Top Investment Firms have to combine

The top 10 shareholding institutions have a case to answer - if they vote as a bloc any deficiency in corporate governance would be stopped in an instant. So they are as culpable as management and there is no point moaning in closed meetings with management. We demand for a long time that the top institutions - and ideally not only the top 10, important as they are, but also the next 50-100 firms, have to act as one - then they could produce quick and decisive change rather than just contributing to the endless debates about corporate governance. If that is not happening sooner rather than later no one should complain if politicians get involved.
(30-Nov-2013)

Proxy Advisory Firms - is their influence waning?

Should Investors - and especially institutional ones - do more or all of their governance research in-house? Interesting contribution by Laurel Hill Advisory Group
(17-Nov-2013)

The trouble with proxy advisors...and a solution

Detailed arguments in this defense of proxy agencies are very good, but simple solution is - ask what are the issues (pay, independence, related party transactions etc etc), they should be easy to answer, yes or not, no exceptions for specific circumstances or the get-out-clause of 'complain and explain' which only exist to make it extremely difficult to track thousands of companies - and the work has to be duplicated by all the investors. No wonder they love to outsource governance to proxy agencies. On top of that electronic voting on an easy-to-use platform would make it transparent, cheap and easy to vote on all the issues.
(12-Nov-2013)

Board Pay - less Understanding and more Action

The highly detailed and interesting report by Hedley May gives useful insights into the fact that (UK) shareholders and company directors hold diametrically opposed views on executive pay and board-room performance.

This should be no surprise to anyone who is following the (endless?) discussions about how to improve corporate governance and (top) executive compensation.

What is somewhat dispiriting is the glacial progress that is being made towards keeping a lid on the ever-growing pay packages that are awarded to CEO's.

Reference to the need for companies and investors to come to a 'greater understanding' on this issue already point to a major obstacle. It is a misconception that CEO's and boards (that are basically at their beck and call) and shareholders are in opposing camps. This overlooks the basic fact that ALL executives are the hired employees of the shareholders.

It is up to shareholders to set the rules. As the top 50-100 investment institutions hold a de-facto blocking minority in all major listed companies it should be easy to agree on some basic and simple rules with respect to executive pay levels. There should not be need for compensation schedules for the favored few at the top that run to dozens, sometimes even 100+ pages.
More and more reports on this problem (which is just the tip of the global inequality iceberg) will be useless if institutions do not face up to the challenge. Any number of politicians are ready to impose (often counterproductive) regulations if no concerted action is taken.
To rely on remuneration consultants to lead the way on this endeavor is tantamount to letting the fox guard the chickens.

I look forward to read your suggestions - please post them on the Blogsite. Alternatively I will post any comments that reach me by email.
12-Nov-2013

Top shareholders back Alibaba's controversial corporate structure

Alibaba's 28 partners, mainly founders and senior executives, want to keep control over a majority of the board, even though they own only around 13 percent of the company. (Reuters)
It is quite amazing that the authorities in Hong Kong, traditionally not known for strict corporate governance, make a stand and bloc this move while other, much older , financial centres with a reputation to lose are in a race to offer more 'flexibility' in order to chase the IPO business.

This raises a number of questions
1 - is there a race to the bottom in regulatory affairs, contrary to all intentions proclaimed by global regulators?
2 - what is the role of board - should Management pick directors (effectively controlling itself)?
3 - should different voting rights be allowed, and if so under what circumstances?
4 - what obligations - if any - do the financial 'advisors' facilitating the IPO have? are they responsible to shareholders or do they only have to look after their own narrow financial interests?
27-Sept-2013

Peer Groups not solution to CEO problem

A Better Way to Compare C.E.O. Pay (New York Times)

The article does not give any hint how peer group comparisons could be used to keep a lid on CEO compensation, let alone help to reduce it.
(24-Sept-2013)

Less Talk, more Action!

That is my message to all those who are following the debate about corporate governance.

Executive Compensation - no need for complexity

SEC Commissioner Gallagher uses time-worn excuse of  'sheer complexity' of executive compensation to put smokescreen over efforts to reform (curtail) top pay.

Stop Pensions Apartheid!

The British Prime Minister David Cameron refuses the growing calls for former banker James Crosby to give up some of his £20 million pension pot.

Stock Buy-backs - Poison for the Economy?

There were times and places where companies were not allowed to buy their own shares. This was principally meant to prevent share price manipulation.

Dell Buy-out (or Snatch-out?)

The only lesson that transactions like the proposed buy-out of Dell shareholders orchestrated by it's CEO Michael Dell can give is that investing in equity is only for short-term speculators.

Harvard Institutional Investors Roundtable

Congregations such as these should generate a powerful punch in the direction of more effective corporate governance