), the FRC not only warned companies Continue Reading →

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15th Proxy Access Proposal of Season Filed at Nabors

Bermuda-based energy-drilling contractor Nabors Industries Ltd., already being sued by shareowners over executive pay issues now faces a proxy access proposal filed by CalSTRS and nine public pension funds from Connecticut, Illinois, New York and North Carolina. The company’s stock has lost about a quarter of its value this year. According to New York City Comptroller John C. Liu, who submitted the proposal on behalf of the City’s five pension funds,

Expropriating the corporate treasury to fund egregious CEO pay packages at the shareholder’s expense is both a symptom and a consequence of Nabors’ entrenched board. The only way to fix a recalcitrant board is to enable shareholders to elect directors other than those nominated by that same board.

According to a press release from CalSTRS, the funds are part of a larger group of 11 public funds that called upon the Nabors’ board in a September 29 letter (PDF; 61KB) to Continue Reading →

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Review: The Organizational Ombudsman: Origins, Roles, and Operations–A Legal Guide

Charles L. Howard

I heard Charles L. Howard discuss working on ombuds issues and his book The Organizational Ombudsman during panel presentations at the Silicon Valley Chapter of the National Association of Corporate Directors and at Stanford University. With all the advantages such offices offer to corporations I was wondering why more corporations haven’t set up programs.

At the recent NACD Directorship 100 program I asked that question during a panel focused on whistle-blowing and other mechanisms to report and resolve ethical issues. None of the panelists had any experience with organizational ombudsman at the companies they represented. Looking to the audience of several hundred, they too Continue Reading →

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SEC v. Citigroup Global Markets

Three heavily abbreviated takes on what the case means:

Federal Judge Pimp-Slaps the SEC Over Citigroup Settlement, Rolling Stone

By accepting hundred-million-dollar fines without a full public venting of the facts, the SEC is leveling seemingly significant punishments without telling the public what the defendant is being punished for. This has essentially created a parallel or secret criminal justice system, in which both crime and punishment are adjudicated behind closed doors…

Judge Rakoff blew a big hole in that practice yesterday. His ruling says secret justice is not justice, and that Continue Reading →

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Video Friday: "Say on Directors iPay" @ Apple

My say on director pay will be on the Apple proxy (embedded links added):

6 – Shareholder Say on Director Pay

Resolved: Shareholders request that our Board of Directors adopt a policy that provides shareholders the opportunity, at each annual meeting, to vote on an advisory proposal, prepared by the Board of Directors, to ratify the pay given members of our Board of Directors as disclosed in the proxy Continue Reading →

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Aguilar Sworn in for Second Term

Luis A. Aguilar was sworn to begin his second term as a Commissioner of the Securities and Exchange Commission.  I hope he will be able to bring back the SEC Investor Advisory Committee, which offered a more accessible access point for retail shareowners.

Commissioner Aguilar began his first term as a SEC Commissioner on July Continue Reading →

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HKEx: New Listing Rules

The Stock Exchange of Hong Kong Limited (“Exchange”) recently published its Consultation Conclusions on Review of the Corporate Governance Code (“Code”) and associated Listing Rules. The Code and Listing Rules amendments aim to promote the development of a higher level of corporate governance among listed issuers and bring Hong Kong in line with international best practices.  They will come into Continue Reading →

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LGIM Pushes Board Diversity

Legal & General Investment Management (LGIM), one of Europe’s largest institutional asset managers and a major global investor managing £362 billion in assets for more than 3,000 clients, is trying to persuade headhunters to widen the pool of company directors by bringing in people without direct board experience.

“It’s not just about gender,” says Sacha Sadan, LGIM’s director of corporate Continue Reading →

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