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How I Voted: Kellogg (K) – Proxy Score 75%

Kellogg ($K) is one of the stocks in my portfolio. Their annual meeting is coming up on 4/26/2013. ProxyDemocracy.org had the wrong date for the meeting and hadn’t posted any votes when I checked on 4/23/2013.  I voted with management 75% of the time.  View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime) Continue Reading →

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How I Voted: Johnson & Johnson (JNJ) – Proxy Score – 76%

Johnson & Johnson ($JNJ) is one of the stocks in my portfolio. Their annual meeting is coming up on 4/25/2013. ProxyDemocracy.org had collected the votes of three funds when I checked on 4/22/2013.  I voted with management 76% of the time.  View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime)

I generally vote against pay packages where NEOs were paid above median in the previous year but make exceptions if warranted. According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay), aggregate compensation by public companies to NEOs increased from 5 percent of earnings in 1993-1995 to about 10 percent in 2001-2003. Continue Reading →

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Switch to TDAmeritrade and Contribute to Corporate Governance (CorpGov.net) at No Cost to You

TDAmeritrade is running a promotional where they pay current customers $50 to refer new customers. I feel like a high school kid knocking on doors selling candy so that I can go on a class trip to Washington but it really does take money to keep up this website and to report on various corporate governance events around the country. A few $50 “donations” would really help and switching to TDAmeritrade should work out for you… better than buying a box of candy. Continue Reading →

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Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime

Malcolm Gladwell’s book The Tipping Point: How Little Things Can Make a Big Difference discusses the “Broken Window theory.

If a window is broken and left unrepaired, people walking by will conclude that no one cares and no one is in charge. Soon, more windows will be broken, and a sense of anarchy will spread.

In the following post I argue that relatively minor problems, like how items left blank on a proxy are counted and how Broadridge labels shareowner proposals, sends a signal. Just like an abundance of graffiti tells you gangs are in charge, switching blank votes to management and relabeling shareowner proposals to gibberish tells you that shareowners are indifferent and that corporate managers have a clear invitation to more serious crime. I ask readers to take a simple action at the end of the post that, like fixing broken windows, could lead to the end of much more serious abuses.  Continue Reading →

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Shareholder Proposals: SLB 14G

On October 16, 2012, the SEC published another “Staff Legal Bulletin” with guidance on shareowner proposals submitted to public companies pursuant to Rule 14a-8. SLB No. 14G provides the Division of Finance’s views regarding:

  • Proof of ownership under Rule 14a-8(b)(2)(i) for purposes of verifying whether a beneficial owner is eligible to submit a proposal;
  • the manner in which companies should notify proponents of a failure to provide proof of ownership; and
  • the use of website references in proposals and supporting statements. Continue Reading →
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Empty Voting: Empty Promises

Jay M. Hoffman and Melissa Ghislanzoni of Miller Thomson in Toronto recently posted Empty Voting – Waiting for a Regulatory Response. While focused on Canada, the post applies equally to the US. The recent Telus decision of the British Columbia Court of Appeal “appears to signal a green light for the continuation of empty voting, at least until a regulatory response is implemented.” That case involved Mason Capital Management LLC, a US hedge fund. The Court found no violation of law, “to the extent that cases of ’empty voting’ are subverting the goals of shareholder democracy, the remedy must lie in legislative and regulatory change.” Continue Reading →

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Video Friday: Replace the Goldman Sachs Muppets

Goldman Sachs has come under fire for placing its interests above those of clients, lack of transparency and insensitivity  regarding its compensation practices. Goldman has been the target of numerous investigations, enforcement actions and private litigation. Key governance flaws include executive compensation and business practices that create financial and reputational risks. Continue Reading →

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ISS Updates Policies

ISS updated its proxy voting policies.  The most interesting to me is the “Board Response to Majority Supported Proposals.”

The marketplace has been evolving in the matter of board responsiveness to majority-supported shareholder proposals, both in terms of institutional investors’ expectations, and in terms of the actual responsiveness by issuers. ISS’ 2012-2013
Policy Survey results show that 86 percent of the institutional investor respondents expect that the board should implement a shareholder proposal that receives support from a majority of shares cast in the previous year. Continue Reading →

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Support Petition to Disclose Corporate Political Spending

More than $6 billion was spent on this year’s presidential/congressional elections, too much of it by unknown sources. Are your companies opposing candidates you support or supporting those you oppose?  If so, do those contributions add to the value of your companies?  If they don’t disclose the expenditure, how would you ever know? Sick of that situation?  Want a change?

