Archive | September, 2017

CII: Index Providers Speak

Index Providers Speak: Policy Process and Voting Rights

Index providers spoke at  about how they develop their policies. Specifically, they discussed recent developments around voting rights.

Index Providers Represented

  • Annalisa Barrett, Clinical Professor of Finance at the University of San Diego (Moderator)
  • David Blitzer, Managing Director & Chairman of the Index Committee, S&P Dow Jones
  • Pavlo Taranenko, Executive Director, Index Research, MSCI (standing in photo)

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CII: Richard Bookstaber – Dynamic Risk Models

Richard Bookstaber: Human Complexity and the Financial Markets

Richard Bookstaber discusses value at risk modeling — easily the most illuminating talk at #CIIFall2017. It was certainly statistics aimed at the layperson. However, in listening to him, I was glad I completed by PhD comprehensive in statistics 35 years ago.  I scribbled a few notes. Although I can’t guarantee accuracy, if I motivate a few fund managers to read his The End of Theory: Financial Crises, the Failure of Economics, and the Sweep of Human Interaction I will be delighted.

Richard Bookstaber: Shifting From Static to Dynamic Interactions

Value at risk models are moving. Early theorists believed economics would only become a science if approached with mathematical rigor, removing human sentiments, and concentrating on the underlying static causes. After more than 100 years, we began to see that we couldn’t forecast the future by modeling the past. The world isn’t static. Under Dodd-Frank, we began stress tests. What it this happens? If I understand correctly, Richard Bookstaber wants to take modeling a step further – essentially stress testing with agent-based models. Not only does history not repeat itself, people are unpredictable agents. Modeling needs to factor in the dynamic interactions of agents, their models and how activity is ever-changing through feedback loops.

Richard Bookstaber: A Few Key Bullets

  • Agents. Drivers have various heuristics. We can typecast drivers into speeders, lane-changers, etc. to help model defensive driving in autonomous vehicles. 
  • The environment is never the same. Agents act, the environment changes. The cycle repeats.
  • We are not automatons as classical economics assumed. (That’s why I changed majors.)
  • Emergence – we interact with our environment and end up in a stampede. Fire marshals can model human herd behavior.
  • Radical uncertainty – we create and invent, changing our world. Filled with surprises
  • Computational irreducibility – Interactions create dynamic complexity. We can’t solve for life, we have to live it.
  • Non-ergodicity – We change with our experiences. The future will not look like the past.

The Four Horsemen of the Econopolypse – aspects of reality that traditional economics sweeps under the rug… emergence, non-ergodicity, radical uncertainty, and computational irreducibility.

  • Emergence occurs “when systemwide dynamics arise unexpectedly out of the activities of individuals in a way that is not simply an aggregation of that behavior.”
  • Non-ergodicity is a feature of financial markets throughout. That is, markets vary over time; they do not follow the same probabilities today as they did in the past and will in the future.
  • Uncertainty is radical when it cannot be expressed or anticipated, when we’re dealing with unknown unknowns.
  • Computational Irreducibility. Our economic behavior is so complex, our interactions so profound that “there is no mathematical shortcut for determining how they will evolve.”

Richard Bookstaber: More Concepts Discussed

Below are a few more concepts discussed by Richard Bookstaber but I don’t have the notes or time to further decipher. Egress – Liquidity, Flammability – Leverage, Crowding – Concentration, Asset shock or funding shock; Forced sales do to leverage; Price effects do to concentration; Further declines due to illiquidity; Cascades and Contagion; Key Data missing – leverage, concentration, illiquidity, collateral damage. Events have fat tails; they are not symmetric. Movement into tails is not smooth. Risk doesn’t resolve at a constant rate. We must move to an agent-based approach.

The end objectives are to manage risk, generate return, and dampen the crises. Develop scenarios, crowd-source the data and mirror the investment process. High frequency traders have kill switches. That accelerates crisis because trading stops and liquidity drops. Leverage is somewhat tamed but not liquidity. Passive index investing is part of the issue.

If I had my camera, I would have taken some shots of his interesting explanation of cascading impact. See Richard Bookstaber’s YouTube video below, especially starting about 30 minutes in. Read his blog.

My cynical take away is that few will adopt Richard Bookstaber’s methodology because we want simplicity. However, the world isn’t simple. Hopefully, a future CII meeting will feature Bookstaber leading a wise group of investors, feeding cascading scenarios into Watson or some other AI device.

