Here’s a surprise start to the 2007 proxy season: An unprecedented level of dialogue among the institutional investor and corporate communities has broken out. No one can quite pinpoint the cause. Is it an unanticipated consequence of the globalization of capital markets, simply the beginning of another proxy season, or the beginning of a “grand […]
Stephen Davis and Jon Lukomnik
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This Spring’s Big Fight: Say On Pay
Every new year, it seems, governance Cassandras like us warn of fresh shareowner uprisings aimed at skyrocketing executive compensation. And of course, at each year-end, we wind up tallying a handful of serious rebellions but another market-wide record for payouts—even at companies inching toward collapse. This year, though, could break the pattern. Sure, we predict […]
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UnitedHealth’s Bold Move For Board Power
Where better to find signs of the next big leap in corporate-governance practice than in the detritus of the latest stock option backdating scandal? Sure enough, it’s there—at UnitedHealth Group. You won’t discover clues in the headlines, though. Daily media stared, transfixed, at the sheer drama of last month’s regicide when the board decided to […]
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Self-Referential, But Not Self-Reverential
We regularly counsel boards of directors, institutional investors, and others to perform periodic self-assessments. As this column marks the end of our second year of punditry for Compliance Week, we figured this was as good a time as any to take our own advice. Herewith, a quick selection of our best—and worst—of the past two […]
Posted inBoards & Shareholders
How Heinz Squeezed Out Its Proxy Victory
Heinz’ tomato ketchup served as Hollywood’s prop of choice for years; early movie directors reached for the company’s distinctive bottles whenever they needed gore authentic enough to make an audience’s skin crawl. Now, thanks to a nasty shareowner insurgency mounted last month by Nelson Peltz, managing partner of the Trian Group, Heinz is sending goose […]
Posted inBoards & Shareholders
Fixing A Company’s Failure To Communicate
TO: Bob Nardelli, chief executive officer of Home Depot FROM: Stephen Davis and Jon Lukomnik, those corporate governance guys at Compliance Week RE: Communication Thank you very much for admitting to a mistake in holding an annual general meeting where you asked board members to be absent, and refused to answer questions about Home Depot’s […]
Posted inBoards & Shareholders
Board Directors Now Face A New Firing Line
To paraphrase Winston Churchill, never in the course of U.S. corporate governance have so many board elections depended on the votes of so few. Which few? Not shareowners, but brokers. For decades they have virtually guaranteed that directors received pumped up, Soviet-style vote totals when running for election. But all that is about to come […]
Posted inBoards & Shareholders
A Short Story Of Potentially Large Disruptions
Unless you’re an electrician, you probably don’t think about the wires running through the walls of your house—until, that is, you get a shock. The stock market has similar hidden wiring. Normally, it works well. Stock trades settle, dividends are paid, proxy votes get recorded. So we don’t think about how it all happens. Recently […]
Posted inBoards & Shareholders
The Surprise Consequence Of Majority Voting
You can’t drive through Leicester, Vt., without gaping at a 19-foot, 16-ton concrete gorilla brandishing a golden VW Beetle. Think of it as a monument to the law of unintended consequences: In 1968, the Legislature outlawed giant billboards to preserve the Green Mountain State’s unspoiled landscape; a used car lot soon found a way around […]
Posted inBoards & Shareholders
Building Alliances For Long-Term Growth
Pick your caricature: Activist owners are greedy short-term players willing to destroy the company long-term in return for a short-term stock price jump. Executives are entrenched management, protected from the downside of their flawed decisions, but reaping the upside when their stock options kick in because of short-term earnings management. Intriguingly, the only trait those […]
