Author: James McRitchie

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...

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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,...

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CEO Pay Machine Destroying America

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...

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How to Think: Reviewed

How to Think: A Survival Guide for a World at Odds (buy), by Alan Jacobs, is not directly about corporate governance. It is more about learning more from your engagements with those who do not share your views. Corporate Governance (#corpgov on Twitter) has not been immune from incivility. How to Think could help us all to better diagnose forces that keep us from thinking, while helping us to acknowledge that it is impossible to “think for yourself.” I’ll post a few of my takeaways from How to Think below. If you only have time to scan a couple...

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Related Party Transaction Rejected

Related Party Transaction Defeated at India-Based Raymond According to a recent report by InGovern, primarily focused on India, Raymond, in its AGM on 5th June, proposed a contentious related party transaction where it wanted to sell one of its prime properties to its Chairman and some of his relatives. As bad as things have gotten in America, I do not recall seeing anything quite like it. The price which was lower than 1/10th of the market value. While the company said through the explanatory statement that this would result in a loss for the company, we didn’t see any...

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Shareholder Society Better Chamber Mantra

A shareholder society appears to have no place in the U.S. Chamber of Commerce Center for Capital Markets Competitiveness (CCMC) severely flawed paper on shareholder proposal reform. The paper is intended to contain a “set of recommendations for the SEC on fixing the broken Rule 14a-8 system in order to protect investors and make the public company model more attractive.” However, the report attempts to solve our economic woes by eliminating shareholder rights. I criticized their report in my post Shareholder Proposal Reform Rebutted. Instead of seeking to amend Rule 14a-8 to create an essentially democratic-free zone for entrenched managers and boards,...

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Walden Withdraws Vanguard Proxy Voting Shareholder Resolution

Walden Asset Management has engaged a number of investment managers and mutual funds on their proxy voting practices, specifically challenging voting records on shareholder resolutions addressing significant social and environmental issues. I see this as a major victory. However, more Vanguard shareholders need to speak out to ensure momentum continues. Contact Vanguard. In 2017, Walden filed resolutions with two Vanguard equity index funds that requested a review of their proxy voting at portfolio companies, particularly on shareholder resolutions focused on climate change. While mutual funds are not required to hold annual meetings for investors, Vanguard scheduled a November meeting for...

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Multi-Class Share Ban: Speculation

Multi-class Share Ban: Methodology Multi-class share structures were banned by S&P from joining their most popular indexes. The move has been hailed by investors, myself included. Little noticed by the mainstream press, but discussed briefly by Davis, Polk & Wardell LLP is a provision allowing spin-offs from companies (like Alphabet) to be listed. Importantly, a newly public company spun off from a current S&P Composite 1500 index constituent would not need to meet the criteria for new additions to the index, and so would effectively benefit from its parent’s grandfathering. S&P Dow Jones believes this helps the index meet...

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Mutuality Business Models Explored

The objective of the forum videoed below was explore how the adoption of mutuality principles and the Economics of Mutuality approach to value creation can contribute to the both society and the commercial success of firms. The notion that business has a significant role in addressing human and social problems has led to a re-evaluation of the purpose of business. Putting mutuality – the interests of others – ahead of profit maximisation can generate more value for both stakeholders and the company than traditional profit maximisation. The best businesses do good through the co-creation of commercial and social benefits. There...

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Shareholder Proposal Reform Rebutted

The U.S. Chamber of Commerce Center for Capital Markets Competitiveness (CCMC) released a paper on shareholder proposal reform, which contains a “set of recommendations for the SEC on fixing the broken Rule 14a-8 system in order to protect investors and make the public company model more attractive.” See also the Chamber’s press release, U.S. Chamber Offers Recommendations to SEC on Shareholder Proposal Reform. Rule 14-8 is not broken, many of the Chamber’s attestations are alternative facts and its recommendations are more likely to hurt our economy than help it. The paper is very similar to their previously released Responsible Shareholder Engagement And Long-Term...

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Proxy Access Battlefront Shifts: HRB No-Action Rejected

The “Proxy Access Battlefront” has shifted once again, as reported by Ning Chiu of Davis Polk (The Proxy Access Battlefront for Next Season? SEC Staff Rejects Attempt to Exclude Proxy Access Shareholder Proposal). Chiu’s post captures the trajectory of proxy access amendment efforts. I’ll just quickly summarize her post, adding a little commentary, and will then report on a few additional observations from the battlefield. Excuse my blood, while I take the metaphor too far. (Okay, maybe I’ve been watching too many episodes of Rebel: Thief of the People on DramaFever but sometimes my fight to end what are...

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Broad-Based Ownership at Twitter: Academic Perspective

Through a proxy proposal, we asked the Twitter board to study broad-based ownership, such as cooperatives, for lessons to be learned on how to make Twitter both more productive and more democratic. The proposal won enough votes to be brought back next year. In the meantime, we continue building a campaign and studying broad-based ownership models ourselves. With that backdrop, I was delighted to see commentary in Fortune by Joseph Blasi and Douglas Kruse entitled, Why Don’t Twitter’s Employees and Customers Buy the Company?   “Consider why it might actually work,” they argued. Broad-Based Ownership Well Worth Consideration Such a...

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WD-40 Win Win – Majority Vote Standard

WD-40 win win is due to a shareholder proposal filed by James McRitchie and directors who want good corporate governance practices. Earlier this week, I reported that Broadridge amended its proxy proxy access bylaws to allow groups of 50 to nominate directors. Now WD-40 has filed bylaws to implement McRitchie’s proposal requesting that uncontested directors be elected only by a majority vote. WD-40 Win Win: No Fanfare Typical of successfully negotiated shareholder proposals, this WD-40 win win got no notice in the mainstream press and will not be counted by organizations, such as the Manhattan Institute, who attempt to demonize...

