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 →
With boards of directors under a microscope in today’s world, they must show how their work contributes to the success of the companies they oversee, and build trust with shareholders. For many of these shareholders, a company’s proxy statement is their only chance to look into the key aspects of the boardroom. So the goal of the proxy statement is two-fold: be informative and be credible.
In working on proxy statements for 1,500 companies annually, we’re seeing a number of trends that foster a sense of accountability between the board and shareholders. At the top of the list are (1) providing business context, (2) a description of board skills and diversity and (3) incorporating more storytelling. Continue Reading →
Even in Washington, the numbers are impressive. The Council of Institutional Investors, who met in Washington DC this week, represents 23 trillion (with a t) dollars, mostly made up of retirement and other savings of working families. Compare that to the entire budget of the US government, less than two trillion a year. Like most industry group meetings in Washington, this one had presentations on what to expect from Congress and the regulatory agencies and how millennials will change the way the members do business, plus snack breaks and wireless sponsored by firms trying to sell products and services to the attendees. But the a two and a half day session featured repeated agenda topics on climate change and what are called ESG issues, suggesting that pension funds may step in where governments have failed. Continue Reading →
For shareholders and investors, transferring securities just got a whole lot easier with the introduction of eSignatureGuarantee.com (link).
In order to transfer securities – whether it’s stock, a 401K, an estate trust, whatever it may be – the transfer agent industry requires what is called a medallion signature guarantee, which essentially proves your identity and helps protect shareholders from fraud. To obtain a signature medallion one must physically go into their financial institution or bank of choice to get one. Not only is this time consuming and outdated, but many financial institutions, such as the Bank of America and many community banks, have stopped offering this service, literally leaving shareholders with nowhere to turn. Continue Reading →
Moneyball Corporate Governance: making the best use of what limited capital is available – just like what the Oakland A’s had to do with their limited payroll.
In the mid-1980s, New York Mets manager Davey Johnson was among the first in professional baseball to realize the advantage that could be gained by using computers and statistics to help select the team members for any given game, the order in which he played them, and even which specific pinch-hitter to use in a given situation. Under his leadership, the New York Mets won the 1986 World Series, Major League Baseball’s championship series.
The more widely known Moneyball story, made famous by Michael Lewis’ book and a movie starring Brad Pitt, takes place nearly 15 years later. It tells a similar story – of using analytics and probability-based decision-making to successfully discover hidden value in both players and collections of players. In that story, the focus of the analytics is on maximizing player and team performance relative to the constraints of the Oakland Athletics’ very limited payroll. Continue Reading →
Large institutional investors, concerned about portfolio risks stemming from the effects of global warming, are calling for climate-competent boards and directors as part of their fiduciary responsibility to preserve and enhance the long-term value of their investment assets.
Despite the anticipated rollback of climate related governmental policies such as the Environmental Protection Agency’s Clean Power Plan and limits on methane emissions by the Trump administration, investors still need to understand the risks that climate change poses to their portfolios. Unequivocal disclosures and boards equipped to manage and govern climate risk will be more important than ever. Now, however, it appears investors will not able to rely on federal regulatory standards or policy interventions to manage climate risk related to greenhouse gas emissions and the emphasis on fossil fuel production. They will be left to their devices to understand the very real financial impacts that climate issues could have on their portfolios. Continue Reading →
After making the decision to apply the principles of SRI investing, many clients embark on the initial step of selecting a core stock fund. Traditional investors have literally hundreds of highly efficient core investment solutions. However, SRI investors aren’t so blessed—which is why I put together this core list of Best SRI Funds.
Best SRI funds need to start out by being financially sustainable. Some fund companies seem to believe that they can rake in higher fees on the backs of well meaning investors. The primary objective of a core fund is to match the market with as little cost drag as possible. Continue Reading →
A lack of affordable SRI investing solutions may incentivize some savvy investors to do their own research and purchase their own portfolio of individual stocks, but this is almost always a mistake. There is power in the SRI Movement.
If you’re joining the SRI movement, it’s likely because you have a vision for our world and the economy that’s bigger than your own portfolio. To leverage the full scope of impact, you should identify ways that you can coordinate your efforts with others whose values overlap with your own. The easiest way to do this is by purchasing a SRI fund, but there are other ways to maximize your impact. Continue Reading →
Douglas Park and Reza Dibadj have launched their boutique business and legal consultancy, Park and Dibadj (P&D)—a unique firm that addresses unmet needs in corporate strategy and governance. We bring decades of successful experience as both lawyers and strategists in extraordinarily challenging environments.
We believe that a siloed approach—law on the one hand, business on the other—cannot adequately address the most pressing problems of corporate governance and strategy. As such, we develop business strategies and also implement transactional structures and substantive legal arguments.
Our experience practicing, consulting, and teaching both business law and strategy allows us to address two critical issues that companies face: corporate development and mitigating legal, operational, and financial risks to organizations and their directors and officers.
