Posts Tagged 'Shareholders'

How to Defend Against Activist Investors

By Vikas Shukla, July 2nd 2013, Value Walk

Institutional investors no longer see an activist as a quick-buck investor. They see activists as smart investors, who have done plenty of research before putting significant capital to work.

Activist investors are increasingly going after large corporations. Over the past few months, we have seen many activist investors attacking the corporate governance or M&A. A few examples include Daniel Loeb’s call to split Sony Corporation (NYSE:SNE)’s entertainment business, and Carl Icahn’s resistanceto Michael Dell taking Dell Inc. (NASDAQ:DELL) private. That has kept the company boards busy too. Recently, we featured the Harvard Law School Forum’s views on how a company can guard against shareholder activism. Continue reading…

Executive pay among corporate governance issues for 2013

Becky Yerak, Chicago Tribune, December 24, 2012

Wall Street isn’t far from its record highs in 2007, but shareholder activists continue to keep management and boards of directors on their toes.

In 2013, trends to watch for in executive compensation and corporate governance include the first round of shareholder votes on the pay of top management at smaller businesses.

Also, more companies are publicly documenting their efforts to keep investors in the loop, right down to assuring them that new directors have passed thorough background checks.

And many corporate watchdogs wonder when the Securities and Exchange Commission will propose rules — mandated by a 2010 law — that require companies to give hard numbers on the ratio between the pay of the chief executive and their average midlevel worker, data that could create new tension between those critical of executive pay and those who set it. Until then, passions over pay levels might remain cooler than they have in years.

Executive compensation isn’t the “hot button issue it was two or three years ago,” said William Atwood, executive director of the Illinois State Board of Investment.

Say-on-pay votes and enhanced corporate transparency about compensation since the 2010 Dodd-Frank Wall Street Reform & Consumer Protection Act have “increasingly ameliorated shareholder angst” on the topic, he explained.

But big investors’ attention is increasingly turning to political contributions made by companies, which will be under more pressure to disclose what they’re doling out and their policies for doing so, Atwood said… Continue reading

Social Media & Corporate Governance

Santiago Chaher & award winning Stephen Davis

At the ICGN Annual Conference 2011 (#ICGN11) in Paris Santiago Chaher from @CorpGovLeaders and Eric Jackson encouraged the audience to discuss the growing influence of Social Media in governance practices and shareholder activism. The following questions were then asked to the audience:

(1) How are social media changing the behavior of institutional investors–both in respect of value creation and in relationships with beneficiaries?

(2) How can corporate boards adapt to risks and opportunities posed by social media?

(3) How are social media affecting the behavior and influence of stakeholders in relation to companies and investors?

The session was live tweeted and you can see the story line here or just look for the hashtag #SMCG.

What are your thoughts? We would like to continue the conversation! Thanks

A Collective Vision

by  John R. Engen for Boardmember, April 2011.

It takes a village—boards, shareholders, and, yes, management—to foster truly effective corporate governance, not an array of rules and best practices. Proxy advisory firms should be scrutinized, and possibly regulated. Director independence, while important, might be just a tad overdone. Oh, and for all its warts and recent foibles, the U.S. corporate governance system actually works pretty well.

Those are a few of the more provocative conclusions of a blue-ribbon panel that last September issued a 32-page report on the state of governance in corporate America. 

The Commission on Corporate Governance, sponsored by the New York Stock Exchange, included lawyers, academics, and representatives from some of the country’s biggest companies, brokerage firms, and institutional investors.

Its major task was to compile a list of 10 “principles of governance,” which was the central focus of the report. The principles are meant, in part, to offer up some informed discussion points where the various commission constituencies found common ground and hopefully spur debate—and possibly some policy changes.

“The underlying objective is to tell people who want to create more requirements that they should step back and not impose any more one-size-fits-all, check-the-box requirements,” says Stephen Lamb, a Wilmington, Delaware-based partner with Paul, Weiss, Rifkind, Wharton & Garrison and a commission member. “Those things don’t lead to effective governance.” (continue reading… )


Uncle Sam and the Hostile Takeover

by Jonathan Macey for Yale Law School, March 21st, 2011.

