Tag Archives | proxy advisors

Call for Papers: Critical Issues for Boards & Institutional Investors

WeinbergCtrThe John L. Weinberg Center for Corporate Governance of the Alfred Lerner College of Business & Economics at the University of Delaware will host a Corporate Governance Symposium on March 15, 2016.  The focus of the Symposium will be “Critical Issues for Boards & Institutional Investors in 2016.”  The Symposium will feature up to four academic papers on corporate governance and a panel discussion featuring speakers from the Delaware judiciary, academic, business and legal communities.  The John L. Weinberg Corporate Governance Best Paper Award will be presented during the symposium luncheon.    Continue Reading →

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Directors Forum 2015: Part 2

Stay Or Go

‘Stay Or Go’ Panel

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 is 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.

Kerrii Anderson

Kerrii Anderson

Directors Forum 2015: Session 3 “Should We Stay or Should We Go? At Play on the Global Stage

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Best Coverage of SEC Proxy Advisory Services Roundtable

theracetothebottomTheRacetotheBottom has by far the best coverage I’ve seen on the SEC’s roundtable. Congratulations. Those interested in the tweet stream during the event can check out Proxy Advisory Services Roundtable: Tweets & Links to Analysis.

Of course, there was no one invited to the Roundtable to represent the interests of retail investors… left out again. My biggest disappointment is that no one mentioned the possibility of proxy advisor contests, such as what I proposed at Cisco. See Cisco: How Our Proxy Competition Would Work – The Short VersionContinue Reading →

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SEC Announces Agenda, Panelists For Roundtable On Proxy Advisory Services

SECThe Securities and Exchange Commission today announced the agenda and panelists for its December 5 staff roundtable on the use of proxy advisory firm services by institutional investors and investment advisers.

The roundtable, announced earlier this month, will begin at 9:30 a.m. and will be divided into two sessions.  In the first session, participants will discuss, among other topics, the current use of proxy advisory services, including the factors that may have contributed to their use, the purposes and effects of using the services, and competition in the marketplace for such services. Continue Reading →

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Cisco Systems (CSCO): How I Voted – Proxy Score 56

ciscoCisco Systems, Inc. $CSCO is one of the stocks in my portfolio. Their annual meeting is next week on Tuesday, 11/13/2013. ProxyDemocracy.org had collected the votes of 2 funds when I checked on 11/13/2013 (there have been more since). I voted with management 56% 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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Cisco Systems: Proxy Proposal #5 – 11 Q&A

ciscoI received a series of questions about my 11/5/2013 post Cisco Systems: Prime Target For Proxy Advisor Contest. Since other $CSCO shareowners might have similar questions, I am posting the questions and our responses below regarding proxy proposal #5, APPROVAL TO HAVE CISCO HOLD A COMPETITION FOR GIVING PUBLIC ADVICE ON THE VOTING ITEMS IN THE PROXY FILING FOR CISCO’S 2014 ANNUAL SHAREOWNERS MEETING.

Question 1. I understand that your goal here is to increase retail investor participation – a goal we share. I certainly agree that individual investors are at a significant disadvantage without professional advice on their proxy voting.

Response: That’s not the main goal, but it would be an additional benefit. The main goal is to solve the shareowners’ “free-rider” problem, which hurts institutional investors too. For most investors it is not worth paying for good voting advice, unless you own more than 5% of the shares. (The Agency Costs of Agency Capitalism: Activist Investors and the Revaluation of Governance Rights, Ronald J. Gilson and Jeffrey N. Gordon, January 1, 2013) Continue Reading →

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Cisco Systems: Prime Target For Proxy Advisor Competition

ciscoCisco Systems (CSCO) faces challenges as never before. For example, see Here’s What Happened When Cisco Lost A $1 Billion Deal With Amazon. Meeting those challenges will take a concerted effort by management and the board of directors. Shareowners, who elect the board and vote on major proxy issues facing our company, also play an important role in Cisco staying competitive and profitable. Yet, most shareowners are passive. Most of us don’t even bother to vote our proxies and who can blame us? This year’s Proxy materials are over 80 pages long. Who has time to read, digest and make decisions on all that information? Finally, we could have the help we need with a proxy advisor contest paid by all shareowners (through Cisco) and chosen by a vote of shareowners.

Proxy Advisors and Research Providers Continue Reading →

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Stanford Academics Focus on Wrong Problems at ISS

StanfordRockIn a recent Stanford “Closer Look” publication (How ISS Dictates Equity Plan Design), Ian D. Gow (Harvard but graduated from Stanford), David F. Larcker, Allan l. Mccall, and Brian Tayan argue ISS dictates pay equity plans. ‘Nonsense,’ was my first reaction. ISS policies generally reflect the will of its customers. The authors have a point but they miss the main problem. Their arguments begin in familiar territory. Continue Reading →

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Proxy Advisor Competition at Cisco OK'd by SEC

ciscocisco

Mark Latham came up with a brilliant idea in the late 1980s: Shareowners should use their corporation’s funds to pay for external evaluations of governance and performance of the board and management. Shareowners would vote to choose among competing organizations to provide this service.

It was a simple concept but SEC rules made subsequent proposals unnecessarily complex and excluded advice on director candidates, often among the most critical decisions on a proxy. Continue Reading →

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Corporate Elections: Looking in the Wrong Places

Congress$Bartlett Naylor, Financial Policy Reform Advocate, and Taylor Lincoln, Research Director, both with Public Citizen’s Congress Watch division, wrote an excellent post recently, Looking for Conflict in All the Wrong Places. They criticize the the Congressional hearing entitled “Examining the Market Power and Impact of Proxy Advisory Firms.”

