Tag Archives | Jon Lukomnik

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.

Practitioners and academics are invited to submit research papers by October 6, 2017, 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 2017 IRRCi Research Award along with a $10,000 award. The winning papers will also be presented at the Millstein Center for Global Markets and Corporate Ownership at Columbia University in December 2017 in New York City.

The panel of respected judges includes:

  • Robert Dannhauser, Head of Capital Markets Policy, CFA Institute
  • James Hawley, Professor and Director of the Elfenworks Center for Fiduciary Capitalism at St. Mary’s College; Head of Applied Research for TruValue Labs
  • Erika Karp, Founder, CEO and Chair of the Board of Cornerstone Capital
  • Nell Minow, Governance Expert and Huffington Post Columnist

Biographies of the judges are available here. Additional judges may be added.

“This award has become both high profile and highly valued. It shines a remarkably strong spotlight on academic and business research that dissects and analyzes pressing investment issues,” said Jon Lukomnik, IRRCi executive director. Lukomnik continued:

Last year’s two winning papers both offered important contributions to the global debate on the need for businesses to maintain a long horizon focus in a short-term world. But whether it is investor time frame, sustainability concerns or insider trading in the derivatives markets, the papers have constantly been high quality. That, in turn, has attracted widespread attention to the winning papers.

Award submissions are accepted online. Submissions may be an original work created specifically for the IRRCi Research Award, or relevant unpublished papers, or papers that have been published after July 1, 2016. Winning papers will be presented at the Columbia University Millstein Center’s conference, published by the IRRCi on its website, and distributed to some 6,000 individuals interested in the organization’s research.

IRRCi Research Award: Background

As noted on the IRRCi web site, Modern Portfolio Theory (MPT) has dominated investment theory for a half century. MPT focuses on security selection, portfolio construction, and other financial issues rather than the intersection of the real economy and investing. Simultaneously, the growing importance of the private sector relative to the public sector in the real economy has increased scrutiny of private sector behavior and economic activity. The IRRCi Research Award encourages new research that analyzes how investments interact with real world economic activity.

More information regarding the award process, submission guidelines and calendar is available here, along with the award submission form and Frequently Asked Questions.

Information on past winners is available here. More information about the award is available here. Read the full body of IRRCi research here.

About IRRCi

The Investor Responsibility Research Center Institute is a nonprofit research organization that funds academic and practitioner research enabling investors, policymakers, and other stakeholders to make data-driven decisions. IRRCi research covers a wide range of topics of interest to investors, is objective, unbiased, and disseminated widely.

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Tipping Points for Intentional Investors

Tipping Points 2016Tipping Points 2016,  a new state-of-the-industry report profiled 50 investors investors with $17.3 trillion in assets, finds that investors are deliberately incorporating new investment approaches to help address systems-level risks and opportunities. The study indicates that investors are intentionally attempting to influence systems-level risk factors previously ignored as beyond the impact-ability of institutional investors.
The report  identifies ten tools through which major institutional investors are deploying “intentional, systems-level investing.” The report also offers specific examples of investors working to impact global challenges including financial system sustainability, climate change and human rights issues.

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IRRCi Investor Research Papers Accepted

IRRCi Investor Research Award

IRRCi Investor Research Award

IRRCi Investor Research papers accepted in fifth annual competition. Two winners will receive $10,000 each and will have an opportunity to present their research findings at the 2016 Columbia University Millstein Center for Global Markets and Corporate Governance Forum. Practitioner and Academic submissions will be accepted until October 7, 2016. Continue Reading →

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Stock Buybacks: Four Reasons

Stock Buybacks

Stock Buybacks

Stock Buybacks: Directors Identify Four Reasons Stock Buyback Programs

Stock buybacks have reached their highest level since the financial crisis, with S&P 500 companies repurchasing $166.3 billion of shares in first quarter of 2016. The Investor Responsibility Research Center Institute (IRRCi) and Tapestry Networks have scheduled a webinar for Tuesday, September 13, 2016, at 1 PM ET to review the findings and respond to questions. Register at no charge here.  Download the research here.

