Author Archive | James McRitchie

Kennedy Assassinated: Mt. Lebanon Remembered

I was in a Mt. Lebanon English class on November 22, 1963, taking a test when the principal came on the loudspeaker to let us know President Kennedy had been assassinated. Our teacher told us to take a moment of silence. After 60 seconds, we were to resume our test.

As I had so many other times, I refused to comply with the directives of Mt. Lebanon teachers and flunked the test. Sixty seconds? I was outraged. I was sure if Nixon had been president and had been assassinated, we would have been told to go home. A few year earlier, Nixon had joined us briefly in a game of kickball in front of a friend’s house. It was that kind of Republican community. Continue Reading →

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Trump Jump: Disclose Political Expenses

The Trump Jump

The Center for Political Accountability reported today on a Trump Jump. Mutual funds support for the CPA’s corporate political disclosure resolution jumped significantly in the first year of the Trump presidency. In 2017, support increased to 48% from 43% in 2016, according to an analysis by Fund Votes. The analysis also found that abstentions decreased from 5% to 3%. My own habits also took a Trump jump, since this is the first year I beguan submitting such proposals. My first target is Kimberly-Clark, (KMB) with several more to come.

According to CPA president Bruce Freed, Continue Reading →

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Investor Response to Chamber: Don’t Gut Rights

Investor Response to Chamber: Letter

Representatives of hundreds of investors with trillions of dollars in assets delivered a letter to the SEC on November 9, 2017, An Investor response to U.S. Chamber’s Proposal to Revise SEC Rule 14a-8 (report).

We noted with interest the November 1, 2017, guidance contained in Staff Legal Bulletin No. 14I. While we are reserving judgment about how the guidance may apply in practice, we are particularly pleased by Director Hinman’s accompanying statement that the guidance is not intended to “make things easier or harder for one side or the other, . . . [but] to improve the process.” We strongly support that goal and plan to actively monitor the SEC staff no-action process during the upcoming proxy season to determine whether the goal was achieved.

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CLX: Vote Clorox Proxy Access

The Clorox Company, CLX, manufactures and markets consumer and professional products worldwide. It operates through four segments: Cleaning, Household, Lifestyle, and International. CLX opposes giving shareholders effective proxy access to enable us to place nominees on our company’s ballot. Shareholders have no right to act by written consent. It takes 25% of shareholders to call a special meeting and 80% to amend certain charter amendments. In short, shareholder rights are lacking. Without changes, CLX is likely to continue to lag the S&P 500, as it has done for the last one, two and five year time periods.

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Standing Voting Instructions: Reviewed

Standing Voting Instructions: Empowering the Excluded Retail Investor by Jill E Fisch just could be the most important article on corporate governance this year… if it is widely read and acted on. Download at ecgiPenn Law or SSRN. The above photo is from Small Investors Support the Boards. But Few of Them Vote, The New York Times. Unfortunately, most will not bother to read the article. What follows is both and summary of main points and my commentary. Hopefully, this post will lead to reading the research and adding your voice to those petitioning the SEC to facilitate standing voting instructions. Continue Reading →

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SLB 14I (CF) – SRI Conference: 1st Impression

SLB 14I (CF): Issued During 28th Annual SRI Conference

The latest SEC Staff Legal Bulletin, SLB 14I (CF), was issued on November 1, while 800 attended the 28th Annual SRI Conference in San Diego. I was flipping though the agenda when I got an email from a Bloomberg reporter asking for feedback on SLB 14I, which will further discourage shareholders from submitting proposals, especially those focused on environmental and social issues. It is yet another move against the ability of shareholders to fight for a salubrious environment, while seeking a healthy return.

28th Annual SRI Conference

First, a brief few words about the SRI Conference, then I will dive into SLB 14I. I should have been attending these conferences for 28 years but they did not seem focused enough on governance issues. Over the years, governance and engagement have become more of an issue for them, while environmental and social issues have become more important to me… a happy convergence. Continue Reading →

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Culture as a Corporate Asset

The NACD Blue Ribbon Commission on Culture as a Corporate Asset identifies how boards can play an active role in shaping corporate culture to promote growth and avoid crisis. The NACD Northern California Chapter offered an inside look at the new 2017 Report of the Blue Ribbon Commission on Culture as a Corporate Asset. at its meeting on October 30th at the offices of Wilson Sonsini Goodrich & Rosati in Palo Alto. We were fortunate to have one of the co-chairs of the Report, Nick Donofrio for this highly anticipated publication. Local board leadership fellow and corporate director, Nora Denzel, moderate the chat with Nick, with a great deal of audience participation. There were ample networking opportunities both before and after the event.

