Tag Archives | SEC

Investor Response to Chamber: Don’t Gut Rights

Investor Response to Chamber: Letter

Representatives of hundreds of investors with trillions of dollars in assets delivered a letter to the SEC on November 9, 2017, An Investor response to U.S. Chamber’s Proposal to Revise SEC Rule 14a-8 (report).

We noted with interest the November 1, 2017, guidance contained in Staff Legal Bulletin No. 14I. While we are reserving judgment about how the guidance may apply in practice, we are particularly pleased by Director Hinman’s accompanying statement that the guidance is not intended to “make things easier or harder for one side or the other, . . . [but] to improve the process.” We strongly support that goal and plan to actively monitor the SEC staff no-action process during the upcoming proxy season to determine whether the goal was achieved.

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CII: William Hinmam Interviewed

Keynote Interview: William Hinman of the SEC

William Hinman, Director of the SEC’s Division of Corporation Finance, was interviewed by CII Co-Chair Gregory Smith, Executive Director, Colorado Public Employees Retirement Association at #, I scribbled a few notes.

As you can well imagine for someone speaking from such a sensitive position, there were no bombshell announcements. However, it is certainly good to have a dialogue between CII members and the head of CorpFin. William Hinman did not disappoint. Continue Reading →

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Citi (C): Proxy Vote Score 48

Citigroup Inc. (Citi, NYSE: C), a diversified financial services holding company, provides various financial products and services for consumers, corporations, governments, and institutions worldwide. Citi logoCiti is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of three fund families when I checked and voted. Their annual meeting is coming up on April 25, 2017.

I voted AGAINST pay and committee members, FOR all shareholder proposals. I voted with the Board’s recommendations 48% of the time. View Proxy Statement. Continue Reading →

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International Business Machines Corporation Proxy

International Business Machines Corporation (NYSE: IBM) provides information technology (IT) products and services worldwide.  IBM is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of two fund families when I checked and voted. Their annual meeting is coming up on April 25, 2017. I voted FOR Proxy Access, Special Meeting amendments and report on lobbying. See how and why I voted these and other items below. I voted with the Board’s recommendations 42% of the time. View Proxy Statement (index on page 4). Continue Reading →

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Starbucks (SBUX): Vote Proxy Access

Starbucks Corporation (NASD: SBUX), together with its subsidiaries, operates as a roaster, marketer, and retailer of specialty coffee worldwide. SBUX is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votImage result for starbuckses of four fund families when I checked and voted. Their annual meeting is coming up on March 22, 2017

I voted FOR Proxy Access Amendments. See how and why I voted other items below. I voted with the Board’s recommendations 50% of the time. View Proxy Statement via iiWisdom.

Read Warnings below. What follows are my recommendations on how to vote the proxy in order to enhance corporate governance and long-term value. Continue Reading →

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Walt Disney Company: Proxy Score 25

Walt Disney Company

Walt Disney Company: before you vote your proxy

The Walt Disney Company (NYSE:DIS), together with its subsidiaries, operates as an entertainment company worldwide.

The Walt Disney Company is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of three fund families when I checked and voted. Their annual meeting is coming up on March 8, 2017.

I voted FOR Proxy Access Amendments. See how and why I voted other items below. I voted with the Board’s recommendations only 25% of the time. View Proxy Statement via iiWisdom. Continue Reading →

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Qualcomm (QCOM) Proxy Access: Proxy Score 57

QCOMQUALCOMM Incorporated (NASD:QCOM) develops, designs, manufactures, and markets digital communications products and services in China, South Korea, Taiwan, the United States, and internationally.

QCOM is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of two funds when I checked and voted. Their annual meeting is coming up on March 7th, 2017.  

I voted AGAINST pay, comp committee members, auditor. FOR Proxy Access Amendments. See why below. I voted with the Board’s recommendations 57% of the time. View Proxy Statement via iiWisdom. Continue Reading →

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Gadfly Proposals Reduce Value?

