Pension Plan Discrimination? - 3M to scrap Pension Plans for non-union employees

Given that Top/Chief/Senior Executives often/usually benefit from better Pension Plans (as well as Medical Benefits and Incentive Plans) is it acceptable that 3M takes this one step further and intends to scrap  its pension plans for non-union employees?

Why do Investors Vote Against Corporate Directors? 

Mega Grants: Why Would a Board Approve Nine-Figure CEO Pay?

Du Plessis: Pot calling the Kettle black

Interesting to read this lament from someone who has to much to be grateful for this "narrow british way of life". Thanks to the "narrow" circle of people who seem to be in control of so much of the City he sailed comfortably from one post to the next.

When he extols the positive (in his "narrow" view) aspects of the business enviroment in the United States he conveniently forgets to mention that a separation of CEO and Chairman is highly unusual over there. And rightly so, as the facts clearly demonstrate that a separation has virtually no benefit and if anything is detrimental. If business performs markedly better in the USA it clearly speaks against this (expensive) separation.

Du Plessis clearly thinks that the sky is the limit for executive pay - again assuming that only high pay for the C-Suite will lead to strong economies when that is not supported by the facts. The USA may look well positioned as the nation with the highest per-capita income (apart from minnows like Luxembourg, Monaco etc) but can one assume that extravagant levels of executive pay are the principal - or necessary - cause of this?

One of the people rankings so popular with the press placed du Plessis as the 10th most powerful person in UK business (TheTimes 2006 Top 100) But does he enjoy any legitimacy? Who gives him this "power"? the same narrow circles that control government, regulators and major firms!

In the latter case it is the financial intermediaries - Pension Funds, Mutual Funds, Insurance companies and Private Banks - that vote "their" shares in favour of high pay. Like du Plessis they have no explicit mandate on how to cast their votes from the ultimate shareholders - the great unwashed public. Proxy Advisors may look like they take an objective view they are also beholden to these Intermediaries who pay substantial (secret) fees to them.

(10 May 2023)

Narrow British way of life’ is holding back the City (PayWall)

Big Funds support attack on Free Speech?

When Tech firms like PayPal start to get involved in censoring media outlets it is time for the owners to stand up and be counted. #Vanguard #Blackrock #StateStreet and other major fund managers cannot stand idly by and wash their hands of the critical debate about Free Speech. Investing cannot be just a numbers game, a sort of casino if you want to call it that. And management cannot be operating in a vacuum. Selling the shares is not an option either - first of all the mania for indexing makes it impossible for many funds to sell the shares. It is also a sign of cowardice not to stand up for the principles of a free society. The debate should also be about the responsibility major financial institutions have due to their control of the major media companies (in conjunction with a small clique of superrich individuals/families)
(25 Sept 2022)

Paypal cancelling the free speech union account shows we need a discussion about the control big tech giants have over british civil society

A company will get nowhere if all of the thinking is left to management.
(Akio Morita)

JPMorgan shareholders vote against Jamie Dimon’s pay

Just shows that the efforts to contain Executive Pay, esp at the very top, have been fruitless so far. If only 31% support Dimon's pay, how can it actually stay at the same level? Is there no moral sense of obligation - at least with the toothless board of directors? Nobless oblige one used to there is no nobless anymore.
What is really wrong with the Personnel Management of many - if not most - firms is the fact that too much reliance is put on the top man/woman and there is no succession plan or proper preparation. Before boards should end pointless debates and rush to the lunch/dinner/golf course they should really review top executive staffing to at least two levels below the CEO. There should also be a plan for the immediate succession - a firm like JP Morgan should be able to have groomed at least two or three worthy successors to Dimon, and reward them well - and cut his ridiculous compensation and assorted freebies.

Onerous legal rules for Impact Investing?

You can trust that lawyers will not miss a chance to make things complicated - and then charge ever-rising fees to disentangle the rules and regulations that they helped to create. Case in point this report by Freshfields about the obligations of fund managers to take impact (socially/environmentally) of the decisions into account. The problem with imposing these obligations is that any lobby group - however small - can start legal proceedings and impose substantial costs on the funds (while often supported by taxpayer money, directly or indirectly or by donations from charities, ngo's or think tanks that in their turn are only representing the view of a small but often vociferous minority). Taken to the extreme there could be a challenge to the investment in a milk delivery company because (take any of the options) it uses petrol or diesel for its vans, uses metals sourced from 'bad' countries, does not have a workforce split evenly between male/female, old/young, white/non-white etc. The possibilities are endless. As are the costs and burdens on business and ultimately the end consumer/investor, Joe Sixpack, you and me.
Freshfield Report


How to influence Companies' Human Rights behavior

How should, how can, shareholders influence Companies? The only solution I can see is a new platform to give them a say in the proxy process. As matters stand the existing (and pretty much unaccountable) oligolopy of profit-seeking proxy 'advisers' cannot be relied on to represent the views of the ultimate owners of Companies.