The WSJ reports that the SEC is actively considering an 8/3/2011 rulemaking petition submitted by a committee of ten law professors that urged the SEC to adopt rules that would require public Continue Reading →

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Breaking Up is Hard to Do

Trillium Asset Management LLC, on behalf of the Benedictine Sisters of Mount St. Scholastica, along with the AFSCME Employees Pension Plan recently filed a shareholder proposal with Citigroup Inc. (NYSE: C, $C) asking the company’s board of directors to explore a possible separation of one or more of its business units. Continue Reading →

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Corporate Governance Guide for Journalists

The International Finance Corporation (IFC), a member of the World Bank Group, in conjunction with the International Center for Journalists, has produced  A Guide to Reporting on Corporate Governance designed for reporters and editors with experience covering business and finance. The goal is to help journalists develop stories that examine how companies are governed, and spot events that may have serious consequences for the company’s survival, shareholders and stakeholders. Continue Reading →

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Broadridge ($BR): How I Voted – Proxy Score 50%

Broadridge Financial Solutions, Inc. ($BR) is one of the stocks in my portfolio. Their annual meeting is coming up on 11/15/2012. ProxyDemocracy.org had collected the votes of two funds when I voted on 11/8/2012.  I voted with management 50% of the time.  View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank will be voted in favor of management’s recommendations. (See Don’t Let Companies Change Shareholders’ Blank Votes) Continue Reading →

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Hain Celestial ($HAIN): How I Voted – Proxy Score 8%

Hain Celestial Group ($HAIN) is one of the stocks in my portfolio. Their annual meeting is coming up on 11/15/2012. ProxyDemocracy.org had collected the votes of two funds when I voted on 11/8/2012.  I voted with management 8% of the time.  View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank will be voted in favor of management’s recommendations. (See Don’t Let Companies Change Shareholders’ Blank Votes) Continue Reading →

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Cisco: How I Voted – Proxy Score 83%

Cisco ($CSCO) is one of the stocks in my portfolio. Their annual meeting is coming up on 11/15/2012. ProxyDemocracy.org had collected the votes of five funds when I voted on 11/8/2012.  I voted with management 83% of the time.  View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank will be voted in favor of management’s recommendations. (See Don’t Let Companies Change Shareholders’ Blank Votes) Continue Reading →

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Turkey's e-GEM Beats Broadridge at Shareowner Communication

Turkey became the first country to require issuers to offer electronic proxy voting with the 1 October inauguration of a voting platform from MKK called e-GEM. The system will stream annual general meetings (AGMs) real time and let shareowners communicate with each other, vote before the meeting, and even change their vote as an annual meeting occurs. Other markets have e-voting but do not require it of all listed companies. Expect other markets to keep an eye on this development.  (Corporate Governance Roundup: New Rules in Canada, Switzerland, Continue Reading →

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Expect a More Active Proxy Season

The 2012 edition of Shareholder Activism Insight sees increasing opposition from shareowners during the next proxy season, according to 78% of respondents. Fully 84% predict an increase in the number of shareholder proposals with the financial services sector hit the hardest. One quarter of corporate executives think 30% or more of shareowner proposals will obtain a majority vote.

In the second quarter of 2012, Schulte Roth & Zabel commissioned mergermarket to interview senior corporate executives and activist investors regarding their experience with shareholder activism and their expectations for the upcoming 12 to 24 months. Continue Reading →

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Netflix: A Candidate for Proxy Access

Netflix Inc. (NFLX),  which has lost half its value in the last two years, adopted an antitakeover plan (poison pill) intended to block activist investor Carl Icahn from expanding his nearly 10% stake. They did so without seeking shareowner approval and the pill may make it harder to find a buyer. Writing for the WSJ, Miriam Gottfried notes, Netflix Pill Should Give Shareholders Pause. Let’s hope shareowners do more than just pause; let’s take action! Continue Reading →

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Video Friday: Use of Social Media By Senior & Board Level Executives is Pitiful

Less than a third of companies today use social media to support their corporate strategy and risk management practices, according to new research conducted by Stanford University’s Rock Center for Corporate Governance, the Center for Leadership Development and Research at the Stanford Graduate School of Business, and The Conference Board.

