Tag Archives | shareholder activism

Mutualism: Kara M. Stein

Mutualism, the subjects of Kara Stein’s recent talk at Stanford Law, has been a subject that has fascinated me since the 1980’s when I  was awarded an NIMH Fellowship to study what types of corporate governance structures (including mutualism) might be most beneficial to employees, shareholders, and society. I applied many lessons learned in heading California’s Cooperative Development Program (now defunct) and continue to try to apply concepts from cooperatives and mutualism to publicly traded companies, such as Twitter.

Commissioner Stein gave an impassioned speech on mutualism and the symbiotic relationship between companies, employees, and shareholders. Dual-class shares and other mechanisms are eroding mutualism. Such structures are inherently undemocratic. Where is the symbiosis inherent in mutualism? How do stakeholders mutually benefit? Continue Reading →

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Shareholder Society Better Chamber Mantra

A shareholder society appears to have no place in the U.S. Chamber of Commerce Center for Capital Markets Competitiveness (CCMC) severely flawed paper on shareholder proposal reform. The paper is intended to contain a “set of recommendations for the SEC on fixing the broken Rule 14a-8 system in order to protect investors and make the public company model more attractive.”

However, the report attempts to solve our economic woes by eliminating shareholder rights. I criticized their report in my post Shareholder Proposal Reform Rebutted. Instead of seeking to amend Rule 14a-8 to create an essentially democratic-free zone for entrenched managers and boards, the Chamber should focus on creating a prosperous shareholder society where all Americans have a stake in our future. Continue Reading →

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Shareholder Activism Redux: The Good, Bad and Ugly

Shareholder ActivismIt’s impossible to read a newspaper, magazine or blog, or watch the news without hearing about shareholder activism.  It’s an industry unto itself with activist funds, attorneys who represent activists, activist defense lawyers, activist-focused investment bankers, activist conferences, activist newsletters, activist databases, and, of course, there are Messrs. Bebchuk and Lipton.

As a former institutional investor turned corporate governance author/advisor, I regularly get calls from media, and am cornered after speaking engagements to talk about activists.  It’s arguable that no topic in recent memory has been discussed by so many in the presence of so few facts.  It’s eerily reminiscent of when cloud computing first overtook the technology vernacular.  You know, when 8 out of 10 people who were earnestly discussing moving to the cloud, cloud infrastructure and so forth, had no idea what the “cloud” actually was. Continue Reading →

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Yvan Allaire: Shareholder Activism & Long-Term Value

Dr. Yvan Allaire

Dr. Yvan Allaire

In case you missed it last weekend, Donna Dabney, Executive Director of the Governance Center at The Conference Board posted this November 14th presentation by  Dr. Yvan Allaire presented at the Annual Meeting of The Conference Board Governance Center. His talk was titled Do activist interventions create long term shareholder value?

Allaire reviews a lot of studies and basically disputes the contention that activist interventions lead to long-term shareholder value. While I find his arguments compelling, what we really need in research going forward is much more nuanced than what his overview provides. Yes, I yield to the point that most shareholder activism doesn’t move in the direction I would like. For example, transferring wealth from employees and debt holders to shareholders only aggravates wealth disparity. Agreed – reducing cash, investment and R&D seem more likely to the hurt long-run prospects of a company. Continue Reading →

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Directors Forum 2014: Afternoon Sessions

RotundaBelow are notes I took during the afternoon sessions at the Corporate Directors Forum 2014, held on the beautiful campus of the University of San Diego, January 26-28, 2014. This year, I was only able to attend on January 27th. The program was subject to the Chatham House Rule, so there will be little in the way of attribution below but I hope to provide some sense of the discussion.

If you are a director or candidate, investor, senior corporate officer, board or management advisor, academic, or are in some way part of the corporate governance industrial complex or want to be, I hope to see you there January 25-27, 2015. If you attended the Forum this year and have ideas for articles you would like to see or to write for CorpGov.net, please email me your ideas or drafts. Part 1. Continue Reading →

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Video Friday: Who's Winning the War on Corporate Governance (and should you care)?

Chad Norton

Chad Norton

Lecture given by Chad L. NortonVice President, Fund Business Management Group of Capital Research and Management Company at Banta Center for Business, Ethics and Society, University of Redlands.

Mr. Norton previously served as corporate secretary of The New Economy Fund and SMALLCAP World Fund, Inc., two of Capital’s retail mutual funds, as well as American Funds Insurance Series, which serves Continue Reading →

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Review: The History of Modern US Corporate Governance

CheffinsMODcorpgovThis unique “must have” two volume set traces the development of corporate governance thought around the core issue of the separation of ownership and control while also touching on the board of directors, executive pay, shareholder activism and the regulatory structures that shape corporate governance in the U.S. I include the index to both volumes at the bottom of this review for your reference. The word “modern” in the title refers roughly to the post 1970 world.

Although referenced, the set does not stem directly from The Modern Corporation and Private Property by Adolf Berle and Gardiner Means.  And of course, scholars continue to explore the consequences of this rift in books such as Citizens Continue Reading →

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Harvard's Shareholder Rights Project

Lucian Bebchuk

This guest post by Lucian Bebchuk originally appeared on the Harvard Law School Forum on Corporate Governance and Financial Regulation on April 9, 2013 as Wachtell Lipton Was Wrong About the Shareholder Rights Project and is reproduced here with Professor Bebchuk’s permission.  Martin Lipton quickly rebutted in a post entitled A Reply to Professor Bebchuk.

