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Re: Why Isn’t Hyundai Motor Group Circling the Drain?

CorpGov.net — Sun, 29 Dec 2024 11:59:00 -0000

Great insights in your post.

While not called “Kaikaku,” Korea had a significant reform movement known as the Gabo Reform or Kabo Reform (갑오개혁; 甲午改革). This series of sweeping reforms took place from 1894 to 1896 during the reign of King Gojong. Key aspects of the Gabo Reform include:
• Modernization: The reforms aimed to modernize various aspects of Korean society and government.
• Structural Changes: It involved restructuring the central government, abolishing the traditional class system, and introducing new administrative systems.
• Social Reforms: The reforms banned discrimination based on class, prohibited slavery and underage marriage, and granted widows the right to remarry.
• Economic Changes: The reforms centralized financial affairs, revised the taxation system, and introduced a new monetary system.
While the Gabo Reform shares some characteristics with Kaikaku, such as implementing radical changes over a relatively short period, it was a broader societal and governmental reform rather than a business improvement methodology.
In conclusion, while there isn’t a specific “Korean Kaikaku system,” the principles of radical change and improvement can be seen in both the Japanese business concept of Kaikaku and the historical Korean Gabo Reform movement, albeit in different contexts and applications.

Re: How Would You Vote On Pressing Tesla Issues For The 2024 Annual Meeting?

CorpGov.net — Sat, 11 May 2024 19:59:44 -0000

Nice summary of concerns. I would have liked to see the author's recommendations.

Nell Minnow, the co-founder of Institutional Shareholder Services, expressed her strong stance, stating, "I took great pleasure in voting NO for the Tesla board members and the staggering $58 BILLION proposed pay for Elon Musk, a plan that was previously rejected by a judge for its failure to meet any standard of business competence. And YES for the shareholder proposals." She has well-founded concerns about the board's decisions and Musk's compensation. I agree with her.

That seems like good advice to me. Even with tariffs of 60% expected to be imposed on EVs imported from China, Tesla needs to invest heavily to maintain its edge in several areas and to catch up in others. Tesla sold over 1.80 million all-electric cars, while BYD exceeded 1.57 million. BYD has also developed "float mode." https://www.tiktok.com/@the...

Re: SEC's New Rules Undermine Shareholder Rights - Bloomberg

CorpGov.net — Thu, 30 Apr 2020 16:23:51 -0000

The last time the SEC really stood up for shareholders in court against companies may have been 1949 in SEC vs TransAmerica. Although the comment period has ended, the SEC will continue to read any comments submitted prior to finalizing their proposed rules. https://www.corpgov.net/202...

Re: Index Funds and Corporate Governance

CorpGov.net — Mon, 24 Feb 2020 17:34:40 -0000

More responsible proxy voting is inexpensive, especially spread over trillions of dollars of investments as it is among the Big 3. The easiest way to begin to address the problem is to publicize proxy votes as they happen in a user-friendly format, not once a year in code, accessible only through an expensive subscription service.

If customer see how their funds are voting, they will demand change and funds will begin to compete based on proxy voting records. See Mutual Fund Wars Over Fees AND Proxy Votes at https://www.corpgov.net/201...

Re: Pete Buttigieg proposes a 'public' 401(k) program

CorpGov.net — Sat, 30 Nov 2019 08:39:46 -0000

I like the proposal, which is similar to Australia's Superannuation program and is, in part, responsible for the fact that median wealth per adult in Australia is $386,058 vs $65,904 in the US https://en.wikipedia.org/wiki/List_of_countries_by_wealth_per_adult. Should be coupled with more transparent fund voting. see https://www.corpgov.net/2019/09/mutual-fund-wars-over-fees-and-proxy-votes/

Re: Storming the Corporate Castle: Does Shareholder Activism Work?

CorpGov.net — Mon, 23 Mar 2015 11:22:34 -0000

With regard to oil companies and divestment, I'd like to own shares in companies that invest as much into alternative energy strategies as oil exploration. That kind of company would be acknowledging that future oil finds might be stranded assets. They might be branching out into recharging stations. I could then also own a little stock in other companies, asking them to be more like the leaders. Unfortunately, I can't find even one oil company that is really aiming to move beyond petroleum.

