Talking To Investors About Pricing In Corporate Governance Risks

by Dina Medland for Forbes

Anyone in denial about the growing importance of corporate governance, environmental and social factors in setting the direction of business needs to start talking to investors.Some 90% of institutional investors from across the UK and Europe believe fund managers should price in corporate governance risks as a core part of their investment analysis, alongside financial metrics.

Environmental, social and corporate governance factors (ESG) are becoming increasingly significant for institutional investors, with over two-thirds believing that pension schemes will reject a growing number of investment opportunities over the next five years if they involved ESG risks, according to Hermes InvestmentManagement’s first ‘Responsible Capitalism’ survey. It finds that 79% of respondents consider significant ESG risks with financial implications as sufficient reasons to reject an otherwise attractive investment. As many as 71% believe that company pension schemes will reject more investment opportunities over the next five years due to ESG risk. Read more here.

Karoon chairman Bob Hosking confident

by Matt Chambers for The Australian

KAROON Gas Australia founder and executive chairman Bob Hosking says he is confident his board will prevail in the face of a campaign by activist shareholder Pegasus CP One to install new directors and change the big explorer’s strategy.

And the Karoon founder, who is getting close to appointing an independent chairman for the company he floated in 2004, said he planned to be managing director for only the next two or three years before taking on more of a mentor role. “We’re confident that we will have a positive outcome (at the AGM),” Mr Hosking said yesterday. Read more here.

Peer Pressure and Active Investors Drive Improved Governance

by Javier Espinoza for The Wall Street Journal

Among the risks associated with investing in smaller emerging markets, poor governance standards are often considered one of the most difficult to mitigate.

Now a new report by East Capital, a Stockholm-based firm that invests in frontier and emerging markets including Russia, Eastern Europe, China and emerging Asia, argues that governance standards are improving—in some cases more rapidly than in the developed markets.

The report’s authors have identified the key factors driving the development and enforcement of higher corporate governance standards: active investors, free and independent media, peer pressure and positive influence from corporate governance associations, sector initiatives, research groups and international institutions. Read more here.

AIG Bailout Trial Turns to Whether U.S. or CEO in Charge

by Andrew Zajac and Christine Smythe for Bloomberg Businessweek

Former American International Group Inc. (AIG:US) Chief Executive Officer Edward Liddy will face a key question on the witness stand in a trial over claims shareholders were cheated of at least $25 billion in the insurer’s bailout: was he or the government running the show?

The U.S. had a hand in everything from press releases to selection of board members after the Federal Reserve Bank of New York loaned the company $85 billion and took most of its stock, according to testimony and documents in the case brought by Maurice “Hank” Greenberg’s Starr International Co.

With Liddy’s testimony set for today, Starr’s lawyer, David Boies, has confronted witnesses this week with documents to bolster his case that the government illegally took control of the company rather than acting as a detached steward. Read more here.

Hyundai Board Passed Land Bid Without Price, Group Says

by Rose Kim for Bloomberg BusinessWeek

The boards of directors at Hyundai Motor Co. (005380) and two affiliates approved the offer for a piece of land in Seoul without knowing the price, according to a shareholder rights group.

South Korea’s largest automaker did not provide the price to board members before they voted on Sept. 17 to approve the bid, according to corporate watchdog Solidarity for Economic Reform, citing minutes of the board meetings obtained from the companies. Hyundai Motor Group, the umbrella group that represents the three companies, declined to comment whether it provided the minutes to the shareholder group and didn’t confirm their contents. Read more here.

Alibaba shareholder disenfranchisement: worse than you think

by Donald Clarke for FT Alphaville

Alibaba shareholders are aware that they can’t elect a board majority even if they hold a majority of shares. But they might be surprised to learn that they can’t evennominate directors—any directors—let alone elect a few to a board minority, no matter how many shares they own.

By now everyone knows about Alibaba’s special governance structure. News reports and Alibaba’s own disclosures tell us that the founders, via an entity called the Alibaba Partnership, can appoint a board majority no matter how few shares they own. What seems to have escaped general notice, however —and is nowhere specifically stated in the prospectus —is how the rest of the board is selected. Remarkably, public shareholders have no right even to nominate directors, let alone elect one, no matter how much stock they own. Read more here.

China’s Path to Financial Reform

by Adam Hersh for the Center for American Progress

Last year, China’s political leaders set forth an ambitious and unfolding agenda for financial reform as part of a broader nationaleconomic strategy of structural rebalancing toward more domestic demand and innovation, as well as a more environmentally friendly and more equitable economy.

These goals are not new for China but rather have persisted across decades of China’s five-year plans. What is new is China’s political leadership, and new leaders have offered a sweeping vision that sets an ambitious agenda to advance the next wave of reform in China’s long evolution from a centrally planned economy that began in 1978. In the November 2013 18th Party Congress Third Plenum Decision— which is at once both a governing policy document and a political statement similar to the State of the Union address—the party’s Central Committee called for reforms across virtually all aspects of society and pledged that the economy should embrace “a decisive role for the market.” Nearly one year later, the scope and intention of these reforms are starting to come into focus. Read more here.



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Leaders in Corporate Governance



Blog da Governança

(in Portuguese) A weekly chronicle about shareholders' rights & duties, activism and capital markets regulation, by Renato Chaves.


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