Why do Investors Vote Against Corporate Directors?

https://corpgov.law.harvard.edu/2023/08/03/why-do-investors-vote-against-corporate-directors/ 
15-Aug-2023

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 say.....so 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.
(19-May-2022)

Board Evaluation -but who evaluates the evaluators?

Well intended maybe, but who evaluates the evaluators, and so on...
(10-Feb-2019)

Board Evaluation Disclosures - Council of Institutional Investors

Chairman - a cushy sinecure for the Establisment

Looking at Philip Hampton's numerous board memberships one can notice one thing: not one of the companies he passed through can be seen as a thorough success - look at the list and point out one if you can find it! British obsession with the role of Chairmen is somewhat similar with the obsession of pack the House of Lords with superfluous worthies!
(21-Jan-2019)
About Philip Hampton
GSK Chairman to retire

Private Equity Boards not much better than those in Listed Companies

Not clear why boards in listed companies could not make speedy decisions - if the will and skillset are there. At least boards in listed companies are more transparent as fiduciaries and often real investors can see the impact of their actions more directly.
(16-Jan-2019)
60 seconds with Bill Priestley

What do Non-Executive Board Members bring to the Party?

News that hospitality veteran James Horler resigned from Patisserie Valerie's board raises the question: what purpose to outside board members play? If they are excused from supervising the nitty-gritty of a company's accounts are they then left with being a sounding board and in-house giver of strategic advice? And who are they accountable to?
(16-Jan-2019)
James Horler resigns fro Patisserie Valerie Board

Chairmen - expensive decoration?

If the USA gets by without expensive chairmen, why keep them in clover here in the UK? Just a retirement bounty for the old boys? (6-Nov-2017)
Bloomberg

Procter & Gamble: Who should sit on a Board?

Should a so-called 'Activist' investor with less than 1% of the outstanding shares be allowed to get a seat on the board? On what principles should boards be nominated?

Join the debate or decisions will be made for you while you have to pay for these expensive proxy 'battles'.

CNBC

Who runs the Show? Are Activist Investors given too much leeway?

News that 'Activist' investor Elliott Management and Arconic settle their longstanding battle should be seen for what it is: a black eye for corporate government. The number of board members handed to Elliott are out of proportion to the stake the firm has in Arconic. Giving investors board seats also creates conflicts of interest - hopes that 'Chinese Walls' work properly may be optimistic. Why create these conflicts when an arms-length relationship would do the job? And what role did the shareholders as a whole play in this 'agreement'? Who consulted them? And can the activist firm be involved in buying and selling the target's shares while negotiations are taking place?
Movers: Arconic and Elliott Settle

Overpaid UBS Chairman

American Companies do very well without the expensive decoration of Chairmen, why does UBS have to pay millions to Axel Weber, just to utter comments such as these? They have nothing to do with the bank's business! (8-May-2017)
UBS CHAIRMAN: 'Brexit is a time bomb' and Macron's win 'doesn't mean Europe is out of the woods'

UAL: gormless Board will probably do Nothing

At least Wells Fargo threw the book at the CEO when the abusive practices came to light. It will be interesting to see how UAL's Board handles this incident, or the large holders (Vanguard, State Street, Blackrock, you know the culprits) of the shares that basically control most of the large public companies. Unfortunately the Board is beholden to the CEO and not really responsible to the Fiduciaries (fake owners). If it would this incident should get immediate and public attention.
Video surfaces of man being dragged from overbooked United flight

Board Members overpaid?

Are board members really worth their money? An interesting take, not politically correct, but there is some truth to it, start at 41 minutes
Hitler on overpaid board members 1940

BlackRock vows new pressure on climate, board diversity

Let us hope that this is not just a PR exercise. Climate Change is a problem that should really be left to governments. Diversity is a fuzzy word, why not also diversity with regard to religion, political inclination, overall age? And why the preponderance of older execs that just draw an extra retirement cheque?
Exclusive: BlackRock vows new pressure on climate, board diversity

How to curb Board Greed

I am not sure the title for Alex Brummer's article reflects the issue correctly. While the Board sets the pay policy for the CEO it is more the greed of the Chiefs that needs curbing. And what is wrong with Pay Committees is above all the fact that the CEO and existing Boards select new members, so it perpetuates self-control. This is not much different from the Parent Teacher Associations that usually are just a lapdog for the Headmaster.
(5-Jan-2017)

Millstein on Corporate Boards

Given that Corporate Boards are the immediate authority tasked with supervising and guiding a company's management one could argue that dysfunctional boards are the root of all evil in the corporate world.
So I have some sympathy with the general drift of this article (Fortune, What's behind Corporate Scandals?) but one is also left with the feeling that while we can easily point to problems it is much more difficult to come up with solutions.
General exhortations for boards to become 'better', more 'hard-working' etc are very well, like Sunday prayers, but they are of no practical use.
Any suggestions?
As always your Comments are welcome, but please no direct messages - use this blog instead so that others can see your contribution! 
(9-Dec-2016)

Five Proposals to make Executive Pay benefit Society

It is refreshing to see that the (endless?) discussion about the level of Executive Pay is not completely dominated by pious wishes, hand-wringing and nebulous remedies.

So I read with interest the contribution from Alex Erdmans in a recent article published by CityAm. He is not only professor of finance at London Business School but also a member of the Purposeful Company steering group.

Here is a short summary of the key proposals Erdmans makes:

1 - Give only Equity and Option grants with a long vesting period, preferably until after the executive has left - or even retired.

2 - De-emphasise long-term Incentive plans or bonuses that are only tied to financial targets.

3 - Grant deferred cash compensation or similar long-term awards so that they are eroded in case of bankruptcy.