What Do Corporate Directors and Senior Managers Know about Social Media? details the results of a survey of more than 180 senior executives and corporate directors of North American public and private companies. The findings reveal a disconnect between companies’ understanding of social media and how they apply it to their business. The report appears in the latest Directors Notes published by The Conference Board. Continue Reading →

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Crowdfunding Amicus Curiae on Gabelli v. Securities and Exchange Commission

William Michael Cunningham, of Socially Responsible Investment Research is attempting to crowdfund the filing fee for a friend of the court brief at the US Supreme Court.

The case involves defendant Mark Gabelli, who was the portfolio manager for the Gabelli Global Growth Fund (GGGF), as well as several affiliated funds, from 1997 until 2004. Defendant Bruce Alpert had been the Chief Operating Continue Reading →

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USPX Suspends Central Activities

As many readers may know, a few months ago I joined the board of the United States Proxy Exchange (USPX). I’ve long been impressed with the work of USPX’s volunteer executive director, Glyn Holton. We worked closely  on several sets of comments to the SEC, Model Shareowner Proposal for Proxy Access and subsequent no-action responses, Shareowner Guidelines for Say-on-Pay Voting, the Amicus Curiae in the case of Apache Corp. v John Chevedden, etc. I could go on and on. Continue Reading →

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Event: The Role of Proxy Advisory Firms

The U.S. Chamber Center for Capital Markets Competitiveness (CCMC) will hold a half-day event on Wednesday, December 5, 2012 in Washington DC to take an in-depth look at the influence of proxy advisors and the state of corporate governance in the U.S. It would be nice to get some shareowners out to at least listen and report back to CorpGov.net. I would love to learn of their plans. Continue Reading →

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Proxy Access: A New Version for 2013

Update: This is a revised version of an earlier post this month. I’ve deleted that post because I don’t want anyone to mistakenly use the prior draft language. I’m hoping this language is a little tighter but always welcome reader suggestions.

Last month I hoped ISS would reconsider their analysis of our proxy access proposal at H&R Block (HRB-ProxyAccessProposal pdf), submitted by Kenneth Steiner. ISS had said our proposals “could undermine the efforts of larger, long-term shareholders whose interests might better reflect those of the broader shareholder base.” However, as I wrote in my September 10th post,

their logic appears flawed. Larger, longer-term shareowners would gain rights, not lose them, under the proposal… without Steiner’s proposal those larger, long-term shareholder have no right to proxy access. Additionally, the proposal does allow those larger, long-term shareowners to nominate 2 members of the board — the same number ISS appears eager to endorse. The smaller shareowners provided for in Option B can’t undermine larger, long-term shareholders, since they would file under Option A.

Nonetheless, they recommended against the proposal and it failed. We spent much of last spring trying to work proxy proposals though the SEC “no-action” process. It looks like it may take fall revisions to obtain endorsements from ISS and Glass Lewis. This post proposes a revised proxy access template, which would still create the possibility for retail shareowners to participate in proxy access nominations but also attempts to address concerns raise by proxy advisors and large institutional investors. Continue Reading →

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James McRitchie Honored by NACD

Sacramento, CA (Oct. 8, 2012) — James McRitchie download <https://www.corpgov.net/wp-content/uploads/2009/03/resume2012.pdf>, Publisher of Corporate Governance (aka, CorpGov.net) <https://www.corpgov.net>, has been named to the 2012 National Association of Corporate Directors (NACD) Directorship 100’s “People to Watch” in recognition of his exemplary leadership in influencing corporate boards and for promoting the highest standards of corporate governance.  Selected by the NACD Directorship Editorial Advisory Committee and the NACD Board of Directors, the
NACD Directorship 100 recognizes the most influential leaders in the boardroom and corporate governance community. Continue Reading →

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Review: Corporate Governance: Cases and Materials

This comprehensive case book sheds light on the complicated regulatory framework and the dynamic nature of laws on corporate governance in the United States. Chapters typically cover regulations promulgated by federal, state, and self-regulatory organizations. Corporate governance is examined through case law with ample discussion to provide context concerning evolving practices and normative concerns. In that regard, the authors give voice to a wide variety of perspectives, including their own. Corporate Governance: Cases and Materialsby J. Robert Brown, Jr., Professor of Law, University of Denver Sturm College of Law; Lisa L. Casey, Associate Professor of Law, Notre Dame Law School. Continue Reading →

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