Deal Professor Envisions Corporate Gadfly

Starting with Corporations

Gadfly proposal on your corporate proxy? One implicit conclusion from a recent academic study is that you should short the company as soon as the SEC disapproves the company’s no-action request, since a proposal from a gadfly is likely to reduce the company’s value. Even though their intent is primarily to show why managers generally oppose proposals, that is the takeaway investment strategy one might conclude from a paper by John G. Matsusaka, Oguzhan Ozbas and Irene Yi entitled Why Do Managers Fight Shareholder Proposals? Evidence from No-Action Letter Decisions. (Why Do Managers Fight Shareholder Proposals, pdf)

Investors Skeptical of Gadfly Proposals

Researchers found a statistical correlation between Securities and Exchange Committee (SEC) staff decisions to block a no-action request and negative abnormal returns over the period of 2007-2016, “suggesting that investors agree with managers that these proposals are value-destroying.” “[O]ur main finding is that the market responded positively to the granting of a no-action letter.” “Investors are not particularly skeptical of proposals by unions and public pensions, but appear to view proposals by individual ‘gadfly’ shareholders as value-destroying.” Continue Reading →

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Business Roundtable to SEC: Muzzle Shareholders

proxymonitorsmeasurecsmypropsAs I indicated yesterday, I have been contacted by several reporters for comments on the latest screed from the Business Roundtable seeking to muzzle the rights of shareholders. Although I have much more productive ways to occupy my time, it does make sense for me to provide at least some response, since the Business Roundtable names me among those “pursuing special interests… frequently at a significant cost to the company.”

Their statistics do not come from an objective third party, such as Proxy Insight, but from the conservative Manhattan Institute‘s Proxy Monitor (funded in part by the Koch Family Foundations), covering only 250 out of thousands of American companies. The Business Roundtable titled their report Responsible Shareholder Engagement And Long-Term Value Creation: Modernizing the Shareholder Proposal Process. Don’t be fooled by the numbers they use, claiming few proposals pass. The Business Roundtable doesn’t count proposals that don’t make it to the proxy because proponents and companies have reached agreement. They don’t count proposals filed at the thousands of small companies, which tend to have poorer corporate governance practices. ‘Modernization’ for the Business Roundtable means moving the SEC further and further from its primary mandate of ‘investor protection’ by creating a democracy-free zone for entrenched managers.  Continue Reading →

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No-Action Requests & the Business Roundtable

Most Popular Topics of No-Action Requests for 2016

Most Popular Topics of No-Action Requests

Yesterday, several reporters asked me to comment on no-action requests and the SEC’s denial to Apple, as well as the Business Roundtable’s fanciful notions regarding the need for reform of the proxy proposal process. I am reluctant to give the Business Roundtable’s proposal, Modernizing the Shareholder Proposal Processany more ink but will just touch on one of their issues here as I explain the Apple decision. 

No-Action Requests: Apple and Proxy Access Lite

The SEC has consistently denied no-action requests to companies where the proponent asks for modifications to bylaws when the companies have made no modifications in the direction requested. See H&R Block and Microsoft as prior examples. Apple is no exception. This is nothing new. Continue Reading →

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#ICGN16: Part 1

#ICGN16

#ICGN16 was the hashtag for tweeting about the 2016 annual meeting of the International Corporate Governance Network held in San Francisco, June 27 – 29th, 2016. Check Twitter for additional posts to #ICGN16. What follows are a few of my rough notes from the conference. Accuracy for details isn’t one of my noted strengths, so I’m tempted to say the notes are for entertainment purposes only but I do hope readers will get some sense of the proceedings.

#ICGN16: PreConference Rethink of ‘One Share, One Vote’

Even before the ICGN16 (International Corporate Governance Network annual conference) met in San Francisco last month, two prominent former board members kicked off lively debate by proposing a radical rethink of what has been a guiding principle for many in the movement for good corporate governance. Peter Clapman and Richard Koppes argued in a WSJ opinion piece that longterm shareholders should have greater voting rights.