LinkedIn is facing pressure from senior MPs and academics to stop “bowing to Beijing” by censoring users who are critical of China.

The Times has identified scholars, businessmen, journalists, whistleblowers and a former diplomat whose accounts were blocked in China after the professional networking site found “prohibited content” on their profiles.

 Stop bowing to Beijing, MPs tell LinkedIn (The Times, PayWall)

Morrisons - Barbarians at the Gate (The Sequel)

Private Equity firms basically are Conglomerates in drag and should never have been allowed to slip under the regulatory mantel designed to protect retail investors from fraudulent investment firms. As a consequence PE promoters enjoy unfair advantages with respect to tax, corporate governance (esp corporate compensation), transparency, treatment of staff and clients. No wonder the universe of listed companies is shrinking fast - and will accelerate if regulations are not changed - FAST!

In this age of growing concern about Inequality it is a slap in the face of ordinary investors - let alone citizens - if more and more public companies get gobbled up by financial engineers and their conspirators among dominant shareholders and management. Apart from the problem that benefits of the Private Equity industry are disputed - there was hardly ANY private equity to speak of before the mid-1980s and the world was doing quite well without it - the distributional effects are clear for all to see: Who else but promoters of the industry can spend millions on a birthday party? why should public companies show restraint in relation to executive compensation when promoters and their hired guns in management don't disclose their pay packets? They probably get paid amounts that would sometimes be multitudes of what senior executives in public companies can earn. It is clear that mechanisms to protect public shareholders from having their companies taken away on less than attractive terms are not up to the task. Who cares about Wider Shareownership or the Shareholder Democracy? Rome's decline started when wealth got concentrated in the hands of the few.

There may well be agency problems at Public Corporations, though family firms often are also ridden with conflict in the C-Suite, especially between family members. But as long as Private Equity gets favorable treatment from a tax, regulatory and transparency point of view this trend away from listed companies will continue. The irony is that Private Equity needs the public market in order to sell its investments. The question of how citizens and workers can be made part of a capitalist system that is concentrated in a very small number of hands should not be forgotten - it may be the most important question after all!

But one aspect is forgotten (on purpose?) in this ongoing saga. For arguments sake let us agree that it is beneficial and fair to give entrepreneurs and investors a lower tax rate on capital gains. But the promoters behind Private Equity are not always putting sufficient funds of their own into the businesses they finance. Taxable income could easily be converted into capital gains if they award themselves a sort of founder's shares at artificially low prices - and voila, when the company/asset is sold they can book a capital gain that is taxed at a much reduced rate. Given the opaque nature of Private Equity one has to assume that this practice is quite prevalent in the industry. In addition, basing buy-out vehicles in offshore tax havens allows even more manipulation of tax levels. So while most of the money managed by 'Private' Equity ultimately comes (via financial intermediaries) from the Public the tax affairs of the promoters are the one aspect that is really private. Maybe a small part of all the noise and energy spent on reforming pay in the listed company sector would be much better addressed to shed more light on the pay practices in the Private Equity business.

The re-emergence of Dell as a Listed Company can only leave a sour taste in the mouth of anyone who supports a Market System that benefits the great majority and not just a few clever financial engineers.For a long time Pro Governance has argued that it is much to easy to take listed companies 'private' (a misnomer in the case of 'Private Equity' backed deals as PE firms are mostly working with money from Joe Sixpack even if it is allocated by fiduciaries in the money management food chain).

Most end investors - and even their often gullible fiduciaries acting as 'limited' partners in the Private Equity investment vehicles - are blissfully unaware of the myriad of fees that are charged to the funds they are invested in. So the current spat between some Private Equity big wigs allows a peek into this opaque world. Given that the disputed fees relate only to the money invested by three officials of the funds one can imagine the amount of money that was charged to the proportionally much larger amounts coming from the 'limited' partners (ultimately Joe Sixpack). Surprisingly the critics of executive pay in listed companies are mostly (all?) silent on the goings-on in the 'discreet' world of (not so) 'Private' Equity where most of the money really is invested on behalf of the general public.

Some call Private Equity and their close cousin, distressed debt investors, nothing but locusts that are out to make a fast buck. This judgment may be overly harsh, but given the short time between investment and exit that is the hallmark of some deals it may be difficult to disprove this judgment.One are of possible abuse, however, is the treatment of shareholder loans when an investment hits the buffers. Loans from major or especially controlling shareholders should be treated as subordinate to all other claims, pensions, wages, trade creditors and tax authorities.In the case of Private Equity 'Funds' it should also not be possible that the Fund washes its hands of an investment that had gone sour. The Fund should be treated as a going concern, much like a Conglomerate. This would instill a much higher level of commitment from the PE investors and prevent overly risky investments on the basis of 'heads we win, tails you loose