Re: Crossing the final frontier in shareholder rights - Cahill - Crain's Chicago Business

CorpGov.net — Sat, 14 Mar 2015 21:32:04 -0000

Proxy access will be the fastest growing corporate governance reform for the next 5 years. Starting next year, there will be more battles around what today are considered the 'details.'

Re: Exclusive: TIAA-CREF joins 'proxy access' push with letter to top holdings

CorpGov.net — Thu, 12 Mar 2015 19:16:16 -0000

I have proxy access proposals coming up at Amazon, United Guardian and Walmart near term. From 2015 on, proxy access will be the most quickly adopted corporate governance 'best practice' ever on a case-by-case basis.

Thank you TIA-Cref and BlackRock for your efforts. Vanguard should get with the standard. They claim they aren't passive owners. However, supporting a 5% standard further enables entrenchment. Owing the index is smart investing. Failing to support proxy access at 3%/3 yrs/for 25% of board is not.

Re: Shareholders Get a Louder Voice As Companies Become More Democratic | RealClearMarkets

CorpGov.net — Sun, 08 Mar 2015 14:05:44 -0000

There will be dozens of opportunities for shareholders to vote in favor of proxy access this year. Citi endorsed my proposal. Another chance to vote for proxy access is at Apple.

Re: Who Should Actually Have Say on Pay?

CorpGov.net — Thu, 13 Jun 2013 16:10:08 -0000

I think at least part of the problem is indexed funds, since they have little if any incentive to actually monitor. They compete with other indexed funds on the basis of low fees. Any benefit that occurs because of their active monitoring goes equally to their competitors, but every dime they spend is only their own expense. We have reached the point that a majority or close to a majority of stock in most large companies is held by indexed funds. The result is that either they defer to management (which I suspect is most frequently the case) or they defer to ISS and Glass Lewis. Either way is problematic.

Re: Wal-Mart Stores, Inc. (NYSE:WMT) Shares Floor With Activist Shareholders Who Aired Recent Controversies Ahead Of Votes On Policy Proposals

CorpGov.net — Sat, 08 Jun 2013 10:39:23 -0000

Once again, thanks to Kalpona Akter for moving my proposal to allow shareowners to hold a special meeting. The common thread in our needs is more democracy at WalMart. Our company is controlled by the Waltons, who seem to want to retain dictatorial control, no matter the cost. The Waltons have created a great company but they need to learn to share, something most of us learn on the playground as children. Unfortunately, their childish behavior has very tragic real world consequences.

Re: Officials tell House panel proxy advisers need to be registered

CorpGov.net — Thu, 06 Jun 2013 13:55:02 -0000

If, and I do mean if, ISS provides better proxy voting advice, it sure isn't because they are registered investment advisers. Frankly, I believe more competition would help. I'd also like to see shareowners experiment with a new model, such as my recent proposal filed at Cisco. http://www.votermedia.org/p...

The subscription model of ISS and Glass Lewis means they can only spend a very limited amount of time analyzing each proxy because they must review and report on thousands. A proxy advisor competition could open up the process to advisers spending much much more time, getting away from anything like a checkbox approach.

Instead of the advice going to the very few (proportionately) shareowners who subscribe to such services, it would be available to all shareowners. Regulations are not the answer for every problem. Let's try more competition first.

Re: Divestment not the answer

CorpGov.net — Mon, 03 Jun 2013 11:13:39 -0000

The article mentions nothing about 'stranded assets.' If we are to ensure a salubrious environment, there is little doubt that most coal reserves should never be burned. I'm probably somewhere between you and McKibben. See http://corpgov.net/2013/05/...

Re: Cozy Corporate Directors Raise Their Pay to $1,000 an Hour

CorpGov.net — Fri, 31 May 2013 09:10:29 -0000

How do you make directors leave? You make elections real by passing proxy access. Next up are Staples (SPLS) on June 3 and Netflix ($NFLX) on June 7. http://corpgov.net/2013/05/...

Re: Screwed by climate change: 10 cities that will be hardest hit

CorpGov.net — Thu, 23 May 2013 17:39:26 -0000

Dovetails nicely with my post this morning. I discussed my conversion to fossil free endowments and investments. Invest in renewables and tax the hell our of carbon so there is a bubble with lots of stranded assets. http://corpgov.net/2013/05/...

