Proxy Insight, a brand new service providing the most comprehensive information on the actual voting behaviour of key global shareholders, is currently recruiting for a number of positions as outlined below. If you are interested in applying please send your CV and covering letter to [email protected]: Continue Reading →
Archive | July, 2014
Last month, with the help of fellow ‘economy class investor’ John Chevedden, I submitted a proposal to Hain Celestial (HAIN) to adopt a full majority director election standard. Majority voting has become a widely prevalent practice in the S&P 500 index, with only 14% of companies failing to adopt this standard. Hain is in the S&P 600 mid-cap index where only 47% have adopted a majority vote standard. Most maintain a plurality standard. So, we were attempting to move this good governance standard downstream to mid-caps. Continue Reading →
The National Association of Corporate Directors (NACD) announced the 2014 NACD Directorship 100, the annual list that recognizes leading corporate directors, corporate governance experts, policymakers, and influencers who significantly impact boardroom practices and performance. NACD has recognized individual directors who serve as role models in promoting exemplary board leadership, oversight, and courage in the boardroom for more than 37 years. Continue Reading →
It is good to see former CalPERS CEO Federico R. Buenrostro finally pleading guilty, with “sources” telling Pensions & Investments that “his admissions could result in expanded criminal charges for his codefendant… Alfred Villalobos,” as well as possible “indictments against two former CalPERS board members, Kurato Shimada and Charles Valdes.” (Guilty plea opens new chapter in CalPERS story and Former CEO of CalPERS pleads guilty to fraud, corruption charge, LATimes). Continue Reading →
The Los Angeles City Employees’ Retirement System (LACERS), a $13.9 billion public pension fund, is requesting information from vendors with expertise in providing proxy voting services with a full range of proxy analysis and reporting capabilities. I expect they will hear from the dominant proxy voting services providers, ISS and Glass Lewis, but this also seems like a real opportunity for firms that are smaller, newer and/or based outside the United States to provide proxy voting services to a large public pension fund.
LACERS encourages smaller firms to apply for this RFI. Continue Reading →
John Oliver, the HBO comedian, discusses income inequality in America. How do you talk about income inequality without being accused of fomenting class warfare. pointed out in an epic rant on Sunday night, that optimism is woefully misplaced when it comes to the subject of severe income inequality. America’s biggest losers in the income inequality game are not about to win the lottery. Ain’t gonna happen. The game is rigged. Continue Reading →
GMI Ratings, the leading provider of research, data and analytics on environmental, social, governance (ESG) and forensic accounting risks affecting the performance of public companies, is introducing Accounting and Governance Risk (AGR®) ratings on over 9,000 companies in nearly 60 emerging market countries. GMI’s AGR ratings capture a variety of accounting irregularities and corporate governance weaknesses associated with negative events. With the addition of the emerging market companies, GMI now offers AGR ratings on nearly 29,000 companies worldwide. Continue Reading →
Cairn India is an oil and gas exploration and production company, headquartered in Gurgaon, India. It is a subsidiary of Vedanta Resources. Cairn India is one of the largest independent oil and gas exploration and production companies in India.
InGovern, India’s first independent proxy advisory and corporate governance research firm. reports that Cairn is giving loan of USD 1.25 billion to a group company, a foreign subsidiary of Sesa Sterlite Limited, at Libor plus 300 basis points for a 2-year period. The company has already disbursed $800 million, even before informing the shareholders. The disclosure is being made post hoc.