With respect to corporate development, Park & Dibadj:
- Collaborate with domestic and international business entities that seek financing strategies that do not require securities registration.
- Advise on mergers & acquisitions, including identifying targets, contractual structures, appraisal rights, and due diligence to maximize the chances of a successful deal.
“You may well say, that’s a valiant flea that dare eat his breakfast on the lip of a lion.”
Valeant: Cautionary Tale
There’s a good reason that no bestselling novels or blockbuster movies about corporate governance exist. It’s because doing corporate governance right is frankly boring. Figuring out which companies are well governed is not a beautiful or riveting process, but for investors it’s critical to make the effort. Why? Because identifying companies that are skating too near the edge may help preserve portfolio value. At Pax World, we experienced this first-hand when we eliminated the drug company Valeant (VRX) from our portfolios last fall. Continue Reading →
Shareholders have been urging companies to fully disclose the lobbying they do directly and through trade associations and third parties for six years now. This year 66 investors joined in filing resolutions with 50 companies seeking expanded lobbying transparency. Twinned with calls for disclosure of political spending aimed at affecting elections, this effort has had a steady positive effect. For example, this year companies including Raytheon, CenterPoint and DuPont came to agreements with investors to expand their lobbying disclosure.
We also find that many companies, even if they do not want to fully disclose, have expanded their reporting on items like Board oversight, priority issues they lobbied on, whether and when they did grassroots lobbying, making it easier to access their quarterly Senate reports or disclosing specific dollar amounts spent on federal lobbying. Continue Reading →
Town Hall Shareholder Meetings
It’s a presidential campaign year here in the U.S., and though the election is still over 6 months away, we’ve already been enlightened (or depressed) by a large number of candidate debates and town halls. Whatever your political views, the candidates seem able to instantly recall policy, financial or data details off the top of their heads. Trade figures, funding levels, voting records — their ability to deliver these on the spot, under bright lights and hostile questioning, is an impressive skill. Continue Reading →
Senators seek to rein in hedge funds through legislation by narrowing the window in which hedge funds must file 13D disclosures with the SEC once they have taken a 5% stake in a company. Right now that window is 10 days. The bill would reduce that to two days.
The bill also seeks to block activist “wolf packs” — that is, activist investors who collectively hold more than 5% of a company but who individually hold less and therefore do not need to disclose their stakes. Will public pension funds join this effort? Continue Reading →
In the wake of a New York Times story by Mark Oppenheimer about Whole Foods Market CEO John Mackey’s relationship with former rabbi and alleged sex offender Marc Gafni, the company has come under scrutiny. (A Spiritual Leader Gains Stature, Trailed by a Troubled Past)
On December 25th, The Times story reported Gafni saying of one of his alleged victims, “She was 14 going on 35.” Continue Reading →
“Using the internet for shareowner proxy voting … will awaken the sleeping giant of corporate governance – individual investors.” My optimism was premature when I wrote that in 1999. But finally the giant has awakened and is starting to stir.
Retail shareowners of Fission Uranium Corp (FCU) have joined forces via internet media, including their Stockhouse.com discussion forum, to challenge the incumbent board’s control of the company. It’s significant that retail investors own a majority of Fission’s shares, in contrast to the institutional investor dominance typical of larger firms. Continue Reading →
Few who have seen it can forget the iconic scene from the movie Wall Street when Michael Douglas’s character Gordon Gekko stands up, microphone in hand, at Teldar Paper’s shareholder meeting and says: “The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works.” Cinematic legend. What if it’s also the key to better small-cap corporate governance? Continue Reading →
Here in the first days of autumn, it seems that every day there is another article about the sorry extreme that executive compensation has become at so many companies. With the many tools now at the disposal of the proxy voter, one has to ask, how did we get here, and how do we fix it?
Of course, when asking the question of how did we get here, there is the standard answer, “greed,” but there has always been greed in corporate America, I don’t believe that the captains of industry at the beginning of the 20th century where any less greedy at heart than those of today. Continue Reading →
Those of us involved in corporate governance issues for a living enjoy talking shop with others in the field. One reason, I suspect, it that it’s so damned difficult to explain corporate governance norms to people on the outside. “You mean CEOs pretty well select the very board members who set those CEOs’ pay and performance standards? How can I get a job like that?”…and so on. Continue Reading →
The passing US proxy season made lots of business headlines as the most turbulent ever (which I’ve found happens every year). But 2015 was still notable for the flood of activist initiatives targeting company boards of directors. Activists sought “no” votes on directors who set executive pay, or said no to stock buyback, dividend, or spinoff plans. They nominated their own candidates for board seats, sometimes even whole board slates. They generally caused a ruckus. Continue Reading →
Deep in the heart of Texas, the oil industry is still going strong. Take Navitas Midstream, a private corporation that specializes in transporting fossil fuels. Navitas is currently laying a pipeline that, when completed later this year, will funnel natural gas fracked from the Eagle Ford Shale into a processing plant that’s also under construction. Called the “La Bahia System,” the pipeline and plant will handle 120 million cubic feet of natural gas per day. La Bahia is part of a labyrinth of fossil fuel infrastructure that’s growing and will generate billions in profits for its owners — even with the current slump in oil prices. But it also is fueling the fracking boom and climate change. Continue Reading →
Good corporate governance means quicker, more frequent disclosures to the stock market. Or does it? The evidence varies by country, and in our research we wanted to check the relationship.