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CII: William Hinmam Interviewed

Keynote Interview: William Hinman of the SEC

William Hinman, Director of the SEC’s Division of Corporation Finance, was interviewed by CII Co-Chair Gregory Smith, Executive Director, Colorado Public Employees Retirement Association at #, I scribbled a few notes.

As you can well imagine for someone speaking from such a sensitive position, there were no bombshell announcements. However, it is certainly good to have a dialogue between CII members and the head of CorpFin. William Hinman did not disappoint.

William Hinman: Disclaimer

I am sure Hinman gave a disclaimer but this is mine. My skills as a journalist are limited to those of the typical sociologist. I only took a few notes on what I thought was timely. If you were there and heard something else, let us know by leaving a comment below sending me an email. Even if you were not there but have something to contribute, please do so.

William Hinman: What I Think I Heard

The SEC’s job is protecting investors without overburdening issuers. They recently revised the rules so that companies can stay private longer with more shareholders. Private markets are developing so that more employees can redeem early shares without the need to go public. See CII: Public Companies Endangered Species?

The massive breach at Equifax is likely to hurt — and may ultimately doom — efforts by Republicans to overturn the Consumer Financial Protection Bureau’s rule banning mandatory arbitration clauses. Will mandatory arbitration change? William Hinman discussed s0me of the issues. For background, see Arbitration Clauses and Class Certification Standards: How the Supreme Court Is Limiting Plaintiffs’ Ability to Maintain Class Actions. He said the SEC would have to analyze the issue if it comes up. However, he does not see it as a rule-making issue… at least not for now.

Universal proxy? Yes, it is widely seen as a positive move. SEC Chair Jay Clayton is reportedly concerned with retail. As I recall (that’s me, not Hinman), Clayton thinks universal proxies will lead to confusion among retail investors. To me, nothing could be further from the truth. Getting multiple proxies and timing delivery is more confusing than anything a universal proxy could add. Mr. Smith said, CII also thinks multiple proxy cards are confusing to retail.

Hinman responded saying SEC may seek still more comments. The debate among commissioners mostly revolves around the level of solicitation effort a dissident must undertake. The currently proposed rule requires that a majority of shareholders be solicited.  What if they don’t solicit? What is the penalty? Background: Four-Year Effort to Allow Universal Proxy Cards for Contested Shareholder Elections Moves Through SEC Channels.

The SEC Looked at 280 no-action letters. In 75% of cases, they agreed with the company. I know that our little group lost far more no-actions than ever this year (specifically on proxy access amendments) because we tried to “compromise” with issuers over raising the group limits for proxy access.

We generally requested fifty, instead of no group limit. That turned out to be a mistake because it was more difficult to prove that limit of 50 (our proposals) was substantially different than a limit of 20 (the most common group limit in company bylaws). Next year should see fewer successful no-actions as our group moves back to requesting no limit.

Of course, those SEC numbers also don’t take into account that shareholders like me essentially withdrew proposals in many cases because companies moved in the right direction. For example, I recently withdrew a proposal at Symantec (SYMC), during the no-action process, because SYMC raised the group limit for proxy access to 50. That kind of partial victory happened in almost 50 cases. Seen in that light, the report that 75% of cases were decided in favor of companies is tempered.

William Hinmam indicated there is a new focus on proxy plumbing. Background: Fixing the stock market’s ‘clogged toilet’ starts in Delaware. Additionally, staff will put out a new SLB (Staff Legal Bulletin) as a result of the annual stakeholder meeting and other input. See my Shareholder Action Handbook for a crude index of SLBs. Suggestions for better descriptors are welcome.

Proven Shareowner Action Formulas


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Reeds, Inc Wants Democratic-Free Zone

Reeds, Inc fights to deepen its a democratic-free zone through dilutions to strengthen the grip of insiders and by opposing proxy access. They are headed for private control, while keeping the company public. Last year, the founder picked a new board. Is it really independent?

Reed’s, Inc (REED) develops, manufactures, markets, and sells natural non-alcoholic carbonated soft drinks in the United States and internationally. Reeds, Inc is one many stocks in my portfolio. ProxyDemocracy.org had collected no votes (company may be too small).

