Los Angeles Times (September 2)
“A relentless focus on share price can hurt not only employees, taxpayers and society, but shareholders too. Managers who are pressured to raise stock price quickly often resort to tricks — selling assets, cutting payroll and investment, draining cash through dividends and share repurchase programs — to bump up stock price for a year or two. But such strategies often hurt a company’s long-term ability to grow and prosper.”
Financial Times (July 29)
Regulators need to achieve “a complete redesign of audits and the way auditors deliver them.” Currently, auditors provide questionable value. “Did auditors give shareholders any advance warnings about failures and losses at Royal Bank of Scotland, Northern Rock, Anglo Irish, MF Global, Lehman Brothers, Bear Stearns, AIG or Barclays? US companies spend nearly $50bn annually on the ‘Big Four’ (PwC, Ernst & Young, Deloitte and KPMG) but the auditor rarely speaks or is questioned at annual meetings.”
Regulators need to achieve “a complete redesign of audits and the way auditors deliver them.” Currently, auditors provide questionable value. “Did auditors give shareholders any advance warnings about failures and losses at Royal Bank of Scotland, Northern Rock, Anglo Irish, MF Global, Lehman Brothers, Bear Stearns, AIG or Barclays? US companies spend nearly $50bn annually on the ‘Big Four’ (PwC, Ernst & Young, Deloitte and KPMG) but the auditor rarely speaks or is questioned at annual meetings.”
Tags: Audits, Big Four, Deloitte, Ernst & Young, KPMG, PwC, Regulators, Shareholders
New York Times (June 27)
Japanese shareholders are “starting to show their teeth.” Shareholders have been unusually vocal at the annual general meetings of major Japanese companies this year. “Shareholder meetings this summer have been marked by a flurry of proposals from investors challenging the management—opposing board appointments, for example, or simply expressing anger at executives.”
Japanese shareholders are “starting to show their teeth.” Shareholders have been unusually vocal at the annual general meetings of major Japanese companies this year. “Shareholder meetings this summer have been marked by a flurry of proposals from investors challenging the management—opposing board appointments, for example, or simply expressing anger at executives.”
Tags: AGMs, Japan, Management, Proposals, Shareholders
Financial Times (June 20)
In the UK, “pay packages for FTSE 100 chief executives have quadrupled since 1998—from an average of £1m to £4.2m.” Shareholders have responded with “rebellions” at major companies including Aviva, Barclays and WPP. Now Business Secretary Vince Cable is also taking aim, promising “the most comprehensive reforms of boardroom pay for a decade by giving shareholders binding votes on pay policy and forcing companies to make executive pay more transparent.”
Tags: Binding vote, Executive pay, FTSE, Shareholders, UK, Vince Cable
Wall Street Journal (May 11)
In the 1980s, they were called “corporate raiders” and frowned upon. Things have changed. “Warren Buffett is financing an unsolicited takeover bid for Avon Products” and the reaction is calm. There is now uproar. This is progress. “A thriving open market for corporate control imposes discipline on managers and can provide relief for long-suffering shareholders.”
Tags: Avon, Corporate raiders, Shareholders, Warren Buffet
Financial Times (April 18)
In the U.S., ‘say-on-pay’ votes were first required last year. On Tuesday, Citi’s shareholders voted down the proposed compensation package, becoming “the first big US bank to suffer majority dissent in a ‘say-on-pay’ vote and only the 12th S&P 500 company to lose such a ballot.” Citi joins a growing list of companies where shareholders rejected proposed compensation. “Last year 41 companies in the Russell 3000 – including Hewlett-Packard, Jacobs Engineering and Stanley Black & Decker – failed to receive majority support in such votes.”
In the U.S., ‘say-on-pay’ votes were first required last year. On Tuesday, Citi’s shareholders voted down the proposed compensation package, becoming “the first big US bank to suffer majority dissent in a ‘say-on-pay’ vote and only the 12th S&P 500 company to lose such a ballot.” Citi joins a growing list of companies where shareholders rejected proposed compensation. “Last year 41 companies in the Russell 3000 – including Hewlett-Packard, Jacobs Engineering and Stanley Black & Decker – failed to receive majority support in such votes.”
Tags: Citi, Compensation, S&P 500, Say on pay, Shareholders, U.S.
Financial Times (February 28, 2012)
European companies have been required to report on a quarterly basis for fiver years. This has “done little but confuse and distract management and investors.” Short-termism encourages management to reject good investments simply because they conflict with quarterly earnings expectations. “Data overload cannot enhance company and shareholder interests. Rather than bombing investors with short-term data, companies should explain their long-term objectives, and how they propose to reach them.”
Tags: Europe, Investors, Long term, Management, Quarterlies, Shareholders, Short term
The Economist (January 21, 2012)
The concept of limited liability, which protects shareholders, “is one of the greatest wealth-creating inventions of all time.” In many places, however, companies can be set up to hide or disguise the ultimate owners. “This is of great use to wrongdoers, and a huge headache for those who pursue them.” Both the World Bank and the OECD argue that the identities of owners should be disclosed. The Economist agrees. “Anyone registering a limited company should have to declare the names of the real people who ultimately own it, wherever they are, and report any changes. Lying about this should be a crime.”
The concept of limited liability, which protects shareholders, “is one of the greatest wealth-creating inventions of all time.” In many places, however, companies can be set up to hide or disguise the ultimate owners. “This is of great use to wrongdoers, and a huge headache for those who pursue them.” Both the World Bank and the OECD argue that the identities of owners should be disclosed. The Economist agrees. “Anyone registering a limited company should have to declare the names of the real people who ultimately own it, wherever they are, and report any changes. Lying about this should be a crime.”
Pensions & Investments (June 13)
“Say on pay” is helping governance grow up in the U.S. In the past investors upset over executive compensation might withhold votes for each member of the compensation committee. Now that they can directly vote against the compensation packages, corporate directors are being re-elected at the highest level of approval (95.3%) in half a decade. As Anne Simpson of CalPERS stated, “We’ve seen less megaphone diplomacy…. But we’ve seen a significant increase in real conversation, real dialogue” between shareholders and companies.
Tags: CalPERs, Compensation, Directors, Governance, Say on pay, Shareholders, U.S.
Wall Street Journal (February 18)
Corporate governance remains weak in Japan, partly because shareholders are too passive. “Japan Inc. has been run, and overseen, by corporate insiders, with shareholders’ interests often taking a back seat.” Among especially bad practices, the Journal points to low returns, cross-shareholdings and “the massive dilutive, follow-on issues that lack compelling equity stories—many of them to make up for mismanagement.”
Tags: Corporate governance, Japan, Returns, Shareholders
