When The Powerful Behave Badly

As shareholders were coming to terms with the implications of last week’s shocking disclosures about phone-hacking at NewsCorp, Simon Caulkin, former management correspondent at the Observer tweeted a thought-provoking observation:

Re Murdochs of the world: “Our only chance of having powerful be good is to have more good become powerful” JPfeffer/HBR ow.ly/4ZM5i

The link is to an article published by Jeffrey Pfeffer a Professor of Organizational Behaviour at the Graduate School of Business, Stanford University at the end of May.… Read the rest

The Making of a Daredevil CEO: Why Stock Options Lead to More Risk Taking

New research from Wharton shows that stock options lead to more risk taking by CEOs.

The research is presented in a new paper, “CEO Compensation and Corporate Risk Taking: Evidence from a Natural Experiment,” by Gormley, David Matsa, a professor at Northwestern University’s Kellogg School of Management, and Todd Milbourn, a professor at Olin Business School at Washington University in St.… Read the rest

UK pay dissatisfaction trends revealed

An analysis by Manifest of voting trends on the remuneration report since its introduction in 2003 has revealed the FTSE 100 companies with the greatest level of shareholder dissatisfaction, on average, over the period.

The list includes some companies where there has been one very large dissenting vote, but the more interesting companies are perhaps those which have shown consistently high levels of dissent (“high” being considered to be 20% or more, double the typical average level).… Read the rest

Manifest in the press

IR Magazine has been looking at shareholder activism in Europe and quotes Manifest:

A different style of activism?
Historically, there have been obstacles to waging a successful activist campaign in much of Europe. Many markets are opaque, the proxy voting system has been leaky with votes often lost, and some countries still block any shares to be voted for several days prior to the AGM, putting a damper on shareholder participation.… Read the rest

Corporates hit out at short-termism review

The UK’s Institute of Directors has hit out against the proposed review of executive pay and short-termism in the City. Speaking to the Daily Telegraph, Miles Templeman, Director General of the leading corporate lobby group expressed deep reservations that the review would not generate the period of stability that corporate policy needed.… Read the rest

In the Pipeline

Shareholders of JD Sports Fashion plc will note a massive 66% salary increase awarded to the executive chairman (from £423k to £700k) when considering the company’s remuneration report. Additionally, the remuneration committee is seeking shareholder approval for the chairman’s proposed cash-based long-term incentive award with a face value of £3.5m.… Read the rest

Proxy censorship – or the SLAPP suit

We’ve never heard of a SLAPP suit before, or not until Wall Street Journal reported on the KBR/Chevedden case on Monday morning:  Firms Try New Tack Against Gadflies: Corporations Look to Block Shareholder Activists’ Proposals by Challenging the Size of Their Stakes – WSJ.com.… Read the rest

CEO performance and pay – the weakest link

Remuneration Committees are struggling to maintain their independence from their CEOs and are adopting increasingly expensive, short-term reward strategies according to the latest Manifest and MM&K Total Remuneration Survey.

The Executive Director Total Remuneration Survey 2011 examines the latest crop of remuneration reports of UK companies finding little link between remuneration, performance and shareholder value. … Read the rest

Vote transparency – send in the marines

Specifically, one marine, Guy Wyser-Pratte to be exact.

As we reported back in March, Guy was determined to leave no stone unturned to find out why the votes on his proposals to shake up the governance at French media conglomerate Lagardère didn’t tally.… Read the rest

US union turns up heat on say on pay

AFSCME, the larges union for public service workers has turned the heat up under mutual funds with the publication of its fifth annual analysis of voting on compensation-related resolutions.

Tipping the Balance? Large Mutual Funds’ Influence upon Executive Compensation,”  takes a look at 26 of the largest US mutual fund families’ voting patterns.… Read the rest

Manifest in the news

Recent quotes by Manifest on topical corporate governance issues:

Protest vote against Prudential chairman >>
Financial Times, May 19 2011

Conservative MP leads charge for tougher audits >>
Financial News, May 18th 2011

Backlash grows over power of proxy >>
Financial News, May 17th 2011

Shareholders ignore proxy advisors on bank pay >>
Financial News, May 16th 2011

(Please note, some articles may be subscriber only)

Read the rest

Audit reform – a double win?

Advocates for audit and accounting reform made great strides this week. Although much of the attention will be directed at the OFT’s conclusion that the audit market isn’t working, a slightly less well covered but equally welcome development emerged from the back benches of the House of Commons.… Read the rest