The annual meeting is coming up on September 29, 2017.  I would be happy to meet readers, especially Reeds, Inc shareholders, in the vicinity of 13000 South Spring Street, Los Angeles, California 90061 either the evening or morning before the 1 pm meeting. (contact me) Vote today. If you have already voted, you can change your vote. Your last vote will override any previous vote. More than 90% of retail shareholders don’t bother to vote, so think of yourself as voting for 10.

I voted FOR Proxy Access, AGAINST excessive equity compensation, proposed dilution for financing undisclosed transactions, and the related proposal approving a change in control. I don’t think I have ever seen such a bundle of proposals aimed at entrenchment and reducing shareholder voice. See how and why I voted other items below. I voted with the Board’s recommendations 47% of the time. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A).

Read Warnings below. What follows are my recommendations on how to vote the proxy in order to enhance corporate governance and long-term value.

Reeds, Inc Proxy Voting Guide: ISS Rating

From the Yahoo Finance profile: Reed’s, Inc’s had no ISS Governance QualityScore. Perhaps too low to score? More likely, too small to be on the radar.

Reed’s, Inc Proxy Voting Guide: Compensation

Reed’s, Inc provides for a say-on-pay vote only every three years. Shareholders have no vote this year on compensation. However, in reviewing the information provided on Valentin Stalowir’s employment agreement as the new CEO, I am concerned about the following:

  • Automatic accelerated vesting if there is a change-in-control. This provides an incentive for windfall profits even if such a change disadvantages other shareholders or even if Stalowir’s employment does not terminate.
  • I see no evidence of clawback provisions, stock ownership guidelines, or a required holding period for board members or executives. In their opposition statement to my proxy access proposal, Reed, Inc claims “We have an established record of best governance practices that are responsive to shareholders.” Their idea of what constitutes “best governance practices that are responsive to shareholders” appears to be a very low bar.

Reed’s, Inc Proxy Voting Guide: Board Proposals

Reed’s, Inc Proxy Voting Guide: Directors

I am concerned about carryover directors. I think they were all picked by Chris Reed last year without the benefit of input from the nominating committee that existed when the Committee to Rescue Reeds challenged one man rule. However, I will give most the benefit of the doubt, knowing they face a difficult situation in any attempt to provide an independent voice.

By way of background:

  • 4/19/2017 Chris Reed resigned as CEO and became chief innovation officer. He continues to serve on the board. Stefan Freeman named interim CEO.
  • 6/28/2017 Valentin Stalowir appointed CEO and director. Freeman named COO.
  • Freeman is not standing for reelection to the board. James Bass and Scott Grossman have been nominated for election as directors.
  • After twice reelecting a director who was defeated and opposing my proposal to put teeth into their majority vote bylaw, on 8/25/2017, the board amended the bylaws to require director nominees to resign if they do not receive a majority of votes cast in uncontested elections.

I voted Withhold on Charles Cargile, since he not only is a CEO of a publicly traded company but servers on three public company boards. He is overcommitted. Reeds, Inc will need more of his attention than he has time available. See Who Wins When CEOs Sit on Multiple Boards? Not Investors. Large investors, of which Reeds, Inc has very few, are cracking down on overboarding (Big Investors Want Directors to Stop Sitting On So Many Boards); retail should do the same.

I also voted Withhold on Christopher Reed. We don’t need two inside directors at Reeds, Inc, we need genuinely independent directors… preferably nominated by shareholders, instead of picked by Christopher Reed. Mr. Reed had decades to bring his company to profit and failed. Even without a board seat, he will have substantial influence, since he and his family hold almost 25% of the stock… probably even more if proposed stock plans are approved.

Reed’s, Inc Proxy Voting Guide: Item 2, Omnibus Stock Plan

The board seeks approval to issue 3M shares to be available for award to all employees, officers, non-employee directors and consultants. Issues about:

  • Excessive cost
  • Duration of available and proposed shares exceeds 6 years (expires 9/29/2027)
  • Plan permits liberal recycling of shares
  • Allows broad discretion to accelerate vesting
  • Silent on cash buyout without shareholder approval

Vote AGAINST.

Reed’s, Inc Proxy Voting Guide: #3, Increase Authorized Stock

The board seeks approval to increase the number of authorized shares of common stock by over 100%, from 19.5M to 40M shares.

