Archive for January, 2010

Court Ruling Shifts Debate on Political Contributions to Boardrooms, Shareholders

The U.S. Supreme Court decisionruling that struck down the government ban on political spending by corporations will shift the fight over campaign contributions to directors and shareholders, lawyer Theodore Olson predicts.

Olson, the former U.S. solicitor general, argued before the court for Citizens United, a nonprofit corporation that produced a 2008 film about Hillary Clinton, then a U.S. senator and presidential candidate. Citizens United’s plan to show the film on the cable television on-demand system was blocked by a federal law barring corporations from using general treasury funds for political advocacy. The Supreme Court overturned the law on January 21. Olson writes: 

“The decision creates new corporate governance issues by shifting efforts to restrict corporate political speech from Congress to the boardroom. In Citizens United, the Supreme Court rejected the government’s argument that corporate political speech can be banned in order to protect dissenting shareholders from being compelled to fund political speech with which they disagree. In the aftermath of Citizens United, it can be expected that shareholders in some corporations will attempt to adopt measures restricting corporate participation in the electoral process and mandating disclosure of corporations’ political activities.”

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January 27, 2010 at 9:22 am Leave a comment

On Shareholder Democracy

ProxyDemocracy is among the shareholder-oriented Web sites that “are the beginning of Business 2.0,” the Financial Post said.  These sites will provide the best leverage for shareholders seeking to bring transparency and accountability to corporate management.

January 26, 2010 at 10:33 am Leave a comment

Pension Leaders Oppose Weakening SEC Proxy Proposal

Leaders of two state pension funds asked the Securities and Exchange Commission to prevent companies from opting out of a proposed rule that would allow shareholders to nominate directors in corporate proxy materials, Pensions & Investments reported.

Keith Bozarth, executive director of the $78 billion State of Wisconsin Investment Board, and Theresa Whitmarsh, who heads the $70.5 billion Washington State Investment Board, submitted letters to the SEC last week opposing any provisions to allow companies or shareowners to decide what access to proxy materials, if any, is appropriate.

“The recent economic crisis has highlighted the need for enhanced accountability of boards for their stewardship responsibilities,” Bozarth said in his letter. “Reasonable access to corporate proxy materials for long-term investors would address some of the problems surrounding director elections. Such access could significantly enhance the U.S. corporate governance model.”

Alexander Cutler, chairman of the corporate leadership initiative of the Business Roundtable and chief executive officer of Eaton Corp., told the SEC in August that, rather than an SEC rule, state law should prevail, allowing companies to decide on amending their corporate bylaws to provide for shareholder access, P&I said.

Click here for the full list of comment letters.

January 19, 2010 at 10:13 am Leave a comment

Slate Gives Shout-Out to ProxyDemocracy

ProxyDemocracy is highlighted in Eliot Spitzer’s column on Slate, where he says technology could transform corporate democracy as much as it changed electoral politics in 2008. The former New York governor describes how stockholders can use ProxyDemocracy to inform themselves about corporate ballot items and see how institutional investors will vote at upcoming meetings. He also notes that mutual fund shareholders can easily see how their managers have voted on particular issues and can track those choices over time.

“ProxyDemocracy is the corporate equivalent of knowing how major editorial boards judged a political candidate,” Spitzer writes in “We Own You!’’

 He notes that individual shareholders often sit out proxy elections; only one-quarter of the 25 percent of shares held by individuals are voted. Technology — especially services like ProxyDemocracy’s — could be the answer, he says:

“In the long run, reinvigorating corporate democracy is almost as important as reinvigorating political democracy. Much as we may believe that a new regulatory regime will fix our corporate sector, the more important levers of influence will, and should, come from the activities of shareholders, aided by new technology.’’

January 14, 2010 at 11:04 am Leave a comment

CalSTRS to Ask Managers for Climate-Risk Analysis

The California State Teachers’ Retirement System will ask its active equity managers to factor climate-risk analysis into their investment decision-making.

CalSTRS will highlight the need for managers to have expertise in climate change and other sustainable investment analysis and to adapt their corporate governance voting practices to address climate risks. The $130 billion pension plan disclosed its action in conjunction with the release of a report by Ceres, the coalition of environmental groups and investors.

“CalSTRS wants to invest in well-managed companies that can address the physical risks of climate change and adapt to the changing regulatory and market realities of a carbon-constrained economy,” Chief Executive Officer Jack Ehnes said in a statement. “Our asset managers need to ask the right questions and critically evaluate how companies are positioned so that we’re sure that our investments will produce outstanding risk-adjusted returns for our members.”

The Ceres study found that 71 percent of managers don’t conduct a climate-risk analysis when they’re not marketing a “green fund,’’ and that 44 don’t consider climate risks at all because they don’t think the issue is material to selecting investments.

“These findings make clear that the investment community is overly focused on short-term performance and ignoring longer-term business trends such as climate-related risks and opportunities,’’ Ceres President Mindy Lubber said.

The survey included 84 investment firms managing $8.6 trillion in assets.

January 8, 2010 at 3:44 pm Leave a comment

Watch for Investor Populism in 2010

Middle-class managers and professionals could turn their anger against corporate executives in the upcoming proxy season, columnist Evan Cooper says. In an Investment News essay headlined “When the middle class gets angry, watch out,’’ Cooper writes:

Instead of throwing out their proxy-voting cards this spring, more investors may decide to vote against management proposals simply out of anger and frustration. … If corporate boards beholden to top management and timid institutions won’t rein in runaway CEO compensation, perhaps humiliation will work if it comes from Ma and Pa Investor.

January 4, 2010 at 4:10 pm Leave a comment


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