Directorship Magazine also highlights the 2017 report on Culture as a Corporate Asset. Continue Reading →

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The Storm Before the Storm: Reviewed

The Storm Before the Storm: The Beginning of the End of the Roman Republic by Mike Duncan reviewed from something of a corporate governance perspective.

The final victory over Carthage in the Punic Wars led to rising economic inequality, dislocation of traditional ways of life, increasing political polarization, the breakdown of unspoken rules of political conduct, the privatization of the military, rampant corruption, endemic social and ethnic prejudice, battles over citizenship and voting rights, ongoing military quagmires, the introduction of violence as a political tool, and a set of elites so obsessed with their own privileges that they refused to reform the system in time to save it.

Duncan makes no references to our current administration but the parallels are obvious… at least to me. Seven years ago the wealth of 388 billionaires equaled the wealth of the poorest half of humanity. Now it only takes five billionaires. Large companies like Snap, Facebook and Alphabet are virtual dictatorships and they can have a huge influence over our elections and governments. Continue Reading →

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Governance, Liquidity, and Employee Retention

Governance, Liquidity, and Employee Retention in an Era of Capital Abundance was the full title of last Thursday’s morning event sponsored by the Silicon Valley Directors Exchange and Stanford’s Rock Center for Corporate Governance. As billed, we were to hear

 a panel of experts discuss the role of the board of directors in addressing challenges of governance, liquidity, and employee retention in an era of capital abundance. The discussion will cover trends in venture capital investments in private companies, including increased funding levels and the rising number of unicorns, the length of time companies are staying private (which is generally longer now than in the past), and exit strategy and valuation trends in acquisitions versus IPOs.

In addition, the panelists will debate the governance implications and the consequences for employees of companies staying private with relatively unlimited access to capital, including:

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Pearl Meyer on CEO Pay Ratios

Pearl Meyer on CEO Pay Ratios: Pay Transparency is the New Black

Pearl Meyer on CEO pay ratios. The leading advisor to boards and senior management released its 2018 Looking Ahead to Executive Pay Practices survey but long before that, in May 2015, one of their principals declared Pay Transparency is the New Black. I guess that means pay transparency will be the next thing in corporate governance fashion. Or maybe like the TV series Orange is the New Black, we will have a lot of laughs along as CEO pay ratios are disclosed but we have a sinking sense this will not end well. Continue Reading →

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Conoco Virtual Only Meetings Targeted

Conoco’s virtual only annual meeting is the target of a shareholder proposal by the Sisters of St. Francis of Philadelphia. A similar proposal was filed at Comcast. The Conoco resolution has already been cofiled by the Church of the Brethren Benefit Trust and the Needmor Fund, a Walden client.

As responsible shareholders, we believe good corporate governance includes the opportunity for shareholders to meet face-to-face with the company’s Board and management at the Annual Shareholders Meeting.

Tim Smith of Walden Asset Management stated

The decision to move an annual meeting to cyberspace has moved far beyond a minor internal management decision and become an important governance matter for companies. Imagine if companies facing major controversies had decided to forgo physical meetings. If a company faces debate on their comp package or its climate change position or has votes on shareholder resolutions it is also a problem to have a disembodied discussion on line for a  stockholder meeting.

For more views, see Nuns tell companies to get real over virtual AGMs @FT and In Depth: Growth in Virtual-Only Meetings a Concern for Institutional Investors @ Chief Investment Officer.

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Disney Ties to Pat Robertson Need Clarified

Disney ties to Pat Robertson could lead to further gun violence if not clarified. Nancy Levine wrote a post that demands attention from Disney shareholders. Where Is Disney’s Outrage About Pat Robertson?

