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2. Shareholder nominations are limited to a quarter of the total number of board of directors seats. |
3. The rule does not apply to small publicly held companies for the first three years. |
4. "Borrowing" shares to get to the 3% ownership level is not permitted. |
The analysis notes that this may not have much of an effect of larger capitalization companies, because the amount of investment necessary to acquire the 3% ownership interest necessary to make a proxy bid in a large company is in the tens of billions of dollars which is beyond the financial resources of most would be ... |
The change was passed on a party line vote in the SEC, with majority Democrats favoring the reform, and minority Republicans voting against it. |
My source is the hardcopy of today's Wall Street Journal. |
What Do Corporate Directors Do? |
Before and after the reforms the modern board of a publicly held corporation has just a few roles (beyond perpetuating itself: |
1. Hire, supervise, fire and set the compensation for senior management, and in particular the CEO. Some Board also see themselves as supervisors of a handful of other "C" level members of the executive team, while others focus on supervising the CEO and leave management of other senior executives to the CEO. |
2. Set policy on dividend payments, redemption of shares, and issuance of new shares on the advice of management and other outside consultants. One these policies are set initially, tradition plays a powerful, although not binding, part in future decisions on these matters. |
3. Make a minimal effort to retain an honest and competent public accountant (almost always from one of the four dominant firms in the market) to audit the books of the company, determine that the public accountant is conducting its business in a workmanlike way (through meetings in which the public accountant almost i... |
4. Plan for and negotiate transactions that could result in a change of control of the company, a merger, a split up of the company into multiple divisions, the sale or purchase of one or more major divisions of the business, or a profound change in the financial structure of the company or the scope of its business. |
5. Vet proposals to take the company bankrupt or otherwise engage in major debt restructuring arrangements in lieu of a bankruptcy. |
6. Put on a good public face for the Company and provide senior management with constructive suggestions from one's own experience when appropriate. |
7. Document and rubber stamp decisions made by others in the organization that it is their job to make. |
Typically, today, about half of the members of the board are senior managers of the company, and the other half are academics and senior people at other companies with financial or business interests that are strategically important to the company. The can number from half a dozen to a couple dozen. The usually meet mo... |
Boards have almost no staff, with a corporate secretary, the chairman of the board, and inside board members usually serving as their liasons with management. Board members start meetings with immense binders packed with information that tend to be discussed in long boring lectures and reviewed only on a cursory basis.... |
Politics on corporate boards, to the extent that they happen in public meetings, tend to be very subtle. A board member may ask a long term questions which management is expected to scrupulously investigate and report back upon in a timely fashion. Or, a board member in the discussion of a minor issue may note tangenti... |
But, ultimately, corporate boards as they are now, are the corporate equivalent of a United States Vice President, or State Lieutenant Government, they are kept in the loop and expected to appoint a successor if necessary, and are given some very light and inconsequential decisions to consider and act upon, but they ar... |
The most important dispute in corporate law today is whether this should change, and how, and this SEC proposal goes to the heart of that question, striking a compromise, but a compromise that appears generally to favor the faction that has long been pushing for greater shareholder rights. |
Why Reform Proxy Rules? |
The hope of reformers is that this reform will approve the accountability of management to ownership. The hope is that a shareholder nominated director of a publicly held company would be dispositionally inclined towards, beholden to, and loyal to the shareholder group that nominated the director, rather than to the CE... |
To be clear, this is no recipe for mass social justice or micromanagement of publicly held companies by their boards of directors. One would expect to see as a result of the reform in the way that some of these key functions are carried out: |
1. Senior executive pay that is less generous, particularly in cases where the company isn't performing well, since they must bargain with true shareholder representatives at arms length. |
2. Directors attempting to develop incentives that cause senior management to adequately consider downside risks that could harm shareholders to a much greater extent than they do executives with stock options. |
3. More dismissals of poorly performing senior managers. |
4. Negotiations in merger discussions and hostile takeover defense strategies that shift more compensation to shareholders and less to management buyouts. |
5. More directors willing to act as whistleblowers when corporate wrongdoing is discovered or contemplated. |
6. More conflict on boards as pro-management and pro-shareholder factions develop over selected issues like executive compensation and dismissal of executives. |
At best, this proposal could revolutionize the way that publicly held businesses in the United States operate by more swiftly replacing mediocre executives, ending self-dealing in executive compensation, giving public corporations a better balance in acceptance of risk between potential upside gains and downside losses... |
At worst, it could fill boardrooms of publicly held companies across the nation with nasty arguments while not doing much to change anything of substance. |
Time will tell how it plays out in practice. |
No comments: |
Mar. 16, 2012 |
