Archive | January, 2013

Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime

Malcolm Gladwell’s book The Tipping Point: How Little Things Can Make a Big Difference discusses the “Broken Window theory.

If a window is broken and left unrepaired, people walking by will conclude that no one cares and no one is in charge. Soon, more windows will be broken, and a sense of anarchy will spread.

In the following post I argue that relatively minor problems, like how items left blank on a proxy are counted and how Broadridge labels shareowner proposals, sends a signal. Just like an abundance of graffiti tells you gangs are in charge, switching blank votes to management and relabeling shareowner proposals to gibberish tells you that shareowners are indifferent and that corporate managers have a clear invitation to more serious crime. I ask readers to take a simple action at the end of the post that, like fixing broken windows, could lead to the end of much more serious abuses.  Continue Reading →

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Report Shows Carbon Divestment Does Not Increase Portfolio Risk

As students around the country are asking their university endowments to do the climate math and divest from fossil fuel companies, the financial community is responding with its own math, the “investment math,” to determine the risk impact of carbon divestment. Aperio Group LLC, a financial advisory firm that manages customized portfolios for a range of values-based investors, released its latest analysis of the risks of divesting from carbon: Do The Investment Math: Building a Carbon Free Portfolio.  Continue Reading →

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Active Ownership Increases Corporate Returns

Elroy Dimson, Oguzhan Karakas, and Xi Li analyze an extensive proprietary database of corporate social responsibility engagements with US public companies over 1999–2009. Engagements address environmental, social, and governance concerns. They are followed by a one-year abnormal return that averages 1.8%, comprising 4.4% for successful and zero for unsuccessful engagements. Continue Reading →

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Audio Friday: Robert A. G. Monks Shares Corporate Governance Resources

Robert Monks

I’ve received praise before: CII said my petition to the SEC on proxy access “re-energized” the debate on that subject, Lexis-Nexis subscribers listed my site among the top 25 business blogs and the NACD put me on a list of “people to watch.”

However, never have I felt so honored as when I heard Bob Monks publicly list my website (corpgov.net) and my twitter account (corpgovnet) among resources worth following. If I were an actor, it would be like getting acknowledgement from Daniel Day-Lewis and Meryl Streep! And to top it off, to be in such company as those other resources Bob mentions! Wow! 2013 is starting out rather nicely. I’d better ask my wife to give me a smack, so my head doesn’t get too big. Continue Reading →

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What to Expect in Regulation/Litigation

Center for Corporate and Securities Law 2013 Directors Forum Bonus Session looks like great add-on to the main event, Directors Forum 2013: Directors, Management & Shareholders in Dialogue, University of San Diego – Institute for Peace & Justice, Sun – Tues, 1/27-29/2013. See ten part coverage from 2012.

The bonus session is Sunday, January 27, 2013 from 2:30 p.m. to 4:45 p.m. in the Kroc Institute for Peace & Justice Theatre on the Continue Reading →

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SVNACD Event – Corporate Boards: Strategy, Not Just Operations Review

Bob Frisch photoBob Frisch is the managing partner of Strategic Offsites Group. He has more than 29 years of experience working with executive teams and boards worldwide on their most critical strategic issues. He has published three articles on teams and decision making in the Harvard Business Review: “Who Really Makes the Big Decisions in Your Company” (12/11), “When Teams Can’t Decide” (11/08) and “Off-Sites That Work” (6/06). Bob’s work has been profiled in publications from Fortune to CFO to the Johannesburg Business Report. He is a regular contributor to Bloomberg Business Week and The Wall Street Journal and his blog appears at HBR.org. Continue Reading →

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Costco: How I Voted – Proxy Score 25%

Costco ($COST) is one of the stocks in my portfolio. Their annual meeting is coming up on 1/24/2013. ProxyDemocracy.org had collected the votes of four funds when I voted on 1/22/2012.  I voted with management only 25% of the time.  View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank will be voted in favor of management’s recommendations. (See Don’t Let Companies Change Shareholders’ Blank Votes) Continue Reading →

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Five Traits Characterize Effective Island Style Leadership

Guest post from Glenn Furuya, courtesy of Pacific Business News, 1/18/2013, page 31. The article caught my eye soon after returning from the funeral of my wife’s great aunt, Kay Kramer (98), who embodied the three cultures Furuya discusses below, both in the flesh and through her work and life. 

Having read hundreds of publications and worked side-by-side with many successful leaders in Hawaii for over 30 years, I believe that Hawaii’s cultural context contributes significantly to effective leadership.

Although few outside these Islands may recognize it, many of our leaders possess a “hard-wiring” that produces outstanding results. Many who have heard my presentation on island-style leadership agree. The following five examples will give you a feel of the inherent potential of island-style leadership. Continue Reading →

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Video Friday: Peter Reali of TIAA-CREF Discusses Proxy Voting

Peter Reali, Lead Corporate Governance Analyst, TIAA-CREF, discusses his process for voting over 100,000 discrete ballot items each season with the Darla Stuckey of the Society of Corporate Secretaries and Governance Professionals. Mr. Reali talks about the use of proxy advisory service data, engagement with issuers, timing, the interaction between governance experts and asset Continue Reading →

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How Mutual Funds Voted on Political Disclosures

As we look back on the 2012 elections one thing is clear, money flowed like water with any barrier that might have contained it removed by Citizens United. Writing for the court in the 5-4 decision, Judge Kennedy opined:

With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters. Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are ‘in the pocket’ of so-called moneyed interests. Continue Reading →

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Take Action: Write to Chevron to Protect Shareowner Rights

Chevron’s subpoena of e-mails in this case goes well beyond the individual players and is a threat to the communication rights of all shareowners. Action: Please take 60 seconds right now to send a message similar to the following to Chevron:

I write to protest Chevron’s subpoena seeking emails and communications from Trillium Asset Management and Simon Billenness to hundreds of organizations, investors and individuals active in challenging Chevron on its oil pollution crisis in Ecuador.