Re: Proof That Loyalty Is For Suckers: Best Customers Get Penalized With Higher Bills

CorpGov.net — Mon, 10 Sep 2012 16:16:39 -0000

Thank you so much for this post. Maybe it will help stop this game. I've certainly had lots of experience with it on home and auto insurance, as well as cable provider.

Re: Shareholder Resolutions Break Records in 2011

CorpGov.net — Tue, 03 Jan 2012 14:54:11 -0000

Great article. However, I'm not sure where you are getting your numbers. You must be looking at only a few companies. There were certainly more than 5 proposals that got a majority vote this year. Only about 5% of retail shareowners bother to vote. So, one way to think about it is that when you DO vote, you're vote is all that much more powerful, since you are in some way representing another 19 shareowners who can't be bothered to participate.

MoxyVote.com and ProxyDemocracy.org are great resources to see how others are voting. Also consider joining http://proxyexchange.org/ . For less than $50 a year, they will set you up with your own blog and help you with proxy proposals. You can also join groups like the Field Agent group where you may get a chance to present a member's proposal at a company near you. Other groups include "Proxy Access" (members have filed 8 proposals), Occupy, Rule 14a-8, which brokers are best for shareowners, and company specific blogs.

While many deal with social issues, like transparency in political contributions, this group deals with more fundamental issues like the rules of how the game is played. If we can expand the rights of shareowners all the other issues get a little easier to solve.

Re: Political Power and Corporate Control

CorpGov.net — Thu, 22 Dec 2011 13:20:40 -0000

According to Gourevitch and Shinn, "corporate governance - the authority structure of a firm - lies at the heart of the most important issues of society"... such as "who has claim to the cash flow of the firm, who has a say in its strategy and its allocation of resources."

The corporate governance framework shapes corporate efficiency, employment stability, retirement security, and the endowments of orphanages, hospitals, and universities. "It creates the temptations for cheating and the rewards for honesty, inside the firm and more generally in the body politic." It "influences social mobility, stability and fluidity... It is no wonder then, that corporate governance provokes conflict. Anything so important will be fought over... like other decisions about authority, corporate governance structures are fundamentally the result of political decisions." If the authors haven't hooked you on the importance of corporate governance by these statements on page 3, you aren't breathing.

I have long argued that creating sustainable wealth and maintaining a free society both require that institutional investors act as mediating structures between the individual and the dominant institutions of our time, the modern corporation. Democratic corporate governance will reduce the corrupting influence of unaccountable power on government and society. At the same time, by transforming corporations into more democratic institutions, institutional investors will instill them with their own values and will unleash the wealth-generating capacity of "human capital."

The model Gourevitch and Shinn set forth in Political Power and Corporate Control: The New Global Politics of Corporate Governance uses corporate governance as the dependent variable. "The arrow of causation flows from preferences to political institutions to corporate governance outcomes."

Whose preferences? Key, are those of owners, managers, and workers. How? "To obtain their preferred corporate governance outcome, they have to win in politics" by mobilizing allies outside the firm in systems the authors categorize as largely majoritarian or consensus. A dynamic feedback loop is thus created: "institutions shape policies that influence preferences. At the same time preferences induce institutional arrangements that increase the chances of preserving the policies desired by the preferences."

Treating the categories of owners, managers, managers and workers as homogeneous blinds us to coalitions. Through an analysis of available datasets, the authors demonstrate that outside owners are more likely to ally with workers to support transparency. Workers seeking to preserve their jobs are more likely to ally with managers; whereas, concern for pension funds motivates transparency and ability to exercise shareholder voice. Firm-centered managers prefer blockholding owners; those seeking maximum pay tend to support minority shareholder protections and vigorous labor markets.

Variation in corporate governance is not necessarily a function of economic stages, technology, or legal framework. Instead, Gourevitch and Shinn provide substantial support for the argument that "corporate governance arises from incentives created by rules and regulations that emerge from a public policy process, reflecting the power of alternative coalitions."

Although most academic writers and the press emphasize minority shareholder protections, Gourevitch and Shinn emphasize the need to also account for "degrees of coordination," which shape incentives to concentrate shareholding or sell down to a more diffuse market. These include product-market competition, price and wage mechanisms, labor relations, and social welfare systems. Each coalition seeks to persuade society-at-large to provide public policies in corporate governance that favor their own interests.