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Broadridge Amends Proxy Access: Allows 50

Have you heard the news? Broadridge amends proxy access bylaws on July 6, 2017, to do the following: Increase the number of stockholders that can aggregate their shares to make a proxy access Board nomination from 20 to 50 stockholders, Eliminate a requirement to count individual funds within a mutual fund family as separate shareholders for purposes of satisfying the minimum ownership requirements to make a proxy access nomination, and Eliminate a requirement that a previously nominated proxy access nominee achieve a specified level of shareholder approval in order to be eligible for re-nomination. Broadridge Amends Proxy Access: No...

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Corporate Governance Experts on 21c Fox Bid for Sky

On Thursday 16 March in a statement to Parliament the Secretary of State confirmed that she was intervening in the proposed merger between 21st Century Fox, Inc and Sky plc on the media public interest grounds of plurality and commitment to broadcasting standards. This began the process whereby Ofcom and the Competitions and Markets Authority (CMA) prepared reports on the public interests specified and jurisdictional issues, respectively. The Secretary of State received those reports on 20 June and on 29 June, in a statement to the House, confirmed that she is minded-to refer the proposed merger to a Phase 2 investigation on the grounds of media plurality and minded-not-to refer on the grounds of genuine commitment to broadcasting standards. She also confirmed that she is minded-not-to accept a set of undertakings-in-lieu of referral offered by the parties on 21 June. As required by legislation, the Secretary of State is giving the parties to the merger an opportunity to make representations in relation to her minded-to-refer decision on media plurality grounds decision and has also given them the opportunity to make representations on her decision on undertakings in lieu of referral. She has also invited representations from third parties which set out new or substantive evidence and any comment on Ofcom’s approach in relation to the not-minded-to refer decision on commitment to broadcasting standards. The consultation is open until 5pm...

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Interfaith Center on Corporate Responsibility: CHOICE Act

The Interfaith Center on Corporate Responsibility, a coalition of institutional investors representing $200 billion in invested capital that engage corporations on the environmental and social impacts of their operations, sent a letter yesterday to all U.S. Senators urging them not to pass the Financial CHOICE Act. The proposed legislation, which passed the House and is currently pending in the Senate, would not only eviscerate critical financial reforms instituted in response to the 2008 financial crash, but would also eliminate the long-standing right of shareholders to exercise their voice regarding the governance of the companies they own. Interfaith Center on Corporate...

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Hybrid Listed Cooperatives

Innovations in Cooperative Ownership: Converted and Hybrid Listed Cooperatives (Link), by O.F. van Bekkum and J. Bijman, is one of the more interesting research papers I have read since our proposal for Twitter (TWTR) to study cooperatives won 5% of the vote, making it eligible for resubmission for the 2018 annual meeting. Before we redo the proposal (and perhaps expand its use to other companies), I want to examine the available research. If you lean of other studies, please let me know. For background on the 2017 proposal at Twitter and alternatives, see the following: Meet the tech activists who...

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Video Friday: CorpGov Micro-Cap Best Practices

Mark Collinson and Elaine Ketchmere of Compass Investor Relations present micro-cap best practices in corporate governance. This is from the webinar, Corporate Governance Best Practices & Communication Strategies, sponsored by OTC Markets Group and Compass Investor Relations. Overall, excellent advice; I did have one nit to pick.  Collinson and Ketchmere share what investors expect from companies in today’s highly-competitive capital markets. Whether your company is newly-listed or is at a more mature stage with a wider shareholder base, this webinar provides ideas to improve your corporate governance and attract new capital and wider ownership. This is a very thoughtful presentation. Clarity,...

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MBII Annual Meeting Gone Missing

MBII, Marrone Bio Innovations, Inc., was added to the Russell Microcap Index after the market closed on June 23, 2017. Hopefully, that will provide some needed stability to this volatile stock, so it is great news. However, corporate governance concerns remain. For example, when will our company hold the 2017 annual meeting? MBII Has Plenty of Positives According to Dr. Pamela Marrone, Founder and CEO of Marrone Bio Innovations, We are very pleased to have joined the Russell Microcap Index. This is an important milestone for Marrone Bio Innovations and represents an opportunity to increase our visibility within the public market investment...

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Alphabet Shareholders Overwhelmingly Support Equal Voting

At Alphabet, Inc.’s most recent annual meeting on June 7, 2017, class A shareholders overwhelmingly supported a shareholder proposal asking company management to recapitalize the share structure so that each share has one vote. According to the proponents of the proposal, assuming that all outstanding class B shares were similarly voted, then up to 99.8% of class A shareholders supported the proposal. Of class B insider shares, if only executive officers and directors of the company are counted, then an estimated 88.7% of class A shareholders still supported this proposal. We hope this will be a wakeup call for Alphabet...

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About CorpGov.net

Corporations should not be democratic-free zones. "Corporations determine far more than any other institution the air we breathe, the quality of the water we drink, even where we live. Yet they are not accountable to anyone." (Power & Accountability) Participate to ensure accountability! Research fund votes: Proxy Democracy. Follow Corporate Governance on Twitter. Join coalition building efforts through As You Sow. Corporate Governance (Corpgov.net) chronicles over twenty years of struggle to make public corporations more democratic. More About CorpGov.net (Disclosures and Disclaimers.)

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