Author Archive | James McRitchie

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% — 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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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, the Chamber should focus on creating a prosperous shareholder society where all Americans have a stake in our future. Continue Reading →

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Walden Withdraws Vanguard Proxy Voting Shareholder Resolution

Walden Asset ManagementWalden 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.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 other reasons, thus setting up the opportunity for a vote on the Walden resolution. Continue Reading →

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Multi-Class Share Ban: Speculation

Say ‘no’ to dual class shares - Mak Yuen Teen and Chris Bennett http://governanceforstakeholders.com/2015/11/28/say-no-to-dual-class-shares/

Say ‘no’ to dual class shares – Mak Yuen Teen and Chris Bennett

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. Continue Reading →

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Mutuality Business Models Explored

Mutuality in BusinessThe 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 may be lessons here for Twitter. Continue Reading →

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Shareholder Proposal Reform Rebutted

Shareholder Proposal Reform

Shareholder Proposal Reform or Fat-Cat Entrenchment?

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 Value Creation: Modernizing the Shareholder Proposal Process. As I wrote in my rebuttal last year (Business Roundtable to SEC: Muzzle Shareholders),

‘modernization’ for the Business Roundtable means moving the SEC further and further from its primary mandate of ‘investor protection’ by creating a democracy-free zone for entrenched managers.

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Broad-Based Ownership at Twitter: Academic Perspective

twitter-co-op-620x412Through 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. Continue Reading →

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WD-40 Win Win – Majority Vote Standard

WD-40 win winWD-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. Continue Reading →

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Broadridge Amends Proxy Access: Allows 50

Broadridge Amends Proxy AccessHave you heard the news? Broadridge amends proxy access bylaws on July 6, 2017, to do the following:

  1. Increase the number of stockholders that can aggregate their shares to make a proxy access Board nomination from 20 to 50 stockholders,
  2. 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
  3. 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.

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Corporate Governance Experts on 21c Fox Bid for Sky

UK DCM&SOn 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. Continue Reading →

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Interfaith Center on Corporate Responsibility: CHOICE Act

Interfaith Center on Corporate ResponsibilityThe 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. Continue Reading →

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Hybrid Listed Cooperatives

Hybrid Listed Cooperatives

Hybrid Listed Cooperatives attempt to consider more stakeholders

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: Continue Reading →

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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 community.

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Alphabet Shareholders Overwhelmingly Support Equal Voting

Alphabet DemocracyAt 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. Continue Reading →

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Capitalists Arise!: Serve Stakeholders

Peter Georgescu

Peter Georgescu

Peter Georgescu’s Capitalists Arise!: End Economic Inequality, Grow the Middle Class, Heal the Nation correctly identifies short-termism and a focus on stock price as a problem contributing to growing wealth inequality. His solutions depend on enlightened managers and boards to transform how America does business by taking all stakeholders into account, not just shareholders. I say, don’t count on enlightened self-interest by those now in control. They are unlikely to overturn the system that benefits them.

Transformation is not likely to come from those in power, even if it would be to the advantage of all. Transformation must be demanded from below. Any transformation system that purports to consider all stakeholders must effectively redistribute power. We cannot depend on benevolent dictatorships like Facebook’s Mark Zuckerberg or Alphabet’s Sergey Brin and Larry Page to act as if all stakeholders matter. To get where Georgescu correctly wants to go, there must be a real shift in power. Continue Reading →

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RBI to Curb Antibiotics in Chicken

RBI burger king logoRestaurant Brands International (RBI), parent of Tim Hortons, Burger King and Popeyes,  announced its decision to purchase only chicken raised without antibiotics important to human medicine by the end of 2018, a major sustainability milestone for the world’s third-largest fast food restaurant operator.

RBI came to an agreement in March 2016 with As You Sow,a non-profit shareholder advocacy group, to set timelines to prohibit the use of medically important antibiotics in its global meat and poultry supply chains. In response to this commitment, As You Sow withdrew a shareholder resolution calling for reduced antibiotic use in the Company’s products. Continue Reading →

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What Ought to Be: Why Grow Up?

