Archive | February, 2018

Disney Proxy Vote Recommendations

The Walt Disney Company (DIS), operates as an entertainment company worldwide. Most shareholders don’t vote because reading through 74 pages of the proxy AND many more pages of appendices is not worth the time for the small difference your vote will make. Below, I tell you how I am voting and why. If you have read these posts related to my portfolio for the last 22 years and trust my judgment (or you don’t want to take the time to read it), go immediately to see how I voted my ballot. Voting will take you only a minute or two and every vote counts.

The annual meeting is coming up on March 8, 2018. I voted with the Board’s recommendations 47% of the time. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A). Continue Reading →

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Benefit Corporation: Accountability Matters

Benefit corporation governance provides increased accountability. Most of our financial capital is allocated and stewarded through a system that has a primary goal of creating financial return. This goal directs the real economy, where shareholders treat corporations as accountable for financial results, but not for their economic, social or environmental impact. Continue Reading →

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Shareholder Hot Topics: Corporate Directors Forum 2018

Shareholder Hot Topics: Introductory Notes

Most of the Corporate Directors Forums I have attended in San Diego start with “Shareholder Hot Topics.” There is widespread interest in the subject from directors, management, shareholders, consultants and academics. This year the Forum had an overall theme, “How Culture Impacts the Boardroom and Beyond.” Corporate culture is the hot topic, especially after the NACD Blue Ribbon Commission Report on Culture as a Corporate Asset. See also Earning It: Lublin @ Corporate Directors Forum.

Like all Corporate Directors Forums, this one operated under the Chatham House Rule, so you will not find any direct quotes below. These are my notes on Shareholder Hot Topics. As such, they include my opinions as well observations made by speakers panelists and others in attendance at the Forum. This is certainly not a transcript. However, I hope even those who attended the Forum will find the post useful, especially my attempt to provide additional context through links and commentary.

To learn more about the Corporate Directors Forum, click on the following: @corpdirforum on Twitter, tweets from  that often link to other posts, website, and Linkedin. Continue Reading →

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Spending Against Change Heightens Climate Risk

Spending Against Change, a new report from the 50/50 Climate Project, finds that twenty-one of the largest energy and utility companies in the U.S. that have spent at least $670 million over six years to influence elections, regulators and lawmakers have limited board oversight of climate risk and political spending, and lack climate competent board members.

These corporations face the highest exposure to climate risk and are most in need of transformation. Yet, they are at the fore of fighting efforts to combat climate change in a manner that raises their risk profile over the long term. These companies typically have minimal board oversight of climate risk and almost no board members with relevant climate-related expertise. Continue Reading →

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AI: Boards Embracing Technology

Robotics and AI: How will Boards Embrace Tomorrow’s Technologies?

As advertized: AI and Robotics are coming. There is no question that disruptive technologies are going to dominate not only what is introduced into the marketplace but also how our businesses are operated internally. Two evolving, and already disruptive forces, are robotics and artificial intelligence (AI).  From the Board’s viewpoint, how do you get smart on these topics and understand their value to you? What are the implications of enabling a digital workforce within organizations? Are their opportunities for the governance process itself to leverage these technologies? Could you soon be joined in the Boardroom by an AI Bot? The future is already here at some boards. Continue Reading →

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Dual-Class Should Sunset Says Rob Jackson

US stock exchanges should require sunset provisions for dual-class shares, SEC commissioner Rob Jackson said in his first speech since taking office last month.  In the speech at UC Berkeley School of Law, he likened dual-class shares that do not sunset to “corporate royalty” and said such structures were “antithetical to our values as Americans.”

If you run a public company in America, you’re supposed to be held accountable for your work—maybe not today, maybe not tomorrow, but someday.

CII welcomed Jackson’s remarks. “We applaud Commissioner Jackson for using his first major public speech to support CII’s ongoing efforts to address the problem of unequal voting rights,” CII Executive Director Ken Bertsch said in a statement.

A dual-class structure without a sunset provision —‘forever shares’— says to investors, ‘we’ll take your money, but we won’t ever value your vote on how we use your capital to run the business over the long-term.’ That’s not equitable treatment of investors, and it’s certainly not good corporate governance.

CII has endorsed those measures taken by indexes to ban dual-class shares and only reluctantly backed sunset clauses. Jackson did not suggest his fellow commissioners take action, although he did say he hopes they share his views someday. Fellow Democratic appointee Kara Stein already does, saying that dual class listings are “inherently undemocratic.”

