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Shareholders & Institutions

Compliance Week regularly explores the pressures that activist investors—pension funds, hedge funds, unions, etc.—are placing on public companies. Below is some of the most recent coverage on those developments and the actions public company executives can take to address them. See also columns by institutional experts Stephen Davis and Jon Lukomnik, as well as related Compliance Week data offerings, like our searchable database of corporate bylaws and policies.

How to Avoid a Negative Recommendation From ISS on Say-on-Pay

August 09, 2011

Proxy advisory firms such as ISS and Glass Lewis may not have the final say on how shareholders will cast their advisory votes on executive compensation, but they sure do hold a lot of sway on how they go. Companies that want to avoid failing a say-on-pay vote may have no choice but to walk the ISS line. "They have become very powerful," says Deborah Lifshey, managing director at Pearl Meyer & Partners.

Go Beyond Compliance for Better Investor Communication

November 16, 2010

With the Securities and Exchange Commission proposing a slew of changes to proxy disclosure and shareholder communications practices based on the Dodd-Frank Act, it’s time for companies to adopt a “lean forward” approach to investor communications, particularly in the proxy statement. Yet, as companies prepare for the 2011 proxy season, they seem to be taking a “lean back” approach to compliance with the proxy disclosure rules and Dodd-Frank provisions—looking to see what peer companies are doing rather than taking the lead to provide better information to their investors.

Can This CEO Bridge the Investor-Company Divide?

November 09, 2010

Normally, few people outside the orbit of a professional association would care much who occupies its executive office. But sometimes a seemingly simple hiring decision can rock the status quo.

Too Much Disclosure, Not Enough Information

October 19, 2010

U.S. corporations are growing more concerned that federal lawmakers and regulators have hijacked the traditional corporate disclosure process to fulfill a social agenda. Investors, meanwhile, are being smothered with volumes of data, much of it virtually useless for making investment decisions. How did we get here?

Shareholders, Be Careful What You Wish For

October 19, 2010

There’s no doubt shareholders have made great strides in gaining more information and power. They’ve won more disclosure on a series of points, including the experience and skills of director candidates, what the board does to oversee risk management, the role of compensation consultants, and the structure of board leadership, just to name a few. Yes, shareholders have worked long and hard to obtain relevant information, and to wield greater influence on what happens in the boardroom.

Proxy Access: Don’t Believe the Hype

October 12, 2010

Just because you get a shiny new hammer doesn’t mean everything in your house is suddenly a nail.

What’s Driving Shareholder Anger and Activism

September 21, 2010

Two emerging trends are likely to have a dramatic influence on investor and market behavior. One is the unbridled advance in technology. The other is the will of a majority of commissioners at the Securities and Exchange Commission and of lawmakers in Congress to give more power to investors.

Activists Flex Muscle, Get Proxy Access

July 13, 2010

With the smoke still swirling on the Dodd-Frank regulatory reform bill, Compliance Week readers are doubtless turning attention to how governance provisions in the bill (or possibly the law, by the time you read this) will affect corporations and investors. That’s as it should be; the legislation promises to hand shareowners more say in director nominations and executive compensation in ways that we have flagged in the past. For now, however, let’s turn to a striking but under-appreciated legacy of this epic battle. Dodd-Frank readjusts the balance of power in boardrooms, but it also illuminates a potentially tectonic power shift in Washington. For the first time, investors showed—in dramatic fashion—that they can go head to head against the established business lobbies and win.

Giving Institutional Shareholders Food for Thought

June 08, 2010

We’ve always had a soft spot for challenges to conventional wisdom—and as financial reform legislation looms, there is no better time for a bout of it.

Intel and Monsanto, Two CSR Pioneers

May 18, 2010

This is the third in a three-part series on corporate social responsibility. My first column, “The Value of Tailoring a CSR Strategy to Investors,” focused on the growing number of institutional and sovereign wealth funds looking for good companies with authentic CSR or sustainability programs. Last month’s column, “Time to Get Started on Your Sustainability Strategy,” explained how to create a sustainability program.

Composing a Competent Board of Directors

April 20, 2010

Does your company have the right directors comprising the board? As a member of the senior management team, it’s certainly of concern to you—and of course the company’s shareholders—to determine whether the men and women providing corporate oversight do the job well. And board members themselves, as they look around the boardroom table, must be comfortable that fellow directors are people you can “go to war” with, your reputation (and possibly personal assets) in their hands.

Paper Puts OBO/NOBO Reform Under Spotlight

March 16, 2010

An influential whitepaper making the rounds in corporate governance circles is advocating that the Securities and Exchange Commission take a go-slow approach to reforming the fractured state of shareholder communications as it prepares for a larger overhaul of proxy rules later this year.