…the shareholder-rights agenda has been largely achieved. Only 10% of S&P 500 boards are classified today, while some 90% are elected by majority vote. Only 3% have a poison pill in force. More than 35% of S&P 500 companies have adopted proxy access… 

Richard Koppes

Richard Koppes

Peter Clapman

Peter Clapman

Activists increasingly demand board representation to implement their agenda, often meaning that short-term investors take and quickly relinquish boards’ seats. Boards frequently settle with activists out of fear of losing a proxy battle—or worse, winning a Pyrrhic victory. (Time to Rethink ‘One Share, One Vote’?)

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‘Substantial Implementation’ Will Backfire

Substantial Implementation Will Backfire

‘Substantial Implementation’ Defense for Proxy Access Lite Under (i)(10) Will Backfire for Corporate Boards

Substantial implementation, that’s the deception companies have been arguing in order to obtain ‘no-action’ relief under SEC Rule 14a-8(i)(10) after implementing proxy access ‘lite.’ Law firms have been touting recent no-action letters released on February 12, with more in March  2016. It looks like a clear win for entrenched managers and directors for implementing only proxy access lite. In reality, such deception will cost companies more in legal fees and will reduce board discretion, since shareholders will increasingly file binding bylaw resolutions to obtain the same robust proxy access promised under vacated Rule 14a-8(i)(10). Continue Reading →

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Lobbying Disclosure Sought by Investors

lobbying disclosureLobbying disclosure is sought by shareholder resolutions filed at 50 companies by 66 institutional and individual investors.

Corporate lobbying disclosure remains a top shareholder proposal topic for 2016. At least 66 investors have filed proposals at 50 companies asking for lobbying reports that include federal and state lobbying payments, payments to trade associations used for lobbying, and payments to any tax-exempt organization that writes and endorses model legislation. Political activity remains a top investor topic for the sixth consecutive year, with more than 90 proposals filed for 2016 that seek disclosure of either lobbying or political contributions. Continue Reading →

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RIA Hands Untied by SEC No-Action Denial

RIA Hands Untied

RIA Hands Untied

RIA hands untied by Newground Social Investments team and the SEC’s refusal to grant a no-action letter to Baker Hughes (BHI, $BHI) on February 22, 2016. Congratulations to Bruce Herbert and staff at Newground, as well as to their advisors.

We have discussed the importance of not counting abstentions before at Simple Majority Vote Counting Initiative for Proxies. Bruce has worked tirelessly in chipping away at vote counting deception for years… making some progress. However, what we are celebrating here are two precedents established that will ease the burden faced by Registered Investment Advisors (RIAs, Investment Advisor or Investment Adviser?) and their clients: Continue Reading →

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SEC Protects the 2%: Qualcomm Example

SEC Protects the 2%

SEC protects the 2%, an absurd meaningless gesture

The SEC protects the 2%. No, I am not writing about the top 2% of America in terms of wealth or income, although there is probably some correlation. I am writing about the 2% of shares that are still registered. While the SEC is protecting shareholders who own that 2% of shares, they are falling down on the job with respect to protecting the rights of shareholders owning the other 98%. Yesterday, I asked the SEC to invalidate the proxy ballot sent out by Qualcomm (QCOM). I’ve raised this issue before, filing a rulemaking petition on the subject in 2009 but can’t let the SEC’s inaction slide. A few examples of previous posts are as follows:

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Apple Shareholders Rejected Real Proxy Access

Apple Shareholders Rejected Real Proxy AccessApple shareholders rejected real proxy access at their meeting on February 25, 2016. Maybe shareholders thought they already have it. Recent decisions by the SEC could lead shareholders to believe proxy access was “substantially implemented.”

Maybe they wanted to support Apple’s management while the company is under attack from the FBI.  

ISS recommended a “For” vote. Shouldn’t that have guaranteed passage?

We probably won’t know for months which Apple shareholders rejected real proxy access… and maybe that’s the key point.

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The Walt Disney Company (DIS): Proxy Score 62

 Disney

before you vote your proxy

Disney ($DIS), together with its subsidiaries, operates as an entertainment company worldwide. Disney is one of the stocks in my portfolio. Their annual meeting is on March 3, 2016. ProxyDemocracy.org had collected the votes of three funds when I checked. I voted against the pay proposal and compensation committee and in favor of shareholder proposal to eliminate supermajority requirements and to report on lobbying. I voted with the Board’s recommendations 62% of the time. View Proxy Statement.