Systems shift when economic conditions change in big way. One of their most interesting discussions concerns their assertion that pension funds, which they define to include all forms of deferred compensation plans, may be most important as the next phase unfolds. "To understand the future politics of corporate governance debates, we will have to track fights about pension reform." "Pension plan regulations may turn out to be the tail that wags the corporate governance dog."

Defined benefit plans held 27% of all U.S. equities in 1989-95 but fell to 21% more recently. Mutual fund ownership, on the other hand, has climbed from 8% in 1990 to 28%. As more defined benefit plans (often jointly administered with employee or union representatives) are dropped, the future of corporate governance reform may lie with mutual funds. That tail, using the above analogy, seems to wag whenever management speaks.

They are required by law, as fiduciaries, to represent the interests of the investors whose money they oversee, not their own business interests, which may including landing contracts to administer 401(k) plans. Recently, Vanguard, Putnam, and Fidelity voted against shareholder proposals that would require directors standing for election to stay on only if a majority of votes are ''yes.'' Clearly, these funds were not voting in the best interest of owners. Mutual funds used to turn over 17% of their portfolio each year (1950-1965) but averaged 91% per year in 1990-2005, prompting John Bogle to remark the "rent-a-stock industry has little reason to care" about good corporate governance.

Gourevitch and Shinn find that "as worker-citizens acquire assets, they develop preferences for shareholder protections, thus adding pressure to the potential for a transparency coalition" and "assets in the hands of institutions that are accountable to their owners are likely to pay more attention to governance than are assets in the hands of autonomous managers." Perhaps an actual power shift will follow as mutual fund investors demand a role in mutual fund governance and those funds begin to represent their true preferences with corporations. If that happens, we might see a book that looks in reverse, tracing the effects of corporate governance outcomes on political institutions. "Socially responsible investment" will then take on new meaning and dimension.

In the meantime, Gourevitch and Shinn, note enough interesting correlations and observations to make the book must reading for any corporate governance policy analyst, especially those with global concerns. Here is a small sample:

-Blockholding and minority shareholder protections are negatively correlated.
-Minority shareholder protections and share price are positively correlated.
-Blockholding dips after increased minority shareholder protections are likely the result of sales by "new money" entrepreneurs, rather than old money blockholders (who may fear the tax collector).
-Blockholding may be preferred when uncertainty is high.
-State-owned enterprises are the most aggressive users of ADRs.
-Money flows toward firms and countries that provide shareholder protections. "No other group can have quite this direct an effect on the economy...the economic vote of investors counts greatly against the mass of votes in elections."
-Where job security is strong, diffusion is weak, and minority shareholder protections are weak.
-Weak intermediate institutions of finance, investment, pensions and stockmarkets are correlated with little voice for shareholder rights.
-"The U.S. Securities regulation system assumes that institutional investors and reputational intermediaries are the agents of investors." "Yet it has become increasingly clear to many observers that these private actors have multiple, complex incentives..."
-"As much as 10 percent of the total ownership of U.S. public firms was transferred from the existing stockholders to senior managers through stock option grants between 1990 and 2000."

Their treatment of the definition of corporate governance from various perspectives is also an eye opener. Here's a flavor of that discussion:

-Where the political scene is capital versus labor, "the investor coalition defined corporate governance in terms of 'meeting the challenge of financial globalization,' adherence to the OECD Principles, fulfilling 'international standards of governance in the global competition for capital.'"
-From a labor power position, "blockholders and foreign portfolio investors were castigated as selfish oligarch in league with the heartless IMF and the faceless gnomes of Zurich."
-Those favoring the corporatist compromise made much of managers and workers "being in the 'same boat' together, of corporate governance choices that ensured that firms 'served the nation' in a 'stable' economy - with owners dismissed as oligarchs or 'speculators.'"
-Countries shifting transparency coalitions and managerism alignment "witnessed predictable invocations of corporate governance that protected 'the little guy, ' the individual investor,' the widow and orphans," such as speeches by U.S. SEC commissioners.
-"Meanwhile across the alignment divide, managers compete to hijack the notion of corporate governance for their own purpose...'building shareholder value."

Shareholder value is partly about efficiency. But Gourevitch and Shinn raise serious issues of distribution, job security, income inequality, social welfare. Will firms of the future be efficient at creating a healthy environment and general prosperity or efficient at putting money into the pockets of CEOs? Political Power and Corporate Control provides a groundbreaking guide, based on empirical evidence, for anyone concerned with the direction of corporate governance and society.