Pat Robertson’s Outlandish Blame Game

As Levine notes, Pat Robertson blamed the Los Vegas massacre on Americans’ disrespect for Donald Trump. Among the things Robertson said, Continue Reading →

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William Steiner, Shareholder Activist

William Steiner recently became the most experienced shareholder activist alive to win majority votes for shareholder proposals at public companies. A few months ago, he celebrated 40 years of shareholder activism with an overwhelming victory at Haemonetics Corporation (HAE). The following is based on an interview with Mr. Steiner by his son, Kenneth Steiner, who works with his father to carry on what has become a family legacy. Continue Reading →

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General Counsel: Corporate Culture Influencer

Corporate Culture Influencer

On September 11, 2017, the John L. Weinberg Center for Corporate Governance hosted a discussion on the role of the general counsel and how she should be a positive corporate culture influencer. The Center has been working with the Association of Corporate Counsel (ACC) to examine this issue in light of ACC’s recent research and white paper on this topic.  ACC is a global bar association with more than 43,000 in-house counsel members worldwide.  Participating in the discussion were the following; Continue Reading →

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Moskowitz Winner: CSR & Executive Compensation

Moskowitz Prize Winner Announced

Moskowitz prize winner for 2017 was announced today by the Center for Responsible Business at the Haas School of Business, University of California, Berkeley, in collaboration with The SRI Conference. The prize is named after research pioneer Milt Moskowitz, one of the first researchers to look for the connection between good corporate citizenship and profitability. Sustainable and responsible investing remains the focus.
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Ascendancy of Finance – Reviewed

The Ascendancy of Finance (link) by Joseph Vogl, explains the dramatic transfer of power to  the financial sector that occurred over centuries but accelerated during the recent financial crisis. Traditionally, markets limited state power and were, in turn, restrained by the nation states. As Vogel notes, “In this theoretical myth, spaces of freedom are weighed against concerns of security…” Finance, once a mediator of capital, now threatens to rule both industry and politics.

Ascendancy of Finance: Not an Easy Read

One sentence from the book, which cogently explains where we are with respect to the ascendancy of finance, also provides a good example of the book’s density, aggravated by long complex sentences.

From 2008, in connection with the recent financial and economic crisis, an emergency politics has formed whose quality and character demonstrate a number of basic features: exceptional situations that require extraordinary instruments and measures; negotiations that take place behind closed doors, that are determined by the rhythm of the financial markets, and that clash with the lengthiness of formal procedures, an urgency that forces decisions to fall firmly in favor of the common good; and the informality of powerful executive bodies that might be described as hastily convened ‘committees of public safety.’

The best known “Committee of Public Safety” was created in 1793 as a de facto executive government in France during the Reign of Terror stage of the French Revolution. Are we there yet?

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Center for Political Accountability: Video Friday

Since 2003, the Center for Political Accountability (CPA) has spearheaded disclosure and accountability in corporate political spending. Corporations are the top political spenders at the state and local level. They are a dominant force in shaping public policy. Next proxy season, I will join the Center for Political Accountability in filing proposals on this important topic.

Center for Political Accountability: Citizens United

As I have reminded readers in previous posts, the US Supreme Court’s decision in Citizens United v. Federal Election Commission was based on a false premise. Justice Kennedy’s majority opinion justifies the decision by pointing to the Internet. Continue Reading →

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CII: Climate Competency & Risk

Shifting Investor Perspectives on Climate Risk & Board Climate Competency

These notes on climate competency are my last post from the Council of Institutional Investors Fall 2017 conference.  Find more at .  As a member of the press, I was excluded from the policy-making meetings. Still, it was a great opportunity to touch base with members of CII and to learn of recent developments and where we may be headed.

The panel discussion on climate risk and board competency hosted by the 50/50 Climate Project and the New York City Comptroller’s Office. From the program: Continue Reading →

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IRRCi Research Award Submissions Due

IRRCi Research Award Submission Deadline is October 6, 2017. Two categories: Practitioner and Academic. Winners to Receive $10,000 each and get to present at the 2107 influential Columbia University Millstein Center Forum.

The Investor Responsibility Research Center Institute (IRRCi) is accepting submissions through October 6, 2017, for its sixth annual competition for research that examines the interaction between the real economy and investment theory. Continue Reading →

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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. Continue Reading →

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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. Continue Reading →

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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). Continue Reading →

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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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How to Think: Reviewed

How to Think

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 of pages in your local bookstore, turn to “The Thinking Person’s Checklist” on pp 155-156. Hopefully, that will hook you in and you’ll buy it and read the entire 157 pages. There’s much more in How to Think than a checklist or a few takeaways.

Thinking is integral to life, so the book is more about establishing good habits, centered around how to communicate with others. It would be nice if everyone read “How to Think” before getting a Twitter account. I will try to apply a few of these and other lessons in future #corpgov posts and responses on Twitter. Continue Reading →

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Related Party Transaction Rejected

related party transactionRelated 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.

Trump face - Happy Eclipse Day - Thanks to The New Yorker

Happy Eclipse Day – Thanks to The New Yorker

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