The board seeks to implement its growth strategy, attract and retain talent, regain compliance with listing standards before 12/22/2017 and meet an agreement with Raptor/HarborReeds to increase common stock by 5M shares. The reasons for the increase in authorized stock lack specificity and the company has a history of repricing options without shareholder approval. Nonetheless, they need the money to continue in business and to stop borrowing a usurious rates.

Vote FOR.

Reed’s, Inc Proxy Voting Guide: #4, Increase Authorized Preferred Stock

The board seeks approval to increase the number of authorized blank check preferred stock by 400%, from 500,000 shares to 2.5M shares.

The board provides no specifics but appears to want flexibility to take advantage of opportunities that may arise.

On the plus side, such stock could be used to finance growth or acquire other companies.

On the minus side, it dilutes the voting power of existing shareholders and could be considered a back-door poison pill, since it can be issued to parties friendly to management. Very little in the way of specifics are provided and the board admits the stock could be used as an entrenchment devise.

Vote AGAINST.

Reed’s, Inc Proxy Voting Guide: #5, Issuance of Shares for Private Placement

Reeds, Inc seeks approval to issue 6M shares (39% of shares as of the record date) at a maximum discount of 25% for consideration not to exceed $8M on or before 12/28/2017. The company states it entered into an agreement with Raptor/HarborReeds on July 13, 2017, but provides little in the way of specifics. Reeds, Inc stock price fell 30% from $2.35 on July 13 to $1.65 on July 14, 2017. Since the specifics concerning any specific proposed transaction were not disclosed, the market did not approve. Neither do I.

Vote AGAINST.

Reed’s, Inc Proxy Voting Guide: #6, Change of Control as a Result of Private Placement

Reeds, Inc seeks prior approval from shareholders of any change of control that could result from the potential issuance of securities pursuant to #5 above. NYSE rules require companies to obtain shareholder approval prior to a change in control.

In my experience, those seeking a change in control often offer a premium to buy out other shareholders or the market signals such a change as positive. In this case, no premium was offered and the market priced the change by cutting the value of stock by 30%.

Vote AGAINST.

Reed’s, Inc Proxy Voting Guide: #7, Establish Range for Board Size

The board seeks approval to set the range of the size of the board between a minimum of 5 and a maximum of 9 at its sole discretion.

Frankly, I do not know the board’s motivation. They could be expanding the potential number of board seats for entrenchment purposes to block potential dissidents engaged in a contest from gaining a change of control.

Without knowing the purpose and seeing no threatened takeover, I will give them the benefit of the doubt.

Vote FOR.

Reed’s, Inc Proxy Voting Guide: #8, Auditor

I have no reason to believe the auditor has rendered an inaccurate opinion, is engaged in poor accounting practices, or has a conflict of interest. However, Weinberg & Company has served as Reeds, Inc auditors for 8 years. It is time to switch to avoid any appearance of capture or lack of independence. Although when I vote against a committee’s recommendation, I would normally vote against the committee, I have decided not to do so this year for lack of audit rotation, since this is a relatively new stance.

Vote AGAINST.

Reed’s, Inc Proxy Voting Guide: Shareholder Proposal

Reed’s, Inc Proxy Voting Guide:  #9, Proxy Access Bylaw Amendments

I submitted this proposal and will speak to it at the annual meeting. The proposal closely follows the 2010 SEC rule requiring proxy access at public companies that was struck down by a conservative DC Circuit Court. The US Chamber of Commerce and Business Roundtable argued the SEC’s cost estimates for implementation were low. Companies would spend considerable sums to keep any shareholder nominees off the proxy.

Since then, more than 60% of S&P 500 companies have adopted proxy access. Out of 13 proxy access proposals going to a vote last year, 13 received majority support. The 1 proposal that failed was at Reed’s Inc, with 33%. The average support for all such proposals, including Reeds, was 66.6%.

The proposal would allow groups of shareholders holding 3% or more of Reeds, Inc common stock held for 3 years to place 2 nominees on the proxy (up to 25% of the board). This would provide direct competition for leadership at minimal cost. The exchange of ideas should drive innovation and lower risk.

Research suggests three women may constitute a critical mass for reframing the decision-making culture of boards. Similarly, having two shareholder-nominated directors may help ensure not only participation on each of the committees but a critical mass for bringing a shareholder perspective to Board decisions. Research also finds that director insulation from removal is associated with lower firm value and worse performance. Proxy access is the surest way to remind directors they can be removed and replaced by shareholders.

