By Brandon Rees, Acting Director, Office of Investment, AFL-CIO
A long overdue executive pay provision of the Dodd-Frank Act will finally go into effect in the near future. As required by Section 953(b), the Securities and Exchange Commission has proposed rules to require public companies to disclose the median pay of all employees, and the ratio of pay between the median employee and the CEO.
The SEC has received over 100,000 comments that are overwhelmingly in support of this disclosure provision. Investors who have come out in favor of the rule include pension plans such as CalPERS and NY State Common, socially responsible investors including Walden and Trillium, and international investors like Railpen and Amundi. Read the rest of this entry »
By Marty Lipton, Partner, Wachtell, Lipton, Rosen & Katz
Harvard Law School Professor Lucian Bebchuk believes that shareholders should be able to control the material decisions of the companies they invest in. Over the years, he has written numerous articles expressing this view, including a 2005 article urging that shareholders should have the power to initiate a shareholder referendum on material corporate business decisions. In addition to his writings and speeches, Prof. Bebchuk has established and directs the Shareholder Rights Project at Harvard Law School for the purpose of managing efforts to dismantle classified boards and do away with other charter or bylaw provisions that restrain or moderate shareholder control of corporations (see “Harvard’s Shareholder Rights Project is Wrong” and “Harvard’s Shareholder Rights Project is Still Wrong”). In addition, Prof. Bebchuk has been at the forefront in arguing to the SEC that, despite the specific action of Congress in 2010 to empower the SEC to adopt a rule to require fair and prompt public disclosure of accumulations of shares by activist hedge funds and other blockholders, the SEC should not do so because it would limit the ability of activist hedge funds to attack corporations. In short, Prof. Bebchuk believes that shareholders should have the power to control the fundamental decisions of corporations – even those shareholders who bought their shares only a few days or weeks before they sought to assert their power, and regardless of whether their investment objective is short-term trading gains instead of long-term value creation. Read the rest of this entry »
By Chuck Nathan, Partner and Senior Advisor, RLM Finsbury
Activist investors are currently the darlings of the equity markets and the financial media. Many of the leading activist investors (Bill Ackman, Dan Loeb, Nelson Peltz and Carl Icahn, to name a few) appear regularly on business news channels, have their investment forays avidly covered by the media and are literally household names. In part due to (mostly fawning) press coverage and a perceived track record of success, activist investing has emerged as a well-recognized and growing alternative asset class, estimated today to total about $85 billion. It is not hyperbolic to call activist investors the rock stars of today’s equity markets. Read the rest of this entry »
By Jim Barrall, Partner, Latham & Watkins LLP
In my last post on the SEC’s proposed CEO pay ratio rules, I recommended that companies determine the work they would need to do to comply with the rules and comment on them before the SEC’s current deadline of December 2. Although the U.S. Chamber of Commerce and other organizations have requested additional time to comment on the rules for compelling reasons, companies should not assume that the deadline will be extended. Moreover, recent developments underscore the importance of company input. Read the rest of this entry »
By Matteo Tonello, Managing Director, Corporate Leadership, The Conference Board
||A Note from The Conference Board Governance Center: This post relates to a report released jointly by The Conference Board and FactSet, authored by Dr. Tonello, Melissa Aguilar, and Thomas Singer of The Conference Board. The Executive Summary is available here. For details regarding how to obtain a copy of the full report, contact matteo.tonello@conference-board.
While the number of shareholder proposals filed at U.S. public companies continued to increase this year, management has been less successful at obtaining permission from the Securities and Exchange Commission (SEC) to exclude from the voting ballot new types of investor demands.
The finding is discussed in the latest Proxy Voting Analytics (2009-2013), recently released by The Conference Board in collaboration with FactSet Research. The study examines data from more than 2,400 annual general meetings (AGMs) held at Russell 3000 and S&P 500 companies between January 1 and June 30, 2013. Historical comparisons with findings from the last four proxy seasons are also made. Read the rest of this entry »