Chain of intermediaries binds US shareholders too

Mixed news from the US federal courts this week as John Chevedden faced up to Apache Corporation over his attempt to submit a shareholder proposal.

Chevedden’s troubles began when he sought to eliminate Apache’s supermajority voting requirement and introduce a simple majority standard.… Read the rest

Owners must generate momentum for reform

Lord Myners has supported calls for reform of the Takeover Code in the UK, but made it clear that “The owners of firms that have lost so much from ill-advised takeovers must generate the momentum for reform”.

Myners was speaking at the public policy think-tank, The Smith Institute, where he laid out his most comprehensive analysis of the financial markets failure to date, together with the UK government’s prescription for reform. … Read the rest

UK pushes for greater board diversity

The UK Government has asked the Financial Reporting Council to consider including a new principle in its code of conduct (UK Corporate Governance Code) to require companies to report on what they’re doing to increase the number of women in senior management positions.… Read the rest

Ireland to get own governance code?

The Irish Stock Exchange is considering whether there should be a stand-alone Irish corporate governance code following revelations of governance shortcomings in the market. According to a new report by accountants Grant Thornton, Ireland has seen a sharp decline in compliance with the Combined Code with just over just over one third (36%) of companies claiming full compliance; in 2009 the figure was closer to a half.… Read the rest

Did Kraft mislead the market?

Kraft is under investigation by The Panel on Takeovers and Mergers (the Panel) over allegedly misleading statements the company made to investors and employees during its five month takeover battle for Cadbury.

According to reports in the Wall Street Journal, the Panel is looking into comments made by Kraft executives during the buyout regarding the future of a Cadbury factory near Bath, which is now set to close with the loss of hundreds of jobs.… Read the rest

High Court grants injunction against BAE settlement

The UK’s High Court has granted an injunction prohibiting the Director of the Serious Fraud Office (SFO) from taking any further steps in its plea bargain settlement with BAE Systems.

SFO has been investigating alleged bribery and corruption in BAE’s arms deals since 2004 in several countries (including Chile, Czech Republic, Qatar, Romania, Saudi Arabia, South Africa and Tanzania).… Read the rest

No value in a non-audit service bar say Scottish accountants

There is no benefit to be gained from a complete prohibition on auditors providing non-audit services to their listed clients.

That’s the view of a new research paper published by a Working Group established by the Institute of Chartered Accountants of Scotland to examine the issue of the provision of non-audit services by external auditors after it was raised by the Treasury Select Committee in their report into the Financial Crisis.… Read the rest

Deloitte develops carbon advisory business

Big Four auditor Deloitte has enhanced its presence in the green consultancy market through the acquisition of sustainability and consultancy adviser dcarbon8.

The firm will be integrated with Deloitte’s environmental and sustainability consulting practice, with founder Guy Battle becoming a partner.… Read the rest

Executive Payouts – An Increasingly Large Frictional Cost in Mergers

Mergers frequently result in large one-time payouts to executives of the acquired company, through change-in-control payments and acceleration of equity awards. Several recent mergers, however, have highlighted how significant those deferred costs can be for shareholders.

Executives at oilfield-services company BJ Services, which is being acquired Baker Hughes in a cash-and-stock deal worth $5.3 billion on the date of announcement, will receive payouts worth approximately 4.5% of the deal’s value – including change-in-control payments of $180 million, and accelerated vesting of equity grants worth another $55 million.… Read the rest

Toyota’s woes a symptom of Japanese corporate governance

A recent article from The Economist has highlighted another real-world connection between firm performance and governance structures.

Commenting on the massive accelerator safety recall and how the Toyota management has handled itself, the Economist points out that the problems it faces: “highlight broader failings in Japanese corporate governance that make large companies particularly vulnerable to mishandling a crisis in this way.Read the rest