Reeds, Inc argues proxy access is not needed, since they have an “established record of best governance practices that are responsive to shareholders,” “majority voting,” and “an annual “say-on-pay” vote.”

However, Reeds failed to provide their opposition statement 30 days in advance of filing their proxy as required by law. Additionally, their opposition statement includes “false and misleading statements,” also prohibited by law. The real “established record” includes:

  • not allowing board candidates to be evaluated by the nominating committee.
  • not removing a director who failed to achieve a majority vote two years in a row
  • opposing my proposal to put teeth in their majority vote bylaw
  • no history of a board evaluation process
  • no history of a succession plan for CEO position
  • failure to notify board or shareholders of voluntary FDA recall regarding exploding bottles of ginger brew or the loss of lucrative contract with Trader Joe’s
  • no annual say-on-pay; only such a vote every three years

If there ever was a company in need of proxy access, it is Reeds, Inc.

Vote FOR.

Reed’s, Inc Proxy Voting Guide: Votes Against Board Position in Bold

As mentioned above, Reeds, Inc may be too small to be in the ProxyDemocracy.org database. That also appears true of Egan-Jones and Proxy Insight. I fully expect institutional investors at Reeds, Inc, like Goldman Sachs and Vanguard will vote for proxy access, since they have a record of doing so. However, institutional investors only hold about 13% of the shares. The largest shareholders at Reed, Inc are Christopher Reed, Robert Reed, and Raptor/Harbor Reeds SP LLC with 25% of the vote, not counting other insiders. The Reeds will probably vote. Will other shareholders bother to vote? Stay tuned.

My votes against the board’s recommendations are in bold below.

# PROPOSAL TEXT CorpGov
1.1 Elect Director John Bello For
1.2 Elect Director Valentin Stalowir For
1.3 Elect Director Lewis Jaffe For
1.4 Elect Director Charles F. Cargile Withhold
1.5 Elect Director Christopher J. Reed Withhold
1.6 Elect Director Scott R. Grossman For
1.7 Elect Director James Bass For
2 Approve Omnibus Stock Plan Against
3 Increase Authorized Common Stock Against
4 Increase Authorized Preferred Stock Against
5 Approve Issuance of Shares for a Private Placement For
6 Approve Change of Control as a Result of Private Placement Against
7 Establish Range For Board Size For
8 Ratify Weinberg & Company, P.A. as Auditors Against
9 Adopt Proxy Access Right FOR

SharkRepellent

Reeds, Inc Proxy Voting Guide: Issue for Future Proposals

Looking at SharkRepellent.net for other provisions unfriendly to shareowners. The main outstanding issue is proxy access:

  • No proxy access, as discussed above.
  • Shareholders cannot call special meetings.
  • Blank check perferred stock may also board to create a poison pill or a new series of stock with special voting power.

Reeds, Inc Proxy Voting Guide: Mark Your Calendar

Stockholder proposals for inclusion in our proxy statement: If a stockholder wishes to present a proposal to be included in our proxy statement and form of proxy for the 2018 Annual Meeting of Stockholders, the proponent and the proposal must comply with the proxy proposal submission rules of the SEC and namely, Securities Exchange Act Rule 14a-8. One of the requirements is that the proposal be received by our Secretary no later than May 4, 2018, which is 120 calendar days before September 1, 2018 – the anniversary date of this Proxy Statement was released to stockholders in connection with the 2017 Annual Meeting. If the date of next year’s annual meeting is changed by more than 30 days from the anniversary date of this year’s Annual Meeting on September 29, 2017, then the deadline is a reasonable time before we begin to print and mail proxy materials. Proposals we receive after that date will not be included in the proxy statement for the 2018 Annual Meeting of Stockholders.

Why You Don’t Fail When You Fail with Chris Reed

Even if he fails with Reeds, Inc, Chris Reed views it as a success. That might be a great personal philosophy, but is it one we want to continue to dominate our board?

Warnings

Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime). I generally vote against pay packages where NEOs were paid above median in the previous year but make exceptions if warranted. According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay), aggregate compensation by public companies to NEOs increased from 5 percent of earnings in 1993-1995 to about 10 percent in 2001-2003.