The Value of Tailoring a CSR Strategy to Investors

March 16, 2010

Why should companies that provide their traditional institutional investors a strong balance sheet, reliable cash flow, management credibility, an effective business strategy, and growth in earnings per share care about going beyond that to develop a sustainability strategy that attracts socially responsible investors? This column is the first of a two-part series that will answer that, examining what is going on in the world of investor interest in Environmental and Sustainability Governance (ESG) and Corporate Social Responsibility (CSR)—components of a sustainability strategy.

Risk, Succession Resolutions Gain Popularity

February 09, 2010

Last fall the Securities and Exchange Commission sent a clear signal it would be content to let shareholders propose more resolutions forcing companies to answer awkward questions about risk assessments or CEO succession.

Will New Director Disclosure Process Satisfy Investors?

February 09, 2010

Compliance Week doesn’t run theatre reviews. But while we’re here, we suggest readers might want to take in a performance of “Enron, The Play,” now playing a star turn in London’s West End to overflow audiences.

Comment Period Ends for Proxy Access; Now What?

January 26, 2010

The extended comment period for the Securities and Exchange Commission’s proposal to allow shareholder access to the proxy statement has now closed—and the controversial idea still seems as divisive and unclear as ever.

SOX Out; Shareowners Get Their Chance in 2010

January 12, 2010

Welcome to the 2010s. You’re just in time for the move from Sarbanes-Oxley to shareowners.

Digital Media Challenges Shareholder Communications

October 20, 2009

The world of shareholder communications is in a “Twitter” about what to do with the new social media. To tweet, or not to tweet … that is the question. As most Compliance Week readers likely know, the dominant social media platforms (today) include blogs, Twitter, Facebook, LinkedIn, myriad chat rooms, multimedia sites such as YouTube, and even services such as RSS feeds and Mobile Investor.

Greater Public Disclosure, Other Tips to Dodge Reg FD

September 22, 2009

The Securities and Exchange Commission provided some long-overdue guidance in August about proper interpretations of Regulation Fair Disclosure—the first interpretive guidance for Reg FD since the rule went into effect in 2000. It’s a must-read for investor relations and corporate communication officers as well as corporate counsel.

The Hidden Investor: When ETFs Attack

August 25, 2009

A faceless new force is emerging in the world of shareholder activism: the exchange-traded fund.

Investors Need to Hone Ownership Abilities

August 11, 2009

It’s all about power. And, as Compliance Week readers know, power is about to shift noticeably away from corporate boards and management toward shareowners, particularly institutional investors.

What’s in Store for 2010 Proxy Season?

June 23, 2009

With the 2009 proxy season winding down, governance experts are already looking ahead at what the 2010 proxy season will hold for public companies and their shareholders.

Will Shareholder Proposals Benefit or Destroy?

June 23, 2009

The resentment and anger over recent corporate performance, especially in the financial services sector, has gone from bubbling up to boiling over.

Proxy Season Sees Upheaval, Not Revolution

June 02, 2009

Despite expectations that the 2009 proxy season would be a banner year for shareholder activism amid the financial crisis, experts say investors’ winter of discontent never did turn into a glorious summer of shareholder victory.

Mixed Views Remain on Broker Voting Reform

March 31, 2009

Deep differences of opinions still exist over the idea of abolishing broker-dealers’ power to vote in elections for corporate board directors, despite a revived push by the New York Stock Exchange to end the practice once and for all.

Big Changes Proposed for Delaware Law

March 24, 2009

The Delaware legislature is reviewing a slew of proposed amendments to its Corporation Law, including several that could sharply tilt the balance of power toward shareholders.

NYSE’s Broker-Voting Rule Makes a Comeback

March 10, 2009

It’s back: A proposal from the New York Stock Exchange to keep broker-dealers from voting in elections for corporate board directors.

Companies Find Selves TARPed and Feathered

Taub Stephen December 09, 2008

Shareholder activists are using the governance restrictions imposed on companies participating in the Wall Street bailout as a weapon to wrestle still more concessions out of those companies in the coming proxy season.

Investor Activists Plan for an Obama World

Taub Stephen November 11, 2008

Many, many will address the Obama Administration and the newly emboldened Democratic majority in Congress as they try to repair America’s frayed financial and regulatory systems. Investor activists intend to be one of the many.

Court Rulings Give Reasons to Review Bylaws

November 04, 2008

Companies have another item on the to-do list as they prepare for next year’s proxy season: reviewing their advance notice bylaw provisions.

CalPERS Endures Governance Growth Pains

Judd Elizabeth July 29, 2008

Once upon a time, the mere mention of the California Public Employee Retirement System could make any executive break into a sweat and wonder: What does CalPERS want now?

CSX Battle Opens New Front on Disclosure Wars

Taub Stephen July 01, 2008

The titanic clash for board control at CSX Corp. reached its climax last week, as the rail company gathered for its annual meeting. The exact outcome remains unknown for now; shareholder activists say they succeeded in electing four nominees to the board, and CSX says they failed.