4 - Launch a Fair Pay Charter and consult workers on the Charter.

5 - Require a binding vote on executive remuneration when less than 75% of shareholders support pay proposals two years in a row.

But while these proposals are a valuable contribution the observer is left with two key questions:

How will these ideas actually be translated into concrete action? And by whom?

And the 64,000 Dollar question regarding the absolute level of Executive Pay is not touched at all. As with so many proposals about pay reform, this is really the elephant in the room. All technical remedies are pointless if at the end all they achieve is that pay is ratcheting higher and higher even when modifications in the way it is set are introduced.

The key question is: Why should an executive be awarded 5, 10 or 20 million if his pay is somehow 'aligned' with company performance? Ultimately this is a question of morality and not economics.

All very well to see BlackRock pledging 'to hold boards' feet to the fire' when it comes to executive pay' when the most critical question of executive pay reform - the way the absolute level of pay is set - is left open.

As always your Comments are welcome, but please no direct messages - use this blog instead so that others can see your contribution!
(8-Dec-2016)

Executive Pay Reform

As long as Boards are left in charge of determining executive compensation there is little - or no - hope of serious reform. Examples such as the (Ab)use of non-GAAP numbers in setting 'incentive' compensation show that Boards are only too eager to use any ruse that can justify more and more egregious pay numbers. Little wonder, most Board members are on the receiving end when pay is set in the companies they are managing. And even if they are serving on Boards to boost their - usually already bloated - retirement income they belong to the same 'Club' as they will have been on the receiving end of similar 'incentive' plans during their active working lives.
Why Management Is Incentivized to Fabricate Earnings: It's All about non-GAAP Bonuses (davidstockmanscontracorner.com)
(31 May 2016)

Activists go to Washington

One can only wait to see what the 'luminaries' of the Activist investment scene want to achieve by setting up a lobbying group.
Have they not already influence way beyond their actual investment stake in the companies they try to influence - for better or worse, depending on your point of view.
The purpose of their grouping can only be to have a freer hand when getting involved in 'activist' investments, stifling criticism from the media, politics and - most importantly - other shareholders (we may call them the silent majority).
Their aims may often make sense, managements may need a nudge in the right direction. But basically that would just mean to give advice, and free advice. Management should then react in a fashion that it considers appropriate. If the outcome is contrary to the interests of ALL shareholders there is the Shareholders meeting that can decide to change management if that is considered appropriate.
But efforts to get paid off (blackmail in effect) or being able to place a disproportionate number of directors on the board are nefarious practises that have been going on for much too long. If the efforts of the Lobby group are directed towards extending these and similar practises the real aims would be exposed as just another scheme to make a buck at the expense of shareholders and the welfare of companies and their stakeholders.
(19 May 2016)

Outcry about Exec Pay - but still no viable Solutions

A few recent headlines picked from the acres of print dedicated to the question of how to limit 'excessive' Executive Compensation:

"Shareholder Voices heard loud and clear" (CityAM, 4 April 2016)

"Time for Shareholders to stand up for their Rights" (Times, 30 April 2016)

"Snouts still in the Trough" (Daily Mail, 23 April 2016)

You may agree or disagree with the basic premise of Exec Pay being 'excessive'. I would be in the camp that thinks it is way out of line with what is necessary to 'motivate' CEO's and senior Management to do a good job, and let's not forget that there is the question of the morality of the whole process.

But one aspect receives very little mention: If one agrees with the underlying argument that these - and many other - commentators make with respect to Pay, what measures will be required to bring Exec Compensation back to earth. Just hoping that Company Boards will do a better/different job would just be a triumph of hope over experience to speak with Samuel Johnson.

And this leads to an even more important question that will have to be addressed first: What is the 'appropriate' level of Executive Pay? Just setting a limit with reference to average/medium pay in an organisation will not do the trick.

And hoping that the 'Shareholders' (who really are nothing but Fiduciaries for the real End Investor) will suddenly be able to exert a decisive influence is not going to be successful without clear and firm rules and standards. Ad-hoc decisions on the pay arrangements for thousands of companies that require in turn scrutiny by hundreds if not thousands of fund managers that are under constant pressure to perform and manage their business may lead to some high-profile scalps but not change the basic problem in a sustainable fashion.

Your author does not have the answer to these questions - although you will find some tentative efforts in this blog. But maybe you want to contribute your thoughts in order to start a discussion that ultimately will lead to some practiable solutions to the problem.
(10 May 2016)

Citigroup Bonus Cap fails to sway Executive Pay Critics

While I applaud that some observers are rattling the cage in the C-Suite I am afraid the result will at best be an adjustment of some decimals behind the comma. 20 or 22 or 18 million, or whatever the number the CEO and his cronies in the Board decide to be 'fair' compensation to show up at the office, it is a number that is decided in a circular fashion - CEO 'invites' board members, board members 'reward' their buddy and hey presto we are all in this together.
The basic deficiency in Executive Compensation - and more importantly CEO pay - is the fact that the fiduciaries who are now supposed to represent the end investor (be they direct or indirect share owners) are just not doing their job, partly because they are in the same boat - be it as recipients of similar pay packages or because they try to get investment mandates from the pension funds the companies they invest are managing.
Only a dismantling of this nexus will lead to lower Executive Pay. As I suggested before, if just the pay of the CEO is controlled the rest of the executive pyramid will adjust accordingly. CEO pay ( and the 'incentive schemes' which have demonstrably be found to be useless) should always be voted on before it is set for each year (during the Annual Shareholder Meeting). All votes by fiduciaries should be based on proxies received not from some proxy agency that makes up its mind divorced from the desires of the end investor but from real people that are the ultimate owners of public companies.
(9 April 2016)