Thanks a billion public shareholders!

That is what the financial acrobats behind the buyout of HCA will not be saying as they cash in a cool $1.75 billion dividend from the company they have taken 'private' only a few years ago. As we continuously argue, there should be a big 'Seller beware!' sign attached to any buyout offer that speculative funds and their collaborators in management make to public shareholders. The trustees of the public shareholders - the major investment institutions - should be held to a very high standard of care when considering any bid, including takeover bids from competing businesses. The valuation and decision process in merger/takeover situations is deeply flawed and tends to short-change the sellers. That employees and clients are also often worse off (layoffs where the burden falls on the tax-payer due to rising costs of unemployment benefits, diminished competition due to increasing concentration) should also be mentioned. It is also instructive to re-read the warning that was issued by law professors at the time of the buy-out in 2006.

Capital One - Scandalous pay for CEO

Capital One - not surprisingly - declines to comment on plans to pay its CEO an outsized pay package. Pro-Gov argues for a long time that all perks for senior management - stock options, pensions, health care plans and longterm incentive plans should be on a company-wide basis only. The amount should be strictly pro-rata to the base salary. It is high time that the trustees of the ultimate shareholders - institutional investors - take a more aggressive approach to top management 'compensation' (for turning up in the morning?).

How to restrain political spending by US Corporations

The recent narrow vote of the Supreme Court may have opened the floodgates for unrestrained political spending by corporations in the US. As big money has already too much influence on the political process as it is, there is justified concern about the outlook for democratic debate in the country. We suggest that corporations should only be allowed to get involved in political debate if they receive an explicit mandate from their shareholders. This should be issue-specific. As individual shareholders are a minority on the shareholder register it would be necessary to make institutions (including hedge funds!) responsible to the ultimate investors. This would mean that they in turn would have to obtain a mandate from their investment clients.

Absurd costs of Lehman bankruptcy

News that advisors working on resolving the Lehman bankruptcy raked in nearly $600 Mio through 2009 demonstrates that the bankruptcy process is in dire need of reform. The lead consultant seems to have gotten away with charging more than $ 1 Mio for each of its members of staff working on the case. Who protects the creditors? who approves these outrageous fees?