Instead of proxy advisors, Congress should be looking at the JPMorgan proxy vote, where $5 million of the company’s money – shareholders’ money – was used to contest the resolution to split the CEO and chairman roles. And, of course, our money – the money of shareholders – is also being used right now to lobby Congress to weaken our rights. Continue Reading →

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Proxy Advisors Get Tougher

I blogged about this in December (Key Changes to Proxy Advisor Policies for 2013), mainly referring to a recent Alert from Weil. Writing for Alliance Advisors, Shirley Westcott, has added to the mix. I’m not sure when it was actually written because the publication says January 2013 at the top but September 2012 at the bottom. Nevertheless, another good analysis to help us understand the changes. Here’s the lead-in from the email Continue Reading →

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Agency Capitalism: Corrective Measures (Part 3)

This is Part 3 of a post which started out reviewing the important thesis outlined in The Agency Costs of Agency Capitalism: Activist Investors and the Revaluation of Governance Rights by Ronald J. Gilson and Jeffrey N. Gordon (January 1, 2013) in Agency Capitalism: Corrective Measures (Part 1). In this post and in Agency Capitalism: Corrective Measures (Part 2) I hope to extend the work of Gilson and Gordon by offering additional avenues to counterbalance the central problem of devalued governance rights. Continue Reading →

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Agency Capitalism: Corrective Measures (Part 2)

This is Part 2 of a post which started out reviewing the important thesis outlined in The Agency Costs of Agency Capitalism: Activist Investors and the Revaluation of Governance Rights by Ronald J. Gilson and Jeffrey N. Gordon (January 1, 2013). See Agency Capitalism: Corrective Measures Part 1 and Part 3. Current law encourages mindless indexing of portfolios and voting like lemmings to fulfill fiduciary duties. While Gilson and Gordon stressed the need for activist hedge funds, below I explore some additional options. Continue Reading →

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Key Changes to Proxy Advisor Policies for 2013

I was going to write-up a short guide to recently announced changes by Institutional Shareholder Services and Glass Lewis but after reading a recent Alert from Weil I’ve decided to save time by simply touching on a few of the main points and recommending readers go directly to the Alert. Why reinvent the Weil? (Sorry, I couldn’t help myself.) I’ve also included a link to it in the Shareowner’s Action Handbook for future reference. 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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Video Friday: Larcker on ISS

David F. Larcker

Many institutional investors rely on a proxy advisory firm to assist them in voting the company proxy and fulfilling their fiduciary responsibility to vote in the interest of beneficial shareholders. The largest and most influential proxy advisory firm is Institutional Shareholder Services (ISS). The recommendations of ISS are not inconsequential. Academic and professional research suggests that a recommendation by ISS can change the outcome of a vote by 15 to 20 percent, depending on the matter of the proposal. Continue Reading →

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Responsible Investor: Manifest to Enter US Market; UN Global Compact Gets Tough

UK-based proxy voting and research firm Manifest Information Services, which numbers the Swedish AP buffer funds among its clients, is planning to enter US market.

Manifest, whose US partner Proxy Governance International (PGI) withdrew from the market late last year, will begin marketing in the US shortly, said Chief Executive Sarah Wilson.

Manifest’s move comes at an interesting time, with the Securities and Exchange Commission’s new proxy access rules facing a legal challenge from the US Business Roundtable and Chamber of Commerce. (UK proxy firm Manifest planning to enter US market, Responsible Investor, 1/24/2011).

The United Nations Global Compact has expelled more than 2,000 companies for “repeated failure” to communicate their progress in integrating its sustainability principles into their operations.

The move reflects a stricter enforcement procedure against firms. The Global Compact said it has now booted out a total of 2,048 firms – the number was reached following the recent expulsion of more than 200 companies. This was at the end of a 2010 moratorium on expulsions in less developed countries. That leaves 6,066 active Global Compact participants in 132 countries. The target is for 20,000 participants by 2020.

The Global Compact is a framework for businesses that are committed to aligning their operations with 10 principles covering human rights, labor, environment and anti-corruption. (UN Global Compact expels more than 2,000 companies in enforcement drive, Responsible Investor, 1/24/2011). If you’re near Standard, you may want to attend the following discussion: The U.N. Global Compact: Principles for Businesses in Human Rights, Labor, Environment and Anti-Corruption, Sponsored by the Arthur and Toni Rock Center for Corporate Governance, Thursday, February 2nd, 2011, 12:45 PM – 2:00 PM, Room 190, Stanford Law School.

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More Regulatory Oversight for Proxy Advisors?

Two of the members of the Shareholder Communications Coalition — the Society of Corporate Secretaries & Governance Professionals and the National Investor Relations Institute — have developed a Discussion Draft on Proxy Advisory Services, to help policymakers and regulators in their review and evaluation of the proxy voting systems. The Discussion Draft presents recommendations for improving the regulatory oversight and transparency of proxy advisory firms, as a starting point for policy deliberations on these issues.  Proxy Advisory Services: The Need for More Regulatory Oversight and Transparency can be downloaded as a pdf. Recommendations include the following:

  • Regulatory Oversight of the Proxy Advisory Industry.
  • Public Disclosure of the Proxy Governance Models Used by Advisory Firms.
  • More Robust Due Diligence Regarding Proxy Vote Recommendations.
  • Public Disclosure of Proxy Voting Recommendations and Decisions.
  • Public Company Input into Advisory Recommendations.
  • Public Disclosure of Voting Errors.

The draft is certainly worth discussion. I’m especially fond of the recommendation that “All institutional investors using proxy advisory services-including pension funds, hedge funds, and private equity funds-should publicly disclose the actual proxy votes cast by them (or on their behalf), if they are not already disclosing their voting records.”

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