Posts Tagged ‘The Conference Board’

The Recent Evolution of Shareholder Activism

Editor’s Note: Matteo Tonello is vice president at The Conference Board. This post relates to a report released jointly by The Conference Board and FactSet, authored by Dr. Tonello and Melissa Aguilar of The Conference Board. The Executive Summary is available here (the document is free but registration is required). For details regarding how to obtain a copy of the full report, contact matteo.tonello@conference-board.org.

Proxy Voting Analytics (2010-2014), a report recently released by The Conference Board in collaboration with FactSet, reviews the last five years of shareholder activism and proxy voting at Russell 3000 and S&P 500 companies.

Data analyzed in the report includes:
…continue reading: The Recent Evolution of Shareholder Activism

The Activism of Carl Icahn and Bill Ackman

Editor’s Note: Matteo Tonello is managing director of corporate leadership at The Conference Board. This post relates to an issue of The Conference Board’s Director Notes series authored by Richard Lee and Jason D. Schloetzer, both of Georgetown University. The complete publication, including footnotes, is available here. Recent work from the Program on Corporate Governance about hedge fund activism includes The Long-Term Effects of Hedge Fund Activism by Lucian Bebchuk, Alon P. Brav, and Wei Jiang.

Activist hedge funds merit the attention of corporate directors, as the value of the assets under management increases and activist funds’ targets expand well beyond small capitalization companies. This post reviews the tactics used by two prominent activist hedge fund managers to create change in 13 companies in their portfolio and highlights four perceived governance failures at target companies that attracted activist funds’ attention. This post also includes a review of characteristics of activist hedge funds, the incentives their managers have to generate positive returns, and current research investigating whether and how hedge fund activism affects target companies.

…continue reading: The Activism of Carl Icahn and Bill Ackman

CEO Succession in the S&P 500: Statistics and Case Studies

Posted by Matteo Tonello, The Conference Board, on Friday April 25, 2014 at 9:02 am
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Editor’s Note: Matteo Tonello is Managing Director at The Conference Board, Inc. This post relates to CEO Succession Practices: 2014 Edition, a Conference Board report authored by Dr. Tonello, Jason D. Schloetzer of Georgetown University, and Melissa Aguilar of The Conference Board. For details regarding how to obtain a copy of the report, contact matteo.tonello@conference-board.org.

CEO Succession Practices, which The Conference Board updates annually, documents CEO turnover events at S&P 500 companies. The 2014 edition contains a historical comparison of 2013 CEO successions with data dating back to 2000. In addition to analyzing the correlation between CEO succession and company performance, the report discusses age, tenure, and the professional qualifications of incoming and departing CEOs. It also describes succession planning practices (including the adoption rate of mandatory CEO retirement policies and the frequency of performance evaluations), based on findings from a survey of general counsel and corporate secretaries at more than 150 U.S. public companies.

…continue reading: CEO Succession in the S&P 500: Statistics and Case Studies

The 2014 Board Practices Survey

Posted by Matteo Tonello, The Conference Board, on Friday March 21, 2014 at 9:02 am
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Editor’s Note: Matteo Tonello is Managing Director at The Conference Board. This post relates to The 2014 Board Practices Survey being led by Dr. Tonello; Bruce Aust, Executive Vice President, Global Corporate Client Group at NASDAQ OMX; and Scott Cutler, Executive Vice President and Head of Global Listings at NYSE Euronext. Board members, general counsel, corporate secretaries and corporate governance officers, and investor relations officers of U.S. public companies are invited to participate in the survey; the survey can be completed online by clicking here.

The Conference Board, NASDAQ OMX and NYSE Euronext announced last week the renewal of their research collaboration to document the state of corporate governance practices among publicly listed corporations in the United States.

The centerpiece of the collaboration is The 2014 Board Practice Survey, which the three organizations are disseminating to their respective memberships. Findings will constitute the basis for a benchmarking tool searchable by market index, company size (measured by revenue and asset value) and industry sectors. In addition, they will be described in Director Compensation and Board Practices: 2014 Edition, scheduled to be released jointly in the fall.

…continue reading: The 2014 Board Practices Survey

Recommendations from Conference Board Task Force on Corporate/Investor Engagement

Posted by Charles Nathan, RLM Finsbury, and Arthur H. Kohn, Cleary Gottlieb Steen & Hamilton LLP, on Wednesday March 19, 2014 at 9:37 am
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Editor’s Note: Charles Nathan is partner and head of the Corporate Governance Practice at RLM Finsbury. Arthur H. Kohn is a partner at Cleary Gottlieb Steen & Hamilton LLP. This post relates to a report from The Conference Board Task Force on Corporate/Investor Engagement, one of three related publications released by The Conference Board Governance Center as a result of its year-long multifaceted study of corporate/investor engagement.

The 2008 financial crisis and the slow recovery that has followed has brought further evidence tending to support the view that the structure of our corporate sector needs adjustment, and that its faults affect the competitiveness of our economy. The crisis has resulted, as would be expected, in a raft of new rules and regulations, which as usual have been implemented before there emerged any consensus about the nature of the problems. There has also been a vigorous competition of ideas over causes and remedies.

…continue reading: Recommendations from Conference Board Task Force on Corporate/Investor Engagement

The Separation of Ownership from Ownership

Editor’s Note: Matteo Tonello is managing director of corporate leadership at The Conference Board. This post relates to an issue of The Conference Board’s Director Notes series authored by Arthur H. Kohn and Julie L. Yip-Williams; the complete publication, including footnotes, is available here.