We used cross-country data from 23 OECD countries, firms with financial years ending between 1 January 2003 and 31 December 2008. We looked at company announcement information from more than 2,000 different firms, and share prices relating to 5,800 different firms. Continue Reading →
I used to believe that democratic power was exercised like the creation of an impressionist masterpiece — each individual offering an artistically placed paint stroke that blends into the whole as you step back. As I have matured, I now see that those who are able to influence others around them are most effective in shaping the spirit of the painting. Power isn’t wielded by isolated individuals but by networks of individuals who are bonded by trust and influence. Continue Reading →
What is corporate governance? It is a process set up for the firms based on certain systems and principles by which a company is governed. The guidelines provided ensure that the company is directed and controlled in a way so as to achieve the goals and objectives to add value to the company and also benefit the stakeholders in the long term. Continue Reading →
It’s impossible to read a newspaper, magazine or blog, or watch the news without hearing about shareholder activism. It’s an industry unto itself with activist funds, attorneys who represent activists, activist defense lawyers, activist-focused investment bankers, activist conferences, activist newsletters, activist databases, and, of course, there are Messrs. Bebchuk and Lipton.
As a former institutional investor turned corporate governance author/advisor, I regularly get calls from media, and am cornered after speaking engagements to talk about activists. It’s arguable that no topic in recent memory has been discussed by so many in the presence of so few facts. It’s eerily reminiscent of when cloud computing first overtook the technology vernacular. You know, when 8 out of 10 people who were earnestly discussing moving to the cloud, cloud infrastructure and so forth, had no idea what the “cloud” actually was. Continue Reading →
The Status of Proxy Access 2015:
“Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” – Winston Churchill
This post is in response to a LinkedIn piece by Anthony Goodman of Tapestry Networks regarding the status of proxy access post the success of New York Comptroller Scott Stringer’s Board Accountability Project (with adopt of proxy access by Bank of America, Abercrombie & Fitch, Big Lots and Whiting Petroleum to date). While the “2015 Battle for Proxy Access” appears won, the war over access is far from finished. What is over is the “ambiguity” over whether there is unanimity amongst institutional investors, governance advocates and proxy advisors for the 3-3-25 standard or whether the mega mutual funds would support conflicting higher ownership thresholds and holding periods. We now know that the answer to that question is generally universal support for 3-3-20/25 standard. Continue Reading →
Investing in America began with bankruptcy and early lessons in corporate governance. In the early 17th century, the hottest stock in England was the Virginia Company of London. Instead of adding to their fame and fortune, wealthy investors gained several hard insights from this first company to go bust on American soil.
Fame Is Not To Be Confused With Fortune
By 1609, the Virginia Company was two years into the Jamestown settlement and despite many setbacks from rugged conditions and Continue Reading →
On February 27, 2015 Vanguard sent out an important letter to many boards of directors of publicly traded companies. The letter, signed by Vanguard’s Chairman and CEO, exhorts directors to follow best practices to ensure that corporate resources are stewarded effectively. But what happens to those boards of directors who are stubbornly entrenched? Continue Reading →
Yesterday (2/10/2015), Corp Fin Director Keith Higgins delivered this interesting speech entitled “Rule 14a-8: Conflicting Proposals, Conflicting Views.” There are some really interesting things in this speech on counterproposals, etc., although there isn’t much that helps those companies grappling with proxy access shareholder proposals this proxy season (but there is some, such as #6 below). Here’s some notables from Keith’s speech: Continue Reading →
In his 1914 collection of essays called Other People’s Money and How the Bankers Use It, Louis Brandeis argued that powerful men such as J.P. Morgan leveraged unbalanced control of the public’s assets to their own benefit. One hundred years later, not much has changed. If Brandeis were alive today, you can be sure that he would be advocating for new systems of financial accountability for those on top of the financial hierarchy. Continue Reading →
Corporate boards are entrusted to make sound and informed business decisions on behalf of shareholders and to take their best interest into consideration. Decisions made at the board level are of strategic significance that may perhaps completely transform the future path of corporations. Examples of major strategic decisions include mergers and acquisitions, entering new markets, launching new product lines, selling off company assets, etc.
An effective board deliberation routine signals to the shareholders that the company directors are carrying out their duties diligently. In the absence of a proper board deliberation mechanism and a healthy and constructive exchange of diverse views across the table, the company and its shareholders could inevitably suffer the unfortunate consequence of losing out on great business opportunities, or being exposed to high levels of risk, or enduring financial difficulties, and ultimately risk losing shareholder value. Continue Reading →