Read Warnings below. What follows are my recommendations on how to vote the proxy in order to enhance corporate governance and long-term value.  Continue Reading →

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Apple Inc. Proxy Score 47 – ‘For’ Proxy Access

Apple IncApple Inc. (AAPL) meeting on 2/26/2016 provides shareholders an opportunity to vote FOR real proxy access. Apple Inc. designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players to consumers, small and mid-sized businesses, education, and enterprise and government customers worldwide. It is one of the stocks in my portfolio. I will attend the 2/26 meeting in person.

ProxyDemocracy.org had collected the votes of four funds when I checked. I voted against two directors and for proxy access, therefore with the Board’s recommendations 47% of the time. View Proxy Statement.

Read Warnings below. What follows are my recommendations on how to vote the proxy in order to enhance corporate governance and long-term value.  Continue Reading →

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Substantial Implementation: Proxy Access Lite

Substantial ImplementationSubstantial implementation, that’s what SEC staff deemed proxy access ‘lite’ last week. Investor rights were eroded again as staff granted a number of no-action letters on February 12th to companies based on “substantial implementation” of proxy access. At its founding, the SEC was largely a champion of shareholder rights. The SEC required companies to include proposals on any proper subject in the proxy in order to approximate the conditions of the annual meeting. The SEC even took Transamerica to court in 1947 for refusing to place shareholder proposals in their proxy. From that high point, the SEC began chipping away at shareholder proxy rights. Last week’s decisions inferring proxy access lite to be substantial implementation provided further evidence of an agency more concerned with protecting entrenched managers than shareholder rights. Continue Reading →

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Franklin Resources: Proxy Score 58

Franklin ResourcesFranklin Resources, Inc. (BEN) is a publicly owned asset management holding company, which includes Franklin Templeton Investments, and is one of the stocks in my portfolio. Their annual meeting is on February 17, 2016. ProxyDemocracy.org had collected the votes of two funds when I checked. I voted against three directors and for the proposal for a report on voting incongruities regarding climate change voting. I voted with the Board’s recommendations 58% of the time. View Proxy Statement.

Franklin Resources: Special Note

This is one of the most important votes of the year because of the vitally important proxy proposal submitted by Zevin Asset Management, along with First Affirmative Financial and Friends Fiduciary Corporate. The proposal asks our company to report on incongruences between the proxy voting practices of Franklin Resources and its stated policy positions on climate change. If they are essentially ‘green-washing,’ this proposal should lead to a change in how they vote. If their proxy votes are already aligned with their policies and public statements, a report will provide an opportunity for good publicity. Continue Reading →

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CSP Inc.: Proxy Score 87

CSPCSP Inc. (CSPI), together with its subsidiaries, develops and markets IT integration solutions and cluster computer systems to commercial and defense customers in the Americas, Europe, and Asia. CSP Inc. is one of the stocks in my portfolio. Their annual meeting is on February 9, 2016. ProxyDemocracy.org didn’t have a listing for CSP I presume it is because the company is too small.  I voted for the directors, pay, auditor and for proxy access, therefore with the Board’s recommendations 87% of the time. View Proxy Statement. Continue Reading →

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TD Ameritrade Holding: Proxy Score 62

TD AmeritradeTD Ameritrade Holding Corporation (AMTD) provides securities brokerage services and related technology-based financial services to retail investors, traders, and independent registered investment advisors (RIAs) in the United States. TD Ameritrade is one of the stocks in my portfolio. Their annual meeting is on February 18, 2016. ProxyDemocracy.org had collected no votes when I checked. I voted against the pay and bonus plans, therefore with the Board’s recommendations 62% of the time. View Proxy Statement.