Stock Buybacks: What Directors Say

As large American public corporations repurchase company shares at historic rates, corporate directors cite four key reasons for buybacks: to return capital to shareholders; invest in the company’s shares; offset dilution from using equity as currency; and/or alter the company’s capital structure. The directors generally disagree with widespread criticism of corporate stock buybacks, and say that companies need to better disclose the reasons for undertaking buybacks.

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The Handbook of Board Governance: Part 4

The Handbook of Board Governance

The Handbook of Board Governance in Times Square

I continue my review of The Handbook of Board Governance: A Comprehensive Guide for Public, Private, and Not-for-Profit Board Member. With the current post, I provide comments on Part 4 of the book, The Rise of Shareholder Accountability. As a shareholder advocate, this is my favorite part of The Handbook of Board Governance. See prior introductory comments and those on Part 1Part 2 and Part 3. I suspect The Handbook of Board Governance will soon be the most popular collection of articles of current interest in the field of corporate governance.”

The Handbook of Board Governance: The Happy Myth, Sad Reality

Robert A.G. Monks warns, capitalism without owners will fail. The chapter is a condensed and updated version of Citizens DisUnited: Passive Investors, Drone CEOs, and the Corporate Capture of the American Dream, which I reviewed here. Continue Reading →

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Review: What They Do With Your Money

What They Do With Your MoneyWhat They Do With Your Money: How the Financial System Fails Us and How to Fix It

What they do with your money is central to many issues of citizens around the world. This wonderful new book by Stephen Davis, Jon Lukomnik, David Pitt-Watson helps readers connect the dots. While its focus is on the financial system, its purpose is empowering individual citizen investors and those who would be investors if that system were redesigned to serve us all.

Fixing the system won’t be easy. We can’t count on most of those those benefiting from the system to initiate needed changes but the authors provide a roadmap of how needed reforms can be accomplished. Continue Reading →

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Video: Uprising Against Wall Street

Uprising Against Wall Street - Occupy

Uprising Against Wall Street – Occupy

Uprising Against Wall Street – it has certainly been a clarion call of Bernie Sanders’ Presidential campaign but, as Stephen Davis points out in the video below, Hillary Clinton, Ted Cruz and Donald Trump have also attacked Wall Street. Public opinion is clear, so politicians aren’t likely to be strong defenders (at least not in public) of a system that doesn’t appear to be working in the public interest.

Watch Stephen Davis and David Pitt-Watson discuss their new book (co-authored with Jon Lukomnik), What They Do With Your Money: How the Financial System Fails Us and How to Fix It. Continue Reading →

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Controlled Companies Underperform, Overpay

Controlled CompaniesControlled companies generally underperformed non-controlled firms in terms of total shareholder returns, revenue growth, and return on equity, according to a new reportControlled 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 →

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LeBlanc on Key Steps to an Effective Board

Dr. Richard LeBlanc

Dr. Richard LeBlanc

A North American board governance guru, Dr. Richard LeBlanc is put on the hot seat to discuss key steps to creating a great board—and how investors can know how effective their board really is. LeBlanc and host TK Kerstetter talk about board leadership, board assessments, board recruitment and composition.Inside the Boardroom by Richard LeBlanc

Kerstetter also quizzes LeBlanc about his book, Inside the Boardroom: How Boards Really Work and the Coming Revolution in Corporate Governance. The two discuss his predictions and whether a corporate governance revolution he projected in 2005 actually transpired. Continue Reading →

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IRRCi Investor Research Award Submission Deadline 9/15

Investor Responsibility Research Center Institute (IRRCi) AwardsThe 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 →

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Most Investment Professionals Consider ESG Issues

ESG Issues IRRCiAlmost 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 →

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Webinar Tomorrow Reviews How Sustainability Drives Growth

Driving Revenue Growth Through Sustainable Products and ServicesSustainability 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 →

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Corporate Human Resources & Investment Outcomes

The Materiality of Human Capital to Corporate Financial PerformanceMonday, May 11, 2015, 2 PM ET
Connecting the Dots: Corporate Human Resources & Investment Outcomes
Investor Responsibility Research Center Institute & Harvard Law Labor & Worklife Program