Why Grow Up? between what is and what ought to be

Why Grow Up? between what is and what ought to be

According to Susan Neiman, the most important distinction in the world is the difference between what is and what ought to be. Recognizing that distinction is central to the process of growing up. (Why Grow Up?: Subversive Thoughts for an Infantile Age)

You need not be Peter Pan to feel uneasy about the prospect of becoming adult. Indeed, it’s easy to argue that Peter Pan, most drastically imitated by Michael Jackson, is an emblem of our times. Being grown-up is widely considered to be a matter of renouncing your hopes and dreams, accepting the limits of the reality you are given, and resigning yourself to a life that will be less adventurous, worthwhile and significant than you supposed when you began it.

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Kite Pharma Proxy Voting Guide

Kite PharmaKite Pharma, Inc. (KITE), a clinical-stage biopharmaceutical company, focuses on the development and commercialization of novel cancer immunotherapy products. Kite is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of no fund families when I checked and voted. Their annual meeting is coming up on June 20th, 2017.

I voted FOR Proposal #3 to Declassify the Board. See how and why I voted other items below. I voted with the Board’s recommendations 43% of the time. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A). Continue Reading →

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Genomic Health Proxy Voting Guide

Genomic Health proxy 2017Genomic Health Proxy Voting Guide by CorpGov.net. Genomic Health (GHDX), a healthcare company, provides actionable genomic information to personalize cancer treatment decisions in the United States and internationally. It develops and commercializes genomic-based clinical laboratory services that analyze the underlying biology of cancer, allowing physicians and patients to make individualized treatment decisions.  Genomic Health is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of no fund family when I checked and voted. Their annual meeting is coming up on June 15, 2017.

I voted FOR #5 proxy access, proposed by me. See how and why I voted this and other items below. I voted with the Board’s recommendations 62% of the time. View proxy via SEC’s EDGAR system (look for DEF 14A). Continue Reading →

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Caterpillar Inc Proxy Voting Guide

Caterpillar Inc Proxy Statement

Caterpillar Inc Proxy Voting Guide by CorpGov.net

Sorry, this Caterpillar Inc Proxy Voting Guide comes late, since tomorrow is the last day to vote unless you attend the annual meeting. Caterpillar Inc. (CAT) manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives for heavy and general construction, rental, quarry, aggregate, mining, waste, material handling, oil and gas, power generation, marine, rail, and industrial markets. Caterpillar is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of two fund families when I checked and voted on the last day. Their annual meeting is coming up on June 14, 2017.

I voted FOR our proposal to reduce the threshold required to hold a special meeting. See how and why I voted other items below. I voted with the Board’s recommendations 70% of the time. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A). Continue Reading →

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Columbia Sportswear Proxy Voting Guide

Columbia Sportswear (COLM) designs, sources, markets, and distributes outdoor and active lifestyle apparel, footwear, accessories, and equipment in the United States, Latin America, the Asia Pacific, Europe, the Middle East, Africa, and Canada.

Columbia Sportswear Proxy Voting Guide

3 PM Pacific June 13, 2017, 14229 NW Science Park Dr., Portland

Columbia Sportswear is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of one fund family when I checked and voted. Their annual meeting is coming up on June 13, 2017.

I voted FOR a shareholder right to Proxy Access. See how and why I voted other items below. I voted with the Board’s recommendations 50% of the time. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A). Continue Reading →

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Alphabet: Another Democracy Vote

Alphabet Democracy

Alphabet’s Corporate Governance

At the June 7 annual shareholder meeting of Alphabet, shareholders will vote for a sixth year in a row to weigh in on tech-giant Alphabet’s unequal voting structure. Today is the last day to vote without attending the meeting tomorrow.

Shareholders are expected to vote in favor of the Recapitalization Plan for all Stock to Have One-vote per Share the but winning depends on getting far more than a majority vote. It means those holding shares with out-sized votes being willing to yield their power. What will make them see the value of more democratic corporate governance? The election is more symbolism than real. Still, symbolism can be powerful. Continue Reading →

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