Your action is without precedent. Never before have shareowners faced such a legal challenge for merely communicating with each other. This is a brazen attack on shareholder rights. I urge you to reconsider your position and withdraw your subpoena.

I share the following from the Needmor Fund and Zevin Asset Management on behalf of everyone who is concerned with the rights of shareowners and the rights of people: Continue Reading →

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Former Corp Fin Staff Speaks

Don’t miss upcoming important events from TheCorporateCounsel.net. Tune in tomorrow, Wednesday, for the webcast – “The ‘Former’ Corp Fin Staff Speaks” – to hear former Senior Staffers from the SEC’s Division of Corporation Finance Brian Breheny of Skadden Arps, Marty Dunn of O’Melveny & Myers, Linda Griggs of Morgan Lewis and Dave Lynn of TheCorporateCounsel.net and Morrison & Foerster weigh in on what you need to be doing for the upcoming proxy season, and provide a “bring-down” of what’s happening now in Corp Fin. Continue Reading →

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100 Thought Leaders in Trustworthy Business Behavior

Trust Across AmericaCHESTER, NEW JERSEY, January 14, 2013. Trust Across America, global leaders in information, standards and data, and Who’s Who in trustworthy business has selected 2013’s Top 100 Thought Leaders in Trustworthy Business Behavior. These people collectively represent a group that can genuinely transform the way organizations do business. Consider following us on Twitter.

According to Barbara Kimmel, Executive Director,

The release of this third annual list coincides with the formal launch of Trust Across America’s Campaign for Trust™, a two-year collaborative initiative to reverse the cycle of mistrust in business. Continue Reading →

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Free Handbook: Corporate Governance and Securities Laws for 2013

Public companies are subject to an extensive and complex regulatory regime under the U.S. federal securities laws and stock exchange listing rules.

This free handbook from Vintage Filings provides an overview of the securities law and stock exchange reporting, disclosure and corporate governance requirements applicable to public companies and their officers, directors and large shareholders. Continue Reading →

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SEC to Propose Rules on Corporate Political Spending by April 2013

The SEC recently updated its entry in the Office of Management and Budget’s Unified Agenda to indicate that, by April, it plans to issue a Notice of Proposed Rulemaking to require public companies to disclose their spending on politics. This is huge! Perhaps petitions, accompanied by thousands of e-mails from supporters, actually can have an impact. Congratulations to Bebchuk and Jackson, co-chairs of the Committee on Disclosure of Corporate Political Spending. See their post at HLS corpgov site. Continue Reading →

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Call for Papers – Journal of Corporate Finance

Since the Cadbury Report was published in 1992 in the UK, there has been increasing emphasis not just by UK regulators but also by regulators from other countries, including the USA and Continental Europe, of the role of boards of directors in corporate governance. However, 20 years down the line it is still uncertain whether boards of directors are able to fulfill the important role they have been assigned by regulators. Continue Reading →

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Corporate Governance Quick Bites

Holly Gregory

Holly Gregory’s post Applying Securities Laws to Social Media Communications is the best I’ve seen on when the SEC’s Enforcement Division is likely to recommend an enforcement case to the Commission based on the potential for liability arising from disclosures by corporate officers through social media.

As widely reported, including by WSJ, Netflix and CEO Reed Hastings both received Wells Notices from the SEC, related to something Hastings wrote on Facebook back in June 2012. (Netflix Gets Wells Notice Over CEO Hastings’ Facebook Post, 12/6/2012) Continue Reading →

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International Review Focuses on Executive Compensation

I received my copy of the November edition of Corporate Governance: An International Review a couple of weeks ago (yes, they usually run late). It is a special issue on executive compensation with the usual diversity of well-researched articles from around the globe. I notice that most, if not all, of the articles are available online for free, so if you don’t subscribe to the best journal on international corporate governance research, this is your opportunity to see a little of what you are missing… although each issue is substantially different. Continue Reading →

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Does the Gender of Directors Matter?

Miriam Schwartz Ziv

Miriam Schwartz Ziv

Abstract: How does gender-balance affect the working of boards of directors? I examine boards that have been required for two decades to be relatively gender-balanced: boards of business companies in which the Israeli government holds a substantial equity interest. I construct a novel database based on the detailed minutes of 402 board- and board-committee meetings of eleven such companies. I find that boards that had critical masses of at least three directors of each gender in attendance, and particularly of three women, were approximately twice as likely both to request further information and to take an initiative, compared to boards that did not have such critical masses. A 2SLS model confirms these results. Continue Reading →

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