Read Warnings below. What follows are my recommendations on how to vote the proxy in order to enhance corporate governance and long-term value.  Continue Reading →

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Visa (V): How I Voted – Proxy Score 53

VisaVisa Inc (V), a payments technology company, operates an open-loop payments network worldwide. The company facilitates commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities. Visa is one of the stocks in my portfolio. Their annual meeting is on February 3, 2016. ProxyDemocracy.org had collected no votes when I checked.  I voted against the pay plan, incentive plan, amendments and the compensation committee but with the Board’s recommendations 53% of the time. View Proxy Statement on iiWisdom. Continue Reading →

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Reed’s – REED: Reject the Board

REED Supplement 2015mtgReed Tshirt12nd update, 12/20/2015: Unpack your bags, cancel your flight and hotel. Reeds Inc. (REED) has postponed tomorrow’s annual meeting to 12/30/2015. Although the move may be costly to shareowners and our company, it may pay dividends in the long-run if REED finally starts paying more attention to shareowners, corporate governance and their legal obligations. REED made a material error in their proxy materials and ballot. Although they filed a revised proxy, they didn’t pay to send a new ballot or link to shareowners. The supplement they issued on Friday includes a new ballot but so far that has not gone out to most shareowners.  I am hoping they will do so this week through Broadridge’s proxyvote.com platform. Continue Reading →

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United Natural Foods (UNFI): How I Voted – Proxy Score 42

United Natural FoodsUnited Natural Foods, Inc. $UNFI, together with its subsidiaries, distributes and retails natural, organic, and specialty foods and non-food products in the United States and Canada. United Natural Foods is one of the stocks in my portfolio. Their annual meeting is on December 16, 2015. ProxyDemocracy.org had collected the votes of four funds when I checked.  I voted with the Board’s recommendations 42% of the time. View Proxy Statement.

Read Warnings below. What follows are my recommendations on how to vote the proxy in order to enhance corporate governance and long-term value.  Continue Reading →

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Medtronic PLC: How I Voted – Proxy Score 44

MedtronicMedtronic PLC ($MDT) manufactures and sells device-based medical therapies worldwide. Medtronic is one of the stocks in my portfolio. Their annual meeting is on December 11, 2015. ProxyDemocracy.org had collected the votes of two funds when I checked.  I voted with the Board’s recommendations 44% of the time. View Proxy Statement.

Read Warnings below. What follows are my recommendations on how to vote the proxy in order to enhance corporate governance and long-term value.  Continue Reading →

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Guidewire Software, Inc. (GWRE): How I Voted – Proxy Score 40

GuidewireGuidewire Software, Inc. provides software products for property and casualty (P&C) insurers. It offers a technology platform supports core insurance operations, including underwriting and policy administration, claim management, and billing. Guidewire is one of the stocks in my portfolio. Their annual meeting is coming up on December 3, 2015. ProxyDemocracy.org had collected the votes of two funds when I checked.  I voted with the Board’s recommendations 40% of the time. View Proxy Statement.

Read Warnings below. What follows are my recommendations on how to vote the proxy in order to enhance corporate governance and long-term value.  Continue Reading →

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Comment: “Materiality,” File Reference No. 2015-300

Public Citizen circulates comment letter on materialityTake Action: Bartlett Naylor of Public Citizen sent me the following draft sign-on comment letter to FASB/SEC regarding their concept release to redefine “materiality” from information that “could” be important to investors to information that “would” be considered important. If you agree with us that regulators shouldn’t be reducing the volume information that “could” be material, please contact Mr. Naylor at [email protected]. Let him know you want to join in the comment letter. Include your contact details and how you want to be referenced. 

December 6, 2015

Mary Jo White/Chair
James Schnurr/Office of Chief Accountant
Securities and Exchange Commission Members
Financial Accounting Standards Board Continue Reading →

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“Directly Conflicts” Clarified by Staff Legal Bulletin

Seal of SECNever underestimate the ability of SEC staff to parse the rules in a creative way. Staff Legal Bulletin No. 14H (CF) does not adhere completely to original intent, which staff determined was “to prevent shareholders from using Rule 14a-8 to circumvent the proxy rules governing solicitations.” However, it gets us where we need to be in defining the meaning of “directly conflicts” with regard to Rule 14a-8 exclusions. Continue Reading →

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