James McRitchie, the publisher of Corporate Governance and one of three retail shareowners accused in the New York Times of holding Corporate America ‘hostage,’ will be in Los Angeles September 29 through October 1 attending the Council of Institutional Investors Fall 2014 Conference.
I am eager to meet with readers to discuss activist corporate governance strategies and how we can work together. Outlined below are some projects I’m working on. If you’d like to discuss any of them or other possible areas for cooperation, please contact me prior to the conference. Additionally, I am always interested in guest posts. Reach out to thousands, especially our under-covered readers in Beijing and India.
Pension funds have disclosed their proxy votes for many years. Since 2003, investment advisers and mutual funds have also been required to disclose. Unfortunately, many do not make accessing this information easy and few, if any, provide any analysis of how their votes compare with others. See, for example, how ProxyDemocracy.org compares fund voting in four basic issue areas. What are best practices?
Funds that announce their proxy votes in advance can influence other voters, some have even argued they have a fiduciary duty to so when they could influence the outcome. I am working with academics to find evidence supporting this notion. Funds using the ISS voting platform can simply tell ISS they want to disclose like Flordia SBA. Funds using the Glass Lewis platform can say they want to disclose like CalSTRS. How do we get them to do so?
The 1994 3rd Restatement of Trust Law, subdivision (c)(8), encourages trustees to consider “an asset’s special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries.” Some have argued these ‘special values’ could include clean air, clean water, healthy food, disclosure of political contributions. At some pension funds, members elect some trustees. Campaigns provide an opportunity for feedback on such issues. Survey mechanisms could help educate both trustees and members concerning ‘special values’ and proxy voting policies. What are best practices?
Volunteers Willing to Present Proxy Proposals
SEC Rule 14a-8(h)(1) requires shareholders or their representative to present their proposal at the AGM. Traveling to each meeting can become burdensome. I would like to build an informal network of people willing to present proposals at local meetings. A network of such volunteers would make it much easier to propose corporate governance reforms at companies around the U.S., especially at small-cap companies.
About 90% of shareholders don’t bother to vote their proxies. An even larger number probably probably don’t contact their mutual or pension funds concerning how the fund is voting its proxies in the ‘best interest’ of members and investors. How do we get individuals to care about proxy voting? This seems like the most fundamental issue of all. One of the best videos on this subject that I have seen come from the now defunct MoxyVote.com. I’d like to learn of additional efforts.
Client Directed Voting (CDV) Platforms
Before going out of business, MoxyVote was attempting to set up a open CDV to enable retail shareowners to implement a proxy voting policies similar to those of most institutional investors. I am eager to learn of and contribute to similar efforts using websites or phone apps.
Innovative Proxy Proposals
I’m always looking for innovations in proxy proposals. For example, we need more diversity and fresh thinking on many boards. However, some of the best board members may be old or long-serving. Capping the age or years of service for all directors may be counter-productive. Therefore, I have proposed (first at Costco) that at least two thirds of board members serve for less than fifteen years. That would at least begin to reduce the most serious levels of board entrenchment. I’m interested in learning of other examples of innovative corporate governance proposals.
I have received several examples from readers of companies trying to avoid their shareholders by holding annual meetings in remote locations or at difficult times. I will wait until after the CII meeting to make the second annual foxhole award. If you have nominations, please let me know.