A new measuring effectiveness roadmap helps investors ensure they are moving beyond generating environmental or social impact through individual market transactions and are better aligning with broader system-level goals (e.g., the United Nations Sustainable Development Goals, SDGs). Group action along the same trajectory can better influence system-level change. The measuring effectiveness roadmap helps investors answer the following question: How can I measure whether I, as a long-term institutional investor, have contributed to promoting the long-term wealth-creating potential of the environment, society, or the financial system? Continue Reading →
Tag Archives | IRRCi
CEO Incentives can boost short-term stock price but destroy long-term value, according to the two winning academic papers of the Investor Responsibility Research Center Institute (IRRCi) annual investor research competition. The winning academic research teams share a $10,000 award. Continue Reading →
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 →
Stock Buybacks: Directors Identify Four Reasons Stock Buyback Programs
Stock Buybacks: What Directors Say
Food safety is an issue I’ve been concerned with for years, first as head of California’s cooperative development program, then while on the boards of a food co-op and a wholesale distributor. I remember going for a State of California job interview with someone who lived a few houses down from the co-op. During the interview, he told me the co-op had a problem with mice. They were invading the neighborhood. When he complained to co-op staff, he was told the mice have just as much right to live as anyone else. Oops, my board experience had gone from the plus to the minus column, plus I had a food safety issue to deal with. That was thirty years ago. Continue Reading →
Controlled companies generally underperformed non-controlled firms in terms of total shareholder returns, revenue growth, and return on equity, according to a new report, Controlled Companies in the Standard & Poor’s 1500: A Follow-up Review of Performance & Risk, commissioned by the Investor Responsibility Research Center Institute (IRRCi) and conducted by Institutional Shareholder Services Inc. (ISS).
The study also finds that average chief executive (CEO) pay is significantly higher at controlled companies with multi-class stock structures: three times higher than that at single-class stock controlled firms and more than 40% higher than average CEO pay at non-controlled firms. In addition, director tenure typically runs longer, board refreshment is generally slower, and boardrooms are less diverse at controlled companies. Continue Reading →
Tom Croft of Heartland Capital Strategies had a good post the other day on the proposed CEO pay rules:
The US Securities Exchange Commission (SEC) voted to adopt a new CEO-Worker Pay Ratio Rule at its August 5 Meeting, passing the rule mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (five years later).
Continue Reading →
The Investor Responsibility Research Center Institute (IRRCi) is accepting submissions for its fourth annual Investor Research Award competition for research that examines the interaction between the real economy and investment theory. Practitioners and academics are invited to submit research papers by September 15, 2015, for consideration by a blue-ribbon panel of judges with deep finance and investment experience.
Two research papers – one academic and one practitioner – each will receive the 2015 IRRCi Research Award along with a $10,000 award. The winning papers also will be presented at the December 9, 2015, forum of the Millstein Center for Global Markets and Corporate Ownership at Columbia University in New York, NY. Continue Reading →
Almost three-quarters of investment professionals worldwide (73 percent) take environmental, social, and corporate governance — ESG issues into consideration in the investment process, according to the CFA Institute ESG Survey, a new survey of CFA Institute members created by CFA Institute and the Investor Responsibility Research Center Institute (IRRC Institute). In addition, 64 percent of survey respondents consider corporate governance issues, 50 percent consider environmental issues, and 49 percent consider social issues in investment decisions. Only 27 percent do not consider ESG issues. Continue Reading →
Sustainability innovation is powering business growth, according to a new research report. Between 2010 and 2013, revenues from company-defined portfolios of sustainable products and services grew by 91% among the companies examined in the report. For S&P Global 100 companies that break out revenue for sustainable products or services separately, that revenue stream grew at six times the rate of overall company results. Continue Reading →
Join the webinar on Monday, May 11th at 2:00 PM to review the findings of the latest research from the Investor Responsibility Research Center Institute (IRRCi) and the Pensions and Capital Stewardship Project at Harvard Law School’s Labor and Worklife Program. Continue Reading →
Practitioner and Academic Submissions Accepted Until Sept. 15, 2015 Continue Reading →
Disclaimer: I’m sharing a few notes from Directors Forum 2015 held at San Diego University beginning 2/25/2015 and ending 2/27/2015. The Forum was held under the Chatham House Rule, so you won’t read any juicy tidbits here. However, I do hope to give readers some flavor of the topics discussed and a little on the general range of opinions. I have take slight liberties with the rule with regard to individual featured speakers, giving some sense of their talks without revealing the specifics of cases raised or providing quoted material of any substance. My notes are sometimes cryptic. Sorry but my time is better spent on other activities.
Directors Forum 2015: Sunday
Thomas J. Ridge, CEO, Ridge Global, LLC
The Honorable Tom Ridge is the CEO of Ridge Global, which helps businesses and governments address risk management issues. He was the first Secretary of the U.S. Department of Homeland Security, another call to service for the former soldier, congressman and governor of Pennsylvania. Governor Ridge was the keynote speaker at the opening dinner. Continue Reading →
A new study finds that economic value creation is not a major factor in institutional investors’ Say-on-Pay voting, nor in the recommendations of the two largest proxy advisors that counsel investors how to vote. The research reveals that there is no material difference between institutional investors’ Say-on-Pay voting for those companies that create economic value as compared to those that destroy value. Continue Reading →
Total shareholder return (TSR), is the most frequent metric used to pay CEOs for performance. The authors of this excellent study from IRRCi believe CEO pay should, instead, be linked to the cost and future value of capital.