Quelling Activists’ Revolt on Human Rights

Carlson Caron May 13, 2008

In every sense of the phrase, Weatherford International recently decided it wouldn’t stand the heat in Sudan.

Shareholder Activists Fall Short on Bank Attacks

Taub Stephen May 06, 2008

Annual meeting season for the banking industry reached a crescendo at the end of last month, with high-profile shareholder gatherings at Washington Mutual, Citigroup, Merrill Lynch, and elsewhere.

No-Action Letters Fly This Proxy Season

April 15, 2008

Corporate America is playing hardball this year with shareholders trying to get their concerns on the proxy statement.

The Rise of Online Shareholder Activism

March 11, 2008

Shareholder activists have always been a thorn in the side of companies. Today, however, thanks to the Internet, they are a sharper and more potent thorn than ever before.

Activism During a Recession: What to Expect

March 11, 2008

When the tide goes out, that’s when you see where the stinking fish really are.

Shareholder e-Forums: Useful Tool or Pitfall?

January 15, 2008

You probably overlooked this, but the Securities and Exchange Commission is trying something new with its latest amendments to federal proxy rules: encouraging public companies to establish online shareholder forums.

Who Speaks for the Silent Investor Majority?

December 11, 2007

The U.S. investor population is booming: more than 90 million individuals invested directly or indirectly in our securities market, according to most reliable estimates. Yet, as the Securities and Exchange Commission and self-regulatory organizations engage in rule making that affects individual investors, what organization truly represents their interests?

Activists Vow Litigation Over Proxy Access

December 04, 2007

Shareholder activists are threatening to drag companies into court this proxy season over their right to place director nominations into the proxy statement.

Perfecting the Art of Reputation Management

M. Thompson, Jr. Louis November 20, 2007

For years, corporations measured their achievements in terms of financial performance and focused on management decisions necessary to improve operations to achieve those results.

The Proxy Advisory World Goes Corporate

Taub Stephen October 23, 2007

Proxy advisory firms have provided valuable advice to companies and shareholders sorting through the deal mania of recent years—right until deal mania swept up the proxy firms themselves.

Cleaning Up Financial Reporting Language

September 18, 2007

When the Securities and Exchange Commission created its Advisory Committee on Improvements to Financial Reporting earlier this summer, one of its challenges was for corporations to make information more “investor friendly”—that is, more useful and understandable.

The Proxy Industry: What You Know … Is Obsolete

July 17, 2007

We need hardly tell you that proxy services firms hold material and rising influence over the way institutional investors perceive Corporate America. Ever since 1988, when the Department of Labor issued its landmark “Avon Letter” declaring voting a fiduciary obligation, funds have turned to these outside specialists for proxy advice. In turn, corporations have learned to live, sometimes unhappily, with this watchdog industry.

One Share, 0.001 Vote?

June 12, 2007

One share, one vote! More than 20 years ago, that was the rallying cry around which the Council of Institutional Investors was created, ushering in the modern era of corporate governance. To the initial 21 pension funds which formed CII’s membership, that simple phrase resonated with all the moral high ground institutional investors could muster. In four words, it conveyed a myriad of powerful, consistent messages: Say no to greenmail; align voting power with capital at risk; shareowners should have a voice.

How To Make ‘Investor Day’ Work For You

April 17, 2007

Public companies are increasingly turning to an “Investor Day” as a way to tell a broad audience of analysts and investors what the company is doing and where senior management sees it going.

Word To SEC: Don’t Rush On e-Proxy Rule

April 10, 2007

The Securities and Exchange Commission’s idea to mandate publication of proxy statements on the Internet starting next year is generating considerable unease in the filing community, with critics fearing that the SEC isn’t allowing enough time to let a voluntary e-proxy program demonstrate what problems might arise.

Activists Lose Proxy-Access Fight At HP

Taub Stephen March 20, 2007

Corporate America scored a strong victory last week in the first skirmish this year over shareholder access to the proxy statement, as activists fell far short in a vote to grant proxy access at corporate governance bellwether Hewlett-Packard.

Barbarians At The Gate; Do You Open Up?

March 20, 2007

An increasing number of companies will experience investors knocking on the board’s door asking to meet with the entire board or independent directors to take up their issues.

Activism ‘B-List’ Portends Greater Agitation

March 13, 2007

Typically, we use this column to spotlight important corporate-governance trends that are on the horizon and heading toward boardrooms. This time we go deeper under the radar to find a phenomenon that promises to turbocharge shareowner activism—and to provide new wormholes for executives to monitor dissent. In 2007, blogs, bulletin boards and email blasts have reached a critical mass among investors. That “B-List” has powerful consequences: the stately pace that once marked the procession of dissident shareowner campaigns from a gleam in the eye to annual meeting threat is now hugely compressed. The Internet has put shareowner activism on fast forward. Plus, it’s global.
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