Continue Reading →
Vincent Ryan‘s recent CFO article, Rethinking Buybacks, should give directors pause before jumping on the bandwagon. In the first quarter of 2014, S&P companies repurchased an estimated $159.5B of their own shares. However, the performance of the S&P 500 Buyback Index, which tracks 100 stocks with the highest buyback rations, is lagging the return of the overall S&P 500 by nearly one percentage point, after beating it by 10% in 2013. Continue Reading →
When a company moves its shareholder meeting to a remote location, it is often associated with bad news, according to Evasive Shareholder Meetings (NBER Working Paper No. 19991) by Yuanzhi Li and David Yermack. The study finds that “companies are more likely to announce unfavorable quarterly earnings in the aftermath of long-distance meetings, and these firms’ stock prices significantly underperform market benchmarks over the six months following the meeting date.” After examining nearly 10,000 annual meetings held between 2006 and 2010, the authors find that a company that holds a shareholder meeting 1,000 miles away from its corporate headquarters has an average abnormal cumulative return of -3.7 percent on its stock during the ensuing six months. Continue Reading →
Last year I introduced a proxy access proposal at Reeds (REED) calling on the Board to allow 1% shareowners holding for two years to place their director nominees (up to 24% of the board) on the proxy. It also would have allowed a party of 25 or more $2,000 one year shareowners to place an equal number of nominees on the proxy. Since Reeds had a five member board, the proposal would have allowed for up to two shareowner nominees from two non-coordinating parties. Continue Reading →
The Conference on the Use and Misuse of Stock Price will take place on Friday, September 19, 2014, from 9:00AM-5:30PM at Columbia Law School in New York City and will be hosted by the Millstein Center and IRRC Institute. Mark your calendar. Continue Reading →
The American economy could face significant and widespread disruptions from climate change unless U.S. businesses and policymakers take immediate action to reduce climate risk, according to a new report, “Risky Business: The Economic Risks of Climate Change in the United States.” Check out their blog too.
The U.S. economy faces significant risks from unmitigated climate change. The Risky Business report presents a new approach to understanding these risks for key U.S. business sectors, and provides business leaders with a framework for measuring and mitigating their own exposure to climate risk. Join Henry M. Paulson, Jr., Michael R. Bloomberg, Thomas P. Steyer, and the members of the Risk Committee for the report release on Tuesday June 24th in New York City.
The Risky Business research focused on the clearest and most economically significant of these risks: Damage to coastal property and infrastructure from rising sea levels and increased storm surge, climate-driven changes in agricultural production and energy demand, and the impact of higher temperatures on labor productivity and public health.
The MBTI® assessment has been used successfully in improving board dynamics with many of Resultive Boards’ clients. By providing individual and team personality type reports, Resultive Boards has been able to illuminate the advantages of type diversity in decision making and problem solving, increase the efficiency of communication, and provide a common, nonthreatening language for all members of the board with whom they’ve worked. Continue Reading →
Thought experiment: Suppose the 21,000 employees of Hobby Lobby had been anonymously polled about whether their company should pay for insurance coverage for contraception, as required by the Affordable Care Act. Suppose the results showed that a comfortable majority, say 55 percent, believed — against the views of their leaders in management — in full coverage. What can we deduce from this hypothetical but plausible scenario? Three deductions come to mind.
One is that the notion of a poll, while interesting, is a meaningless act. Under commonly accepted notions of corporate law, employee voice does not really exist. It has no “standing.” It does not count. In light of that cold hard fact, employees should simply accept the judgment of their betters in management and get back to work. Continue Reading →
SSRN, the Social Science Research Network, is one of the best sources for academic research on corporate governance. What follows are brief highlights from four recent papers in corporate governance related topics. You may find SSRN research on corporate governance of interest.
Does Corporate Governance Quality Affect Analyst Coverage? Evidence from the Institutional Shareholder Services (ISS)
Chintrakarn, Pandej and Jiraporn, Pornsit and Kim, Young Sang and Kim, Jang-Chul, Does Corporate Governance Quality Affect Analyst Coverage? Evidence from the Institutional Shareholder Services (ISS) (June 25, 2014). Available at SSRN. Continue Reading →
TIAA-CREF, the $569 billion financial services provider, appointed Bess Joffe as managing director of corporate governance, effective August 4. She will report to Jonathan Feigelson, senior managing director, general counsel and head of corporate governance, and will be based in London. Joffe will help lead TIAA-Cref’s corporate governance program and policies, including active ownership, public advocacy, thought leadership and proxy voting. Continue Reading →
Corporate Governance Publisher’s Note: Yes, you’ll find many broken links in the material referenced below. After 5, 10 and 15 years, the internet moves on. Many of the organization’s linked have since gone under. We’re just glad to still be here, offering our readers a sense of the history we have shared. More about the WABAC machine.
Five Years Ago in Corporate Governance
This morning, the SEC held a hearing on proxy access. By a three to two vote, Commissioners voted for proxy access. Democracy in corporate governance will dramatically improve with our right to nominate and elect directors, even if limited to 25% of the board. Directors may actually begin to feel dependent on the will of shareowners. Continue Reading →
Dr. Richard LeBlanc, author of Inside the Boardroom: How Boards Really Work and the Coming Revolution in Corporate Governance, discusses how to create effective boards.