CEO Pay for ‘Performance”
In 1993, Congress amended the tax code to tie executive pay to “performance” metrics. To be a deductible business expense, pay had to be linked to performance. Stock price was an easy proxy for performance and the link was acceptable to the IRS. Before the amendment, in 1991, average CEO pay at large public firms was 140 times that of average employees. By 2003, it was approximately 500 times. Whereas equity-based compensation at such firms was zero percent in 1984, it climbed to 66% by 2001. The percentage of CEO pay from stock option grants rose from 35% in 1994, to 85% by 2001.
As the authors point out, “total shareholder return is, by far, the most dominant performance metric in long-term incentive plans.” Yet, increased TSR often has little to do with actually growing a business for the long-term. The rise of fall in stock price generally has little to do with CEO effort. When there is effort involved, rewards come quicker through cost-cutting (firing employees, reducing R&D), stock buybacks or financial engineering than by developing new products, training staff or increasing sales. Continue Reading →
Corporate boards are exceeding legal oversight requirements on environmental and social issues, with more than half of S&P 500 companies providing board level oversight of environmental and/or social issues above and beyond that required by law. Board Oversight of Sustainability Issues finds that many industries subject to scrutiny – paper, forestry, healthcare, utility companies – are among the most likely to have board oversight of sustainability issues. But, the retail sector lags despite criticism for recycling and labor and human rights practices. Continue Reading →
The Investor Responsibility Research Center Institute (IRRCi) deadline approaches for its third annual competition for research that examines the interaction of the real economy with investment theory. Two papers – one academic and one practitioner – each will receive the 2014 IRRC Institute Research Award along with a $10,000 award. Continue Reading →
Since issuing their first report in 2009, the Investor Responsibility Research Center Institute has made a deep impact – far beyond their expectations. A new Five Year Impact Report recaps the 28 reports IRRCi has issued, which cover a wide range of contentious issues – executive compensation, fracking, political spending and proxy voting – to name a few. Since founding, they have remained passionate that all their research is objective and unbiased. As a result, the research has become a valuable tool for investors, policymakers, and other stakeholders. Continue Reading →
TK Kerstetter, Chairman, NYSE Governance Services / Corporate Board Member interviews one of the brightest minds in corporate governance, Jon Lukomnik, who serves as the executive director of the IRRC Institute. A columnist for Compliance Week, Mr. Lukomnik previously chaired the executive committee of the Council of Institutional Investors, co-founded and served as a governor of the International Corporate Governance Network and is co-author of the award-winning The New Capitalists: How Citizen Investors Are Reshaping the Corporate Agenda (Harvard Business School Press, 2006). Download Creating Responsible Financial Markets. Continue Reading →
Author Presentation of Findings: September 19, 2014
The Investor Responsibility Research Center Institute (IRRCi) announced its third annual competition for research that examines the interaction of the real economy with investment theory. Two papers – one academic and one practitioner – each will receive the “2014 IRRC Institute Research Award” along with a $10,000 award. Continue Reading →
Jon Lukomnik, Executive Director of Investor Responsibility Research Center Institute (IRRCi), was announced the winner of the 2013 International Corporate Governance Network (ICGN) Award for Excellence in Corporate Governance. He received the honor at the ICGN annual general meeting in New York, New York. Ralph Whitworth, Founder and Principal of Relational Investors, was awarded the Lifetime Achiever Award, and a special posthumous award was given to the late Michael O’Sullivan, former President of the Australian Council of Superannuation Investors. Continue Reading →
Two seminal research papers have won the Investor Responsibility Research Center Institute’s (IRRCi) prestigious annual researchcompetition focused on the interaction of the real economy with investment theory. One research paper highlights the financial market’s ability to learn the value of corporate governance, and the second explores evolving fiduciary responsibilities resulting from the need for long-term value creation. IRRCi Chair Linda Scott announced the 2013 prize recipients yesterday at the Columbia University Millstein Governance Forum, Corporate Governance in the New ‘Normal’: The Impact of New Patterns of Corporate Ownership. Continue Reading →
Key Characteristics of Prominent Shareholder-sponsored Proposals on Environmental and Social Topics, 2005-2011, released by the IRRC Institute (IRRCi) and researched by Ernst & Young LLP finds environmental and social (E+S) shareowner proposals are gaining increased support from investors at US companies. Download the report, presentation, press release and even replay the webinar from IRRCi’s website. Continue Reading →
The Investor Responsibility Research Center Institute will host a webinar on Wednesday, February 20, 2013 at 1 PM ET to review the findings of a new study that finds environmental and social (E+S) shareholder proposals are gaining increased voting support from investors at U.S. public companies. From 2005-2011, average support for these proposals more than doubled, from about 10 to more than 20 percent. Continue Reading →
The Investor Responsibility Research Center Institute (IRRCi) is accepting submissions for its second annual competition for research that examines the interaction of the real economy with investment theory. Two papers – one academic and one practitioner – each will receive the “2013 IRRC Institute Research Award” along with a $10,000 award. A blue-ribbon panel of renowned judges with broad finance and investment experience will carefully review submissions and select two winning papers.
Wednesday October 17, 2012, 2pm EDT/11 am PDT, To register for this complimentary webinar, click here.
Shareholder value growth is the core challenge of every business and the ultimate Continue Reading →
A new study finds that controlled companies – particularly those with multiple classes of shares – generally underperform over the long term. As compared to companies with dispersed ownership, controlled companies experience more stock price volatility, increased material weakness in accounting controls, more related party transactions, and offer fewer rights to unaffiliated shareholders. The study results challenge the notion that multiclass voting structures benefit a company and its shareowners over the long term. Continue Reading →