by Marie Howe |
I need to buy for the trip. |
Even now I can hardly sit here |
already screeching and banging. |
The mystics say you are as close as my own breath. |
Why do I flee from you? |
My days and nights pour through me like complaints |
and become a story I forgot to tell. |
Help me. Even as I write these words I am planning |
"Prayer" by Marie Howe, from The Kingdom of Ordinary Time. © W. W. Norton & Company, 2008. Reprinted with permission. (buy now) |
Nathaniel Hawthorne's The Scarlet Letter was published on this date in 1850 (books by this author). He didn't expect the book to sell well, although he did feel that "some parts of the book are powerfully written." As it happened, the book was an instant best-seller, selling 2,500 copies in 10 days. The Scarlet Letter ... |
Robert Goddard launched the first liquid-fueled rocket on this date in 1926. Goddard had been interested in outer space since he read H.G. Wells' The War of the Worlds as a boy of 16 in Worcester, Massachusetts. Though he'd always been interested in science, he started thinking seriously about rockets the following yea... |
Eight years later, while studying at the Worcester Polytechnic Institute, Goddard began experimenting with a rocket that was powered by gunpowder. He had a theory that a rocket engine could produce thrust even in the vacuum of space, without any air to thrust against. The government wasn't really interested in the idea... |
The New York Times heard about his paper and ridiculed him. He went from being a relative nobody to a laughingstock literally overnight. But he persisted, and on this date in 1926, he completed the first successful launch of his liquid-fueled rocket in Auburn, Massachusetts. Similar to a blowtorch, his rocket was equip... |
Today is the 60th birthday of Alice Hoffman (books by this author), born in New York City (1952). Her parents divorced when she was quite young, so she was raised on Long Island by her single mother. She writes for young adults as well as older ones, and often delves into magical realism. She's often said that her favo... |
Hoffman is a breast cancer survivor, and she donated the advance for her 1999 story collection Local Girls to help found the Hoffman Breast Center at Mt. Auburn Hospital in Cambridge, Massachusetts. |
Today is the birthday of Sid Fleischman (books by this author), born Avron Zalmon Fleischman in Brooklyn, New York (1920). Fleischman grew up in San Diego, and as a teenager toured the country with vaudeville acts as a magician. After college he became a journalist, then he started writing suspense novels and screenpla... |
One day his daughter Jane came home from school with the autograph of a children's author. Fleischman's wife, Betty, pointed out to the children that their father was also a writer. Jane said, "Yes, but no one reads his books." So he started in at once, and his first of many children's books, Mr. Mysterious & Company, ... |
He said: "The books we enjoy as children stay with us forever — they have a special impact. Paragraph after paragraph and page after page, the author must deliver his or her best work." |
—Joy Williams |
—Anne Tyler |
—Stephen Greenblatt |
—F. Scott Fitzgerald |
—John Edgar Wideman |
“In certain ways writing is a form of prayer.” |
—Denise Levertov |
“Writing is a socially acceptable form of schizophrenia.” |
—E.L. Doctorow |
—E.L. Doctorow |
“Let's face it, writing is hell.” |
—William Styron |
—Thomas Mann |
—Paul Rudnick |
—Padget Powell |
—Shelby Foote |
—William Carlos Williams |
—Iris Murdoch |
—Pico Iyer |
—Pico Iyer |
“Writing is my dharma.” |
—Raja Rao |
—Anthony Powell |
—Michael Cunningham |
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“That gay dog gone,” he said in a reflective voice. “All those old ghosts come to fetch him at proper time. No good run away from ghosts; they travel too quick; one jump, and pop up where you no expect. Well, more place for Jeekie now,” and he spread himself out comfortably in the empty seat, adding, “like hello-swe... |
Thus died the Mungana, and such was the poor wretch’s requiem. With a shiver Alan reflected that had it not been for him and his insane jealousy, he too might have been expected to go into that same scent-bath and have his face painted like a chorus girl. Only would he escape the spell that had destroyed his predeces... |
All that night they rowed on, taking turns to rest, except Alan and Jeekie, who slept a good deal and as a consequence awoke at dawn much refreshed. When the sun rose they found themselves across the lagoon, over thirty miles from the borders of Asiki-land, almost at the spot where the river up which they had travelle... |
So they landed, ate from their store of food and began a terrible and toilsome journey. On either side of the river lay dessicated swamp covered with dead reeds ten or twelve feet high. Doubtless beyond the swamp there was high land, but in order to reach this, if it existed, they would be obliged to force a path thr... |
Still they went on steadily, seeing no man, and when their food was exhausted, living on the fish which they caught in plenty in the shallows, and on young flapper ducks that haunted the reeds. So at length they came to the main river into which this tributary flowed, and camped there thankfully, believing that if any... |
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6 Insane Uses of Animals in Wartime (That Actually Worked) |
Animals have been used in warfare for centuries. Sometimes it makes perfect sense -- horses have pulled chariots, and mules have carried equipment. Other times, it's more like Mickey Rourke unleashing a tiger on Jean-Claude Van Damme, as witnessed in the war documentary Double Team. |
And sometimes, it's crazier than that. That's how we wound up with ... |
Flaming Camels |
The Mongolian chieftain Timur invaded India in 1398, because when you're Mongolian that's just kind of what you do. He marched on Delhi and was met by the army of Sultan Mahmud Khan, who had 120 war elephants at his command, covered in armor and with giant scimitars attached to their tusks. |
"That's OK, guys. I don't want to play anymore." |
But that's not the insane use of animals we want to talk about here. |
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