Few firms admit to having average executives. They generally set compensation at above average for their “peer group,” which is often chosen aspirationally. While the “Lake Woebegone effect” may be nice in fictional towns, “where all the children are above average,” it doesn’t work well for society to have all CEOs considered above average, with their collective pay spiraling out of control. We need to slow the pace of money going to the 1% if our economy is not to become third world. The rationale for peer group benchmarking is a mythological market for CEOs. For more on the subject, see CEO Pay Machine Destroying America.

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FedEx Fights Proxy Access, Lobbying Disclosure

FedEx Fights for a democratic-free zone @ 9/25/2017  annual meeting. Seeks to maintain fake proxy access; refuses to disclose lobbying payments; wants to continue to monitor say-on-pay vote to lobby those who vote against; wants to disrespect human rights where allowed by state laws.

FedEx Corporation provides transportation, e-commerce, and business services worldwide.  FedEx is one of many stocks in my portfolio. ProxyDemocracy.org had collected the votes of two fund families when I checked and voted. Their annual meeting is coming up on September 25, 2017. Vote today. If you have already voted, and want to change your vote, you can. Your last vote will override the previous vote. More than 90% of retail shareholders don’t bother to vote, so think of yourself as voting for 10.

I voted FOR Proxy Access Amendments and all the other shareholder proposals. See how and why I voted other items below. I voted with the Board’s recommendations only 25% of the time. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A). Continue Reading →

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CII: Public Companies Endangered Species?

Public Companies Endangered Species: CII Panel

Are public companies an endangered species? If so, why? How can we solve that problem? At last week’s Council of Institutional Investors (CII) Fall Conference there as an informative panel discussion entitled Public Companies: An Endangered Species?

Panelists were David BrownMichael Mauboussin, and Robert McCooey moderated by the always erudite and entertaining Frank Partnoy, one of the best facilitators in the corporate governance industry. Continue Reading →

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Key Climate Vote Survey Provides Tool

The 50/50 Climate Project released their Key Climate Vote Survey 2017 (link) of votes by America’s largest investors. Those attending last week’s informative Fall Conference of the Council of Institutional Investors in San Diego found out about it and many other newsworthy items.

Key Climate Vote Survey 2017: Groundbreaking Season?

First-time approval of climate risk proposals at Exxon (XOM) and Occidental (OXY) represents a huge win. Victory was only possible because of a highly visible shift in voting by mainstream funds State Street, J.P. Morgan, as well as from BlackRock and Vanguard, which joined climate risk proponents for the first time.

However, do not get complacent. More effort to get mutual funds to address climate change is still needed. According to the 50/50 Climate Project representatives at CIIVanguard backed only 15% of such proposals, while Blackrock voted for only 9%.  while —despite both managers’ high-profile support of resolutions at ExxonMobil and Occidental. The cynic in me says votes may be more driven by the potential for adverse publicity, rather than potential impact on value, although the two are undoubtedly correlated. Compare to Vanguard’s Investment Stewardship 2017 Annual Report.

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Elect Flaherman and Brown to CalPERS

Keep CalPERS healthy; vote for Flaherman and Brown. Ballots have been mailed out to more than 1.5 million CalPERS members. They must be received by October 2nd to count. This is probably the most important election the $333B+ System has ever held, given how the board isolated and ostracized current director J. J. Jelincic for doing his job.  I voted for Michael Flaherman and Margaret Brown. I recommend all members do the same. Take action today.

Questions? Contact [email protected] and [email protected] before and after the election. Flaherman and Brown won’t hide from members once elected. Both have also been endorsed by J. J. Jelincic, the only current board member who routinely asks the tough questions of staff and others on the Board. Continue Reading →

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CEO Pay Machine Destroying America

The CEO Pay Machine (cover)The CEO Pay Machine: How it Trashes America and How to Stop it (Amazon) by Steven Clifford should be mandatory reading for all compensation committees and those who vote proxies for large funds. The book is easily read and understood by the layperson. It also includes the fact-based evidence needed to convince fiduciaries that voting against most executive pay packages is one of the first steps to restoring shareholder value, company sustainability and the very foundations of American democracy.

Why combine CEO and chair positions or pay executives with options when both practices lead to poor results? We don’t except “everyone else does it” as an excuse for harmful behavior from our teenagers; why should we accept it as a reason from compensation consultants and the former CEOs sitting on most corporate boards? Clifford also outlines possible remedies but nothing will be done unless we shift public opinion. If widely read and discussed, The CEO Pay Machine could be central to change. Continue Reading →

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