The increase in institutional ownership of corporate stock has led to questions about the role of financial intermediaries in the corporate governance process. This post focuses on the issues associated with the so-called “separation of ownership from ownership,” arising from the growth of three types of institutional investors, pensions, mutual funds, and hedge funds.

To a great extent, individuals no longer buy and hold shares directly in a corporation. Instead, they invest, or become invested, in any variety of institutions, and those institutions, whether directly or through the services of one or more investment advisers, then invest in the shares of America’s corporations. This lengthening of the investment chain, or “intermediation” between individual investor and the corporation, translates into additional agency costs for the individual investor and the system, as control over investment decisions becomes increasingly distanced from those who bear the economic benefits and risks of owners as principals. The rapid growth in intermediated investments has led to concerns about the consequences of intermediation and the role of institutional investors and other financial intermediaries in the corporate governance process. These concerns are particularly relevant against a background of increasing demands for shareholder engagement and involvement in the governance of America’s corporations.

…continue reading: The Separation of Ownership from Ownership

Global Trends in Board-Shareholder Engagement

Editor’s Note: Matteo Tonello is managing director of corporate leadership at The Conference Board. This post relates to an issue of The Conference Board’s Director Notes series authored by James Kim and Jason D. Schloetzer; the complete publication, including footnotes, is available here.

There has been a rapid increase in shareholder requests for special meetings with the board. This report discusses the potential benefits and complexities of the board-shareholder engagement process, reviews global trends in engagement practices, provides insights into engagement activities at U.S. companies, and highlights developments in the use of technology to facilitate engagement. It also provides perspectives from institutional investors on the design of an effective engagement process.

The annual general meeting is the main channel of communication between a company’s board and its shareholders. Among other important meeting activities, shareholders have the opportunity to hear executives and directors discuss recent performance and outline the company’s long-term strategy.

Since 2007, there has been an increase in shareholder requests for special meetings with the board. A recent study of board-shareholder engagement activities shows that 87 percent of security issuers, 70 percent of asset managers, and 62 percent of asset owners reported at least one engagement in the previous year. Moreover, the level of engagement is increasing rapidly, with 50 percent of issuers, 64 percent of asset managers, and 53 percent of asset owners reporting that they were engaging more. Only 6 percent of issuers and almost no investors reported a decrease in engagement. Shareholders, particularly institutional investors, believe that annual meetings are too infrequent and do not provide sufficient content to address their concerns.

…continue reading: Global Trends in Board-Shareholder Engagement

Proxy Voting Analytics (2009-2013)

Editor’s Note: Matteo Tonello is managing director of corporate leadership at The Conference Board. 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.org.

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.

Data analyzed in the report includes:
…continue reading: Proxy Voting Analytics (2009-2013)

Disclosure Lessons from the 2013 Proxy Season

Editor’s Note: Matteo Tonello is managing director of corporate leadership at The Conference Board. This post relates to an issue of The Conference Board’s Director Notes series authored by James D. C. Barrall, David T. Della Rocca, Carol B. Samaan, Julie D. Crisp, and Michelle M. Khoury.

In light of increased transparency and governance expectations imposed by shareholder advisory groups and increasingly aggressive attempts by plaintiffs’ firms to enjoin shareholder votes on key compensation issues, U.S. public companies face a substantial burden to provide adequate disclosure in their annual proxy statements. This Director Notes examines the key disclosure issues and challenges facing companies during the 2013 proxy season and provides examples of company responses to these issues taken from proxy statements filed during the first half of 2013.

U.S. public companies face a substantial burden to provide adequate disclosure in their annual proxy statements. In addition to complying with a growing number of increasingly burdensome disclosure rules from Congress and the Securities and Exchange Commission (“SEC”), companies must take into account corporate governance guidelines from institutional shareholder advisory groups such as Institutional Shareholder Services (“ISS”) and Glass Lewis & Co. Moreover, a recent wave of proxy injunction lawsuits has added to this burden and created additional issues and challenges for companies. The plaintiffs’ bar has also been actively pursuing damage claims against public companies based on disclosure and corporate governance issues, including issues relating to Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). All of these developments present many traps for the unwary. As a result, companies should review their executive compensation disclosure and their say-on-pay and equity plan proposals to determine whether additional disclosures, beyond those required by statutes and rules, are appropriate to attempt to reduce the risk of a potential lawsuit or investigation by a plaintiff’s law firm.

…continue reading: Disclosure Lessons from the 2013 Proxy Season

When Do Shareholders Care About CEO Pay?

Editor’s Note: Matteo Tonello is managing director of corporate leadership at The Conference Board. This post relates to an issue of The Conference Board’s Director Notes series authored by Ryan Krause, Kimberly A. Whitler, and Matthew Semadeni.

With recent legislation mandating that publicly traded corporations submit CEO compensation for a nonbinding shareholder vote, a systematic understanding of how shareholders vote under such circumstances has never been so important. Using simulated say-on-pay votes, this post investigates how different levels of CEO pay and company performance can interact to influence how shareholders vote.

In July of 2010, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which, among other things, mandated that all publicly traded U.S. corporations solicit a non-binding advisory vote from their shareholders to approve or reject the compensation of the most highly compensated executives, commonly referred to as “say-on-pay” (SOP) votes. In the short time since the passage of Dodd-Frank, these votes have already made waves. In 2011, the shareholders of Stanley Black and Decker issued a “no” vote, and the board subsequently lowered the CEO’s pay by 63 percent, raised the minimum officer stock requirements, altered its severance agreements to be less CEO friendly, and ended the practice of staggered board terms. [1]

…continue reading: When Do Shareholders Care About CEO Pay?

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