I certainly welcome Commissioner Jackson’s remarks. I’ve written many posts on dual-class shares over the last few years. I like the ban indexers are enforcing and also embrace the idea 0f sunset provisions for dual-class shares of two years. However, I don’t see US stock exchanges imposing sunset provisions. That is much more likely to come from the SEC… maybe, under the next administration. Continue Reading →

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Mutualism: Kara M. Stein

Mutualism, the subjects of Kara Stein’s recent talk at Stanford Law, has been a subject that has fascinated me since the 1980’s when I  was awarded an NIMH Fellowship to study what types of corporate governance structures (including mutualism) might be most beneficial to employees, shareholders, and society. I applied many lessons learned in heading California’s Cooperative Development Program (now defunct) and continue to try to apply concepts from cooperatives and mutualism to publicly traded companies, such as Twitter.

Commissioner Stein gave an impassioned speech on mutualism and the symbiotic relationship between companies, employees, and shareholders. Dual-class shares and other mechanisms are eroding mutualism. Such structures are inherently undemocratic. Where is the symbiosis inherent in mutualism? How do stakeholders mutually benefit? Continue Reading →

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Transparent Political Spending: Ford Lost No-Action

The Ford Motor Company ($F) challenged my resolution on Transparent Political Spending and lost. I created a new posting category, “SEC no-action letters.” Posts under this category will include what I believe are precedent setting decisions. By including them on CorpGov.net I will be creating a searchable database going forward of significant decisions for ready future reference. Hopefully, it will reduce the need to recreate the wheel and will save on time defending similar proposals. Read the full no-action file at the SEC. Continue Reading →

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Earning It: Lublin @ Corporate Directors Forum

Earning It: Introductory Notes

Joann Lublin gave the opening keynote at the recent  Corporate Directors Forum 2018 in San Diego. She spoke largely about her new book, Earning It: Hard-Won Lessons from Trailblazing Women at the Top of the Business World. This year the Forum had an overall theme, “How Culture Impacts the Boardroom and Beyond.” Corporate culture is the hot topic, especially after the NACD Blue Ribbon Commission Report on Culture as a Corporate Asset, and within that umbrella topic nothing is more timely than women and diversity. Continue Reading →

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FACT Coalition: US 2nd Largest Tax Haven

The United States has become the second largest tax haven in the world. That’s according to a new report published Tuesday by the Tax Justice Network (TJN), partnering with the FACT Coalition.  TJN’s 2018 Financial Secrecy Index (FSI) finds the U.S. has surpassed the Cayman Islands. Now we are the second largest secrecy jurisdiction, next to Switzerland.  TJN partnered with Transparency International and the Financial Accountability and Corporate Transparency (FACT) Coalition. They held an event in Washington on Tuesday afternoon. I would love to see the FACT Coalition follow up with research on how this corruption impacts corporate governance and civil society. Continue Reading →

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2018 CES: Northern California NACD Insights

The 2018 CES (Consumer Electronics Show) and its impact on boards was the subject of a January 31 meeting of the NACD’s Northern California Chapter. We met at the offices of WilmerHale in Palo Alto. We heard primarily from Maureen Conners, Fashion Incubator San Francisco board director and former director of Deckers Brands (NYSE: DECK); Erin Essenmacher, NACD chief programming officer and founder of the NACD Technology Symposium and the NACD CES® Experience; John Hotta, Kaiser Permanente board advisor and former Microsoft executive; and Sandra Lopez, vice president and general manager of Intel’s Sports Group. Continue Reading →

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Apple: CorpGov.net Proxy Vote

Apple Inc. (AAPL) designs, manufactures, and markets mobile communication and media devices, and personal computers to consumers, and small and mid-sized businesses; and education, enterprise, and government customers worldwide. The company also sells related software, services, accessories, networking solutions, and third-party digital content and applications.

The annual meeting is coming up on February 13, 2018 at the new Apple Park. I voted with the Board’s recommendations 69% of the time. I voted against the pay package. I voted for proxy access amendments and for a human rights committee. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A). Continue Reading →

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AES “Games” SEC: CII Seeks Correction

CII sent an important letter to the SEC on a recent no-action issued to the AES Corporation (AES) (not yet posted). A similar no-action had been granted in 2016 to Illumina (ILMN) on a proposal I (James McRitchie) had submitted. ISS referenced both. From the facts regarding AES, it appears John Chevedden submitted a proposal to lower the required threshold for shareholder to call a special meeting. The current standard is 25%. Chevedden’s proposal requested 10%. The SEC’s no-action letter gave the following rationale: Continue Reading →

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