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 →

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Alignment Gap Between Say on Pay Voting & Creating Value

Alignment Gap Between Say on Pay Voting & Creating ValueA 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 →

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CEO Pay: Link to the Cost and Future Value of Capital

IRRCi study on CEO PayTotal 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 →

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Many Boards Moving Ahead on Environmental and Social Issues

IRRCiCorporate 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 →

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Video Friday: Jon Lukomnik on Executive Compensation and Short-termism

LukomnikTK 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 →

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2013 Millstein Forum: Dual-Class Structures, Pro and Con

Sorry to be late and abbreviated in getting out my coverage of this great forum. Be sure to check out the Forum’s photo gallery, which contains many more and much better shots than what I took between notes and conversations.

The second panel discussed the growing issue of dual-class stock structures. While there was considerable debate, my sense is that most in the room see the advantages of such structures do not outweigh the disadvantages. I would like to see more discussion in the broader press about these issues when dual-class companies are going public. Maybe the discount would be even steeper. Continue Reading →

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Jon Lukomnik Wins ICGN Award for Corporate Governance

LukomnikJon 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 →

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Environmental and Social Shareowner Proposals Gain Traction

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 →

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Controlled Companies Carry Negatives

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 →

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Director Elections: Shareowners Still Relatively Powerless

In theory, throwing out current directors and/or electing new candidates through their proxy votes is the most important function of shareowners with respect to corporate governance. That’s how we hold our agents accountable. In practice, shareowners look like powerless wimps, even at companies with majority or plurality plus resignation election standards. At least that is my conclusion after reading the excellent report by Kimberly Gladman, Agnes Grunfeld and Michelle Lamb of GMI Ratings, sponsored by IRRC Institute and its Executive Director, Jon Lukomnik. Continue Reading →

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IRRC Announces Research Competition

The Investor Responsibility Research Center (IRRC) Institute announce 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 Continue Reading →

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Research on Post-Modern Portfolio Theory Awarded by IRRC Institute

The Investor Responsibility Research Center (IRRC) Institute today announced the first recipients of a new annual research competition that examines the interaction of the real economy with investment theory. A blue-ribbon panel of judges selected two papers – one practitioner and one academic – for the new IRRC Institute Research Award.  The authors of each research paper received a $10,000 award.

Steve Lydenberg received the practitioner award for research entitled, Reason, Rationality and Fiduciary Duty. A 30-year veteran of the asset management Continue Reading →

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IRRC Deadline Upcoming for Research Entries

Friday, November 18, 2011 is the deadline to enter the IRRC Institute’s competition for research that examines the interaction of the real economy with investment theory.  Two papers – one academic and one practitioner – will receive the new “IRRC Institute Research Award” along with a $10,000 award.

Maybe it is just me, but I’ve got a feeling if you win this award you won’t have to go through the usual gauntlet to get your paper published in a respectable journal. (see cartoon at left by Nearing Zero)

The following panel of renowned judges with broad finance and investment experience will carefully review submissions and select two Continue Reading →

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Governance After the Financial Crisis

Corporate Governance in the Wake of the Financial Crisis: Selected International Views is a publication of the United Nations Conference on Trade and Development (UNCTAD). It contains commentary and analysis by leading experts from around the world, including the OECD, World Bank, ICGN, IOSCO, The Corporate Library, PRI and others with a forward by Mervyn King. The intent is to inform ongoing reform efforts and document the work of major organizations.

Frankly, I haven’t read it yet but it looks great and you can download all seven chapters from the UNCTAD site. Thanks to Jackie Cook of FundVotes.com for giving me a heads-up through the Social Investment Forum… otherwise I may have missed it.

Highlights are touted as follows:

  • Multilateral and national financial reform efforts have identified specific areas of corporate governance requiring reform at financial institutions. In particular, reform efforts should focus on:
    1. strengthening board oversight of management;
    2. positioning risk management as a key board responsibility, and; Continue Reading →
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