The following commentary was published in The Wall Street Journal on March 21, 2011.

Conflicts between a public company’s top management and shareholders are seldom more intense than when an activist investor emerges with plans to make a substantial investment in the company’s stock. These investors sometimes are hedge funds or “value investors” like Warren Buffett. Whoever they are, after they take a huge stake in the target company they have strong incentives to agitate vigorously for reforms that will increase the value of their investments.

Shareholders benefit from the reforms of corporate governance initiated by these activist investors. So does the economy generally, because the overall economy performs better when companies perform better. But managers are not so fond of this process because activist investors push incumbent senior managers hard to improve their performance. Occasionally they even fire them.

Since incumbent managers sometimes lose to activist investors in fair corporate elections, their preferred strategy for dealing with them is to hire legal talent and team up with friendly regulators to make new rules and to concoct anti-takeover devices like poison pills.

For example, J.C. Penney adopted a poison pill last October, soon after learning that the hedge fund Pershing Square Capital Management and the publicly traded Vornado Realty Trust had acquired a sizeable position in the company. The particular poison pill it adopted would dilute the voting rights of the two activist investors’ shares if they further increased their holdings or attempted a takeover of the company by giving other shareholders the right to buy J.C. Penney shares at half-price. (continue reading… )

NACD Director Professionalism Course Tackles Pressing Proxy Season Issues

by PRNewswire, March 21st, 2011.

Sessions Designed to Help Directors Become Strategic Assets for Shareholders

As the 2010 proxy season began, the National Association of Corporate Directors (NACD) devoted its March Director Professionalism course to providing directors with the tools needed to navigate the new environment created by Dodd-Frank and the Securities and Exchange Commission (SEC). The two-day program brought together more than 50 dedicated corporate directors and governance experts to discuss topics ranging from risk management and transparency to the enhanced responsibilities of the board’s key committees.

“The March Director Professionalism course tackled the most pressing issues that boards are facing during this period of change for corporate America,” said Ken Daly, the president and CEO of NACD. “The course also underscored what it truly means to be a director who adds value — one who is fully prepared for and knowledgeable about the responsibilities of boards in this new era of increased accountability and scrutiny.”

The latest Director Professionalism course, held March 3-4 in Park City, Utah, offered more than 17 sessions taught by active public company directors and corporate governance experts, including Michele Hooper, veteran director of several prominent corporate boards, including PPG IndustriesWarner Music GroupUnitedHealth GroupAstraZeneca PLC and NACD;Professor Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware and a director for HealthSouth Corporation Thomas Bakewell, former director, Lindenwood University and Bethesda Health Group; and Robert M. Galford, managing partner, Center for Leading Organizations and chair of the Compensation and Governance Committees, Forrester Research.

“Directors must be prepared for the regulations and requirements that have broadened the scope of their work,” said Hooper, who led sessions on the new challenges and opportunities facing nominating/governance committees and effective corporate governance strategies in today’s regulatory environment. “The nominating/governance committee has an incredibly important role. It not only determines the skill sets, experiences and qualifications required to optimize the board’s composition, but the committee also sets the tone for corporate governance on the board.” (continue reading… )


Why Shareholders Don’t Want Shareholder Democracy

by John Carney for CNBC, March 17th, 2011.

Have you ever noticed how few public companies are run on anything like a democratic basis?

They have some of the trappings of democracy. Elections for directors; ballots on important—and sometimes unimportant—questions of corporate governance or strategy; investor meetings that sometimes resemble a New England townhall.

But, in practice, their democracy is a lot like the democracy in a one party state—you get the vote, but only party candidates and platforms stand any chance of winning.

To some advocates of good corporate governance, this is a scandal. It almost looks like there’s a bit of authoritarianism lurking at the heart of the free-market. If democratic capitalism is good enough to run our country, why isn’t it good enough to run our corporations?

In reality, however, corporate governance gives far more respect to individual liberty than any political democracy does. Unlike being a US citizen and a resident, it is quite easy to withdraw your membership from a corporation—simply sell your shares. No corporation can force you to accept its strategy or leadership. If you don’t like it, you don’t have to be a shareholder. (continue reading… )


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Leaders in Corporate Governance

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Blog da Governança


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