Re: Now hiring: Corporate boards. Applicants beware. - Fortune Management

CorpGov.net — Fri, 16 Dec 2011 19:46:00 -0000

Eleanor Bloxham's fantastic article speaks volumes as to why I submitted a "Say on Directors iPay" proposal that will appear on the Apple 2012 proxy. We have a say on the CEO's pay and the pay of other named executive officers but not on board pay. Yet, at least on paper, the directors are the ones we elect and who negotiate CEO pay on our behalf. Shareowners need to focus more on board members . They are our direct representatives.

At Apple, we are paying at least two directors more than $1M a year; more than $2500 an hour. Two of our directors are full time CEOs. How much time do you think they are putting in on board service? When you read Apple's rebuttal to my proposal on next year's proxy, you will see they spend more time playing down the cost of their "Equipment Program" than they do addressing actual money paid out.

According to Apple, each director gets each new product and can buy products at a discount... and here's where it gets really rough for them.

"Directors are not provided tax gross-ups payments for the taxable income they incur in connection with the equipment program."

The poor dears have to pay taxes on the difference between the cost of any equipment they get at a discount and what they charge their friends for the equipment. They are bragging that Apple provides no tax gross-ups on their equipment program! The implication is that Apple is out ahead of other companies on this issue.

The Apple board doesn't require a majority vote either. That means if no one is running against the directors picked by the nominating committee (almost always the case), all it takes is one positive vote. The other 899,999,999 shares could be withheld or could be votes against and the directors would still win. That's a better deal than Vladimir Putin gets in Russia.

I'm sure the situation is even worse at many other companies. Apple is a great company. With a little more involvement from shareowners it can be even better.

Re: Crisis investor relations in the age of social media

CorpGov.net — Thu, 08 Dec 2011 12:05:57 -0000

Regardless of if we need them, separate social media platforms seem bound to proliferate. One newly coming online is http://sharegate.com/. The site is robust and appears focused on long-term owners by facilitating discussions among investors and between investors and management, including discussion of proxy proposals.

Re: First Proxy Access Proposal Filed - Compliance Week

CorpGov.net — Wed, 16 Nov 2011 22:17:35 -0000

I hope Compliance Week readers will give the proposals careful consideration. Proxy access is long overdue. Companies being targeted have serious corporate governance issues. At MEMC Electronics, for example, less than half the directors even hold shares in the company which has lost much more than half its value in the last year.

Re: From CEO to CBO | Financial Post Magazine | Financial Post

CorpGov.net — Tue, 01 Nov 2011 23:15:18 -0000

"Our proprietary analysis of executive pay and performance suggests 75 of Canada’s Top 100 CEOs are earning what could be considered normal pay based on their corporate performance." What about the other 25%? As a shareowner concerned with CEO excess, the 2% rejection rate seems low. Your insight that 75% are being paid properly only serves to confirm my suspicions. I suspect most investors gave a pass this year, waiting to see what happens. Expect more like a 10% rejection rate this year as shareowners wake up to the ever ratcheting CEO pay based on everyone being above average.

Re: CalPERS condemns conduct of placement agent, presents review

CorpGov.net — Wed, 16 Mar 2011 12:40:01 -0000

Those of you who are concerned with corruption at CalPERS should attend the CalPERS Candidate Forum on April 26th in the CalPERS auditorium at 400 P Street at 6 pm. There you will be able to ask questions of all eight candidates. The event is sponsored by http://perswatch.net/ and will be facilitated by the League of Women Voters. The publisher of PERSWatch testified before the State Senate in 1997 on pay for play and was the first to obtain closed door minutes. See http://www.perswatch.net/is...

Re: ProxyMonitor: A New Shareholder Proposal Monitoring Tool

CorpGov.net — Thu, 20 Jan 2011 23:36:19 -0000

Very nice. I've added permanent links to ProxyMonitor.org to the Links page on my site, CorpGov.net, hoping that shareowner activists will find it useful.

Re: The Virtual Lack of Virtual Shareholder Meetings

CorpGov.net — Thu, 28 Oct 2010 19:53:36 -0000

Lisa, I would love to read your paper. Please send me a copy. jm at corpgov.net
I will be studying the one by Anatoli Van Der Krans and others as I find them. Thanks.