In light of corporate malfeasance in recent years, the governance of corporations has been receiving great attention from regulators, researchers, shareholders, and directors themselves. Based on Richard Leblanc’s in-depth five-year study of 39 boards of directors of both for- and not-for-profit organizations, Building a Better Board goes behind the scenes to reveal the inner workings of boards of directors, including how they make decisions. Continue Reading →
The SEC this week weighed into the proxy advisor debate with Staff Legal Bulletin 20, which provides information on the proxy voting responsibilities of investment advisers (i.e. professional investors) as well as clarification on the exemptions from federal regulation which apply to proxy advisory firms. Continue Reading →
On June 30th, the Securities and Exchange Commission released some long-awaited guidance on the procedures that advisers should follow in retaining proxy advisory firms and clarifies the responsibilities for both investment advisers and proxy advisory firms. Here is our initial response for a more detailed response please read our white paper. Continue Reading →
After founders have raised funds from friends and family, and in some cases, angels, the next round of capital is likely to come from professional investors, usually venture capital (VC). Unless the demand for an investment opportunity is so great as to allow the founders to dictate the terms, it is likely that VC investment will be conditioned on election of a board comprised of a majority of independent directors. This brief article explores the reasons why such a demand for founders to cede control can be expected as well as some of the benefits founders may not have considered from such a requirement. The differences and confusion between “independent,” “outside,” “non-management,” and “disinterested” directors are also briefly explained.
1. Founders cede control because it is someone else’s money.
Help Wanted ICGN – Job Description
The Senior Policy Advisor will be responsible for advising/supporting the Managing Director and the International Corporate Governance Network (ICGN) Board on key policy issues which includes:
- Fill in our form on the Corporate Secretary site and click submit
- Supply an executive summary or supporting material
- Cross your fingers and await the shortlist announcement in September!
Deadline to enter: July 18, 2014 Continue Reading →
Stratasys $SSYS, which provides additive manufacturing (AM) solutions (3D printers) for the creation of parts used in the processes of designing and manufacturing products and for the direct manufacture of end parts, is one of the stocks in my portfolio. The next annual meeting for Stratasys is July 10, 2014. ProxyDemocracy.org had collected the votes of two funds on Stratasys when I checked and voted on 7/6/2014. I voted with the Board’s recommendations 30% of the time. View Stratasys Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Stratasys proxy in order to enhance corporate governance and long-term value. Continue Reading →
Guest Post: Bartley J. Madden. After a career in money management and related investment research that included the founding of Callard Madden & Associates, Madden retired as a Managing Director of Credit Suisse/Holt. During his career he developed the CFROI valuation framework which is used today by money management firms worldwide. He is currently an independent researcher and a Senior Fellow at the National Center for Policy Analysis (NCPA). His research focuses on knowledge building and wealth creation as opposite sides of the same coin, and also on the application of systems thinking to public policy. Continue Reading →
Amy L. Goodman and John F. Olson, both of Gibson, Dunn & Crutcher LLP posted Shareholder Proposal Developments During the 2014 Proxy Season on the Harvard Law School Forum on Corporate Governance and Financial Regulation yesterday. It included some good information and analysis but seemed a bit too much like the response to a shareholder proposal should be a lawsuit — an advertisement for Gibson Dunn to this, admittedly biased, eye.
David Bogoslaw, Editor of the Corporate Secretary sent out an email in response that was more balanced with regard to shareholder proposals and lawsuits. I was heading out to Ottawa yesterday, so only had time for a brief response. The following is my open email to Mr. Bogoslaw. Continue Reading →
The most recent issue of Corporate Governance: An International Review has plenty to digest. I found The Social Value of Shareholder Value to be especially interesting. Also available at SSRN. Randall Morck, The Social Value of Shareholder Value (May 2014). Corporate Governance: An International Review, Vol. 22, Issue 3, pp. 185-193, 2014. The Review is the only journal to take a truly international perspective on issues and developments in the theory and practice of the governance, as well as publishing professional practice articles and case studies discussing practical experiences in the field.
Guest Post: Andrew Shapiro is Founder, President and Portfolio Manager of Lawndale Capital Management, an investment advisor that has managed activist hedge funds focused on small- and micro-cap companies for over 21 years, one of the longest periods of experience deploying an activist/relational investment strategy today.
The following is a press release from Lawndale. I am an investor on one of the affiliates. I’ve added votes disclosed on ProxyDemocracy and some observations from a recent GMIAnalyst report. Continue Reading →