The Shareholder Rights Project (SRP) is a clinical program operating at Harvard Law School and directed by Professor Lucian Bebchuk. The SRP works on behalf of public pension funds and charitable organizations seeking to improve corporate governance at publicly traded companies, as well as on research and policy projects related to corporate governance. Continue Reading →

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Active Ownership Increases Corporate Returns

Elroy Dimson, Oguzhan Karakas, and Xi Li analyze an extensive proprietary database of corporate social responsibility engagements with US public companies over 1999–2009. Engagements address environmental, social, and governance concerns. They are followed by a one-year abnormal return that averages 1.8%, comprising 4.4% for successful and zero for unsuccessful engagements. Continue Reading →

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Shareholder Activism: Stanford Rock Center for Corporate Governance Series – Part 3 of 3

Evan, Abe, Mason

This was the last of a three part overview of shareholder activism, beginning with the history and an overview of the key players in the space; continuing with a behind-the-scenes look at non-contentious shareholder engagement and how its impacting companies and the market; and ending with this session on Contested Situations: Proxy Fights, PR wars and activist defense. Continue Reading →

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CorpGov Bites

What’s the difference between the role of advisors and a board of directors for a start-up? At what point in your development should you build each group? Tips for creating an Advisory Board or Board of Directors: choosing the right people, defining objectives and expectations and compensation issues (i.e. What’s in it for them?) Common pitfalls to avoid Find out how having with the right advisors and board members can help you build your business. Moderator: Ron Close Panel: David Pasieka, Kerri Golden and Bill Wignall. (The Role of Advisory Boards and Boards of Directors, video format – 2009/10, MaRS

California state pension funds going broke, Stanford study finds (Stanford University News, 4/5/2010) “The simulation shows that the state would need to invest more than $200 billion, and possibly as much as $350 billion, today to return the fund to a minimum responsible level of funding.” CalPERS Response to Stanford Policy Brief on Public Pension Funds (4/6/2010) “The study relies on data when the system had $45 billion less in assets than it has today.” Findings are based on a mathematical model that uses current interest rates, which are very low and make liabilities appear to be much higher, in a manner inconsistent with accounting standards. Pension reform issue in race for governor (CalPensions, 4/7/2010)

Blackstone Group LP, the world’s largest private equity firm, is challenging a California Public Employees’ Retirement System proposal to prohibit money managers from dangling contingency fees in front of middlemen who help win pension fund contracts. (Calpers, Blackstone Clash Over Placement Agent ‘Jackpot’ Fees, BusinessWeek, 4/7/2010)

Unilever stopped providing earnings guidance. The initial impact of that was a 6% drop in the share price. But things have bounced right back since then. Is it time to shift from maximizing shareholder value? (IR magazine) (Time to shun short-termism, InvestorsChronicle, 4/7/2010) Executives lack the incentive to begin investments that they will not be around to see through, and decisions made to boost short-term profits can undermine relationships built up over many years.

The Center for Political Accountability (CPA) and the Council of Institutional Investors jointly sent letters to 427 of the companies in the S&P 500 stock index, asking them to disclose all their political contributions. As of early March, 46 resolutions on corporate political spending had been filed for 2010, versus 48 for all of last year, according to proxy advisory firm RiskMetrics Group Inc. (Shareholder groups seek to limit corporate contributions, Christian Science Monitor, 4/5/2010)

“The lawmen and bandits who fought it out at the infamous O.K. Corral in 1881 had no idea how the showdown would play out – and neither will you if your company becomes an activist’s target. But that doesn’t mean you can’t be prepared. Maureen Wolff-Reid offers four steps, including Stay Out of the Crosshairs, Keep Your Friends Close . . . , . . . And Your Adversaries Even Closer, Be Quick on the Draw. (Winning the Gunfight at the Proxy Corral – Four Steps to Prepare for Shareholder Activism, Sharon Merrill Associates, 4/7/2010)

“Within a week of Sen. Christopher Dodd (D-Conn.) unveiling his 2,200-page finance reform legislation, more than 750,000 articles had been published about it, pushing, prodding, and analyzing its provisions.” Stephen Davis and Jon Lukomnik advise against squandering time on crystal-ball-gazing, since “the most interesting part of the Dodd bill’s governance provisions is how much of them fall into step with trends already well under way.” (A Closer Look at Dodd Bill’s Governance Provisions, Compliance Week, 4/6/2010; see also NACD Washington Update: More Efforts to Federalize Governance, Directorship, 4/7/2010)

Ceres has released the 21st Century Corporation: The Ceres Roadmap to Sustainability as a vision and practical roadmap for integrating sustainability into the DNA of business—from the boardroom to the copy room. It analyzes the drivers, risks and opportunities involved in making the shift to sustainability, and details strategies and results from companies who are taking on these challenges. This Roadmap is designed to provide a comprehensive platform for sustainable business strategy and for accelerating best practices and performance.

62% of top-quartile mutual funds for the 10 years through Dec. 31 suffered stints of five-year below-median performance along the way, according to investment consultant Dimeo Schneider. (Don’t give up too soon, study finds, P&I, 4/5/2010)

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