Corporate Governance Concerns at Kimball International, Inc.

by The Corporate Libary Blog, October 14, 2009.

The Corporate Library‘s analyst still have serious concerns related to Kimball International, Inc.’s takeover defenses and board composition. To purchase the company’s governance rating and risk profile at a steep discount ahead of the annual meeting on October 20, visit our online store. The profile contains:

• Proprietary TCL governance risk ratings and analyst commentary
• Complete CEO compensation data and review
• Board and individual director profiles and compensation
• Committee structures and independence
• Chronology of key governance events
• Hard-to-find related party transactions
• Current SOX 404 compliance status
• Critical takeover defenses information

Concerns related to the company’s ownership structure put this company at a high governance risk. Due to the presence of a dominant shareholder, the risk is increased that minority shareholder interests could be subordinated to the interests of a principal shareholder. The shareholder group in question is the Habig family, which includes the sons of company founder Arnold Habig, long-standing Chairman Douglas A. Habig and Director Emeritus and former Senior Executive Vice President John B. Habig, along with Barbara J. Habig. While the Habigs only control approximately 15% of the outstanding shares, they control over 38% of the Class A stock. Class A stock elects seven Class A Directors and votes on all other matters (other than the sole Class B director). Needless to say, this puts holders of Class B shares at an overwhelming disadvantage in all voting matters…(continue reading)

UAE’s corporate governance law due in Q2 ’10

by Middle East Business, October 14, 2009.

ABU DHABI – A new corporate governance law for publicly listed companies in the United Arab Emirates will come into force from the second quarter of next year, a regulatory body official said on Wednesday.

“The draft law has been prepared, we hope to implement governance to the utmost,” Maryam al Suwaidi, deputy chief executive officer for issuance, research and legal affairs at the Emirates Securities and Commodities Authority (ESCA), told a corporate governance conference…(continue reading)

ADX sponsors and participates in the 1st Abu Dhabi Corporate Governance Conference

by AMEinfo, October 14, 2009.

Improved corporate governance in the region will improve the prospects of GCC’s economic growth by mitigating risks and reducing markets volatility, according to Rashed Al Baloushi, Deputy Chief Executive (DCE) and Director of Operations at Abu Dhabi Securities Exchange (ADX).

Rashed’s comment comes on the occasion of ADX’s sponsorship and participation in the 1st Abu Dhabi Corporate Governance Conference, titled “Corporate Governance in the UAE: Current Realities … Future Prospects,” taking place today Wednesday, October 14, 2009 in the capital.

The one-day event is organized by Abu Dhabi Center for Corporate Governance, and is hosting a distinguished elite of speakers and experts to review and discuss the various aspects of corporate governance codes and implementation.

Rashed explained that “enhanced corporate governance can result in the growth of total returns by 5% in three years and by 8% in five years time.”…(continue reading)

The First Abu Dhabi Corporate Governance Conference organised in Abu Dhabi

by AMEinfo, October 14, 2009.

Under the auspices of H.E. Sultan Bin Saeed Al Mansouri, Minister of Economy for the United Arab Emirates, the First Abu Dhabi Corporate Governance Conference was successfully organised today by the Abu Dhabi Center for Corporate Governance (ADCCG), which aims to effectively promote and positively contribute to the development of the national economy by introducing highest standards and practices of corporate governance.

The one day inaugural conference was titled “Corporate Governance in the UAE: Current Realities … Future Prospects”. The conference witnessed active participation from local and international experts as keynote speakers at the conference. The Corporate Governance conference comprised of three panel discussion sessions, pertaining to key Corporate Governance issues.

The sessions organised during the course of the conference were titled as ‘Local laws and Regulation on Corporate Governance in the UAE”, ‘International Best Practices of Corporate Governance’ and ‘Applications of Corporate Governance to various industries’…(continue reading)

Reducing Incentives for Risk-Taking

by Lucian Bebchuk & Holger Spamann at the Dealbook Dialogue of the New York Times, Ocotber 12, 2009.

Lucian Bebchuk is professor of law, economics and finance and director of the corporate governance program at Harvard Law School, and Holger Spamann is co-executive director and fellow of this program. This post builds on their joint paper “Regulating Bankers’ Pay.”

It is now widely accepted that compensation structures in financial firms should be devised to avoid excessive incentives for risk-taking and that doing so requires tying executive compensation to long-term results and preventing cashing out of large amounts of compensation on the basis of short-term results.

What long-term “results” are we talking about though? We propose that risk-taking incentives could be improved by tying executives’ pay not only to the long-term payoffs of shareholders but also to those of preferred shareholders, bondholders and taxpayers insuring depositors.

In examining how executive compensation can affect risk-taking in financial firms, attention has focused on distortions that can arise from the ability of executives to cash out large amounts of compensation before the long-term consequences of risk-taking are realized. The importance of eliminating such distortions, which was first highlighted in a book, “Pay without Performance,” that one of us published with Jesse Fried five years ago, has become widely accepted in the aftermath of the financial crisis…(continue reading)

M&A Break Fees: US Litigation vs. UK Regulation

by John Coates, for The Harvard Law School Forum at Harvard Law School, October 14, 2009.

In a recent working paper, M&A Break Fees: US Litigation vs. UK Regulation, I consider differences in M&A break fees between the UK and US systems. Despite generally similar economies and political systems, the UK and US restrict M&A break fees very differently. The UK, in essence, regulates them; the US governs them through litigation. The contrast may be able to teach us something about trade-offs between litigation and regulation as modes of governance, including how laws change under each regime over time.

Analysis of data on 1,136 bids in 1989-2008 and 61 fee disputes show: (1) the UK caps fees at a low level with a simple ex ante rule based not on regulatory expertise but on an arbitrarily chosen percentage of bid value, which nonetheless has the virtues of clarity and lower litigation costs, and enhances competition conditional on an initial bid, and (2) US courts evaluate fees ex post with a complex and vague standard, allowing for greater variation and higher average fees,…(continue reading)