Investors for Director Accountability

New Rule On Proxies Puts Heat On Firms

admin — Thu, 19 Aug 2010 22:35:03 +0000

Certain big businesses that angered investors this year may find themselves under more pressure next year. The reason: Stockholders are gaining greater clout to elect corporate directors. On Wednesday, the Securities and Exchange Commission is expected to finalize a “proxy access” rule allowing large investors to nominate their own board candidates using companies’ ballots.

Gimme Back Your Paycheck

admin — Tue, 20 Jul 2010 00:56:05 +0000

Should executives get to keep lavish pay packages when the profits that generated their compensation go up in smoke? With losses mounting at the nation’s largest financial institutions, years of earnings have been erased, investors have lost billions, thousands of employees have been let go, and taxpayers have been tapped to rescue the financial system. But executives who helped set the problems in motion, or ignored them as they mounted, are still doing fine. Humbled, perhaps, but well paid for their anguish.

Executives at seven major financial institutions that have collapsed, were sold at distressed prices or are in deep to the taxpayer received $464 million in performance pay since 2005, according to an analysis performed for The New York Times. Almost half of that consisted of cash compensation.

Yet these firms have reported losses of $107 billion since 2007, a result of their own missteps and the ensuing economic downturn. And $740 billion in stock market value has been lost since these companies’ shares peaked in 2007, just before the housing bubble burst.

For Investors, Shaking Up Is Hard to Do

admin — Mon, 19 Jul 2010 23:04:56 +0000

The Securities and Exchange Commission is trying to fix “proxy plumbing” to make it easier for shareholders to effect change inside companies. But confronting insiders, who are richer and better-informed than you, will probably remain a lonely, lopsided battle.

Just ask Matthew Crouse of Salt Lake City. Starting in 2002, he sank roughly $190,000 into Cadus Corp., a classic “value” stock. The tiny company was selling for less than the amount of its cash minus debt.

Pension Fiasco May Foment $1 Trillion Bailout

admin — Mon, 19 Jul 2010 22:43:00 +0000

The Chicago Transit Authority retirement plan had a $1.5 billion hole in its stash of assets in 2007. At the height of a four-year bull market, it didn’t have enough cash on hand to pay its retirees through 2013, meaning it was underfunded to the tune of 62 percent.

The CTA, which manages the second-largest public transit system in the U.S., had to hope for a huge contribution from the Illinois state legislature. That wasn’t going to happen.

Then the authority found an answer.

“We’ve identified the problem and a solution,” said CTA Chairman Carole Brown on April 16, 2007. The agency decided to raise money from a bond sale.

CEO Compensation an Issue in Maryland

admin — Mon, 19 Jul 2010 22:16:15 +0000

Jos. A. Bank Clothiers navigated a tough consumer market to gain in profit and stock price in the past fiscal year. The Hampstead retailer’s chief executive, R. Neal Black, also did well, taking home $2.6 million in pay, more than double his compensation in 2008.

On the other end of the executive pay spectrum, A.L. “Tom” Giannopoulos, head of Columbia-based MICROS Systems Inc., saw his total compensation drop $4.1 million. Giannopoulos’ $2.8 million pay package, while not a small sum, reflected the declining profit and stock market value at the information systems company during the past fiscal year.

Dodd-Frank Bill reshapes businesses

admin — Mon, 19 Jul 2010 22:04:27 +0000

The passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Bill”) represents the most ambitious and thorough regulatory reform of the laws governing the financial industry since the Great Depression. The Bill touches every domestic financial entity and affects most foreign financial entities. While most of the Bill’s provisions are aimed at large, complex financial institutions, smaller institutions are affected by many of the regulatory changes as well. As many of the Bill’s provisions give a basic structure of reform and leave the regulators to fill in the details over the next 6 to 18 months, the process of implementing the Bill’s provisions promises to be a dynamic one. Consequently, the final shape and practical impact of the Bill are still years from being understood.

Compensation committees: cover for high CEO pay?

admin — Mon, 19 Jul 2010 21:14:44 +0000

When you want to understand whether the CEO runs the board or the board oversees the CEO, a good place to start is to look at the work of the Compensation committee. Compensation committees so impact how companies are run that NYSE and NASDAQ listing standards require that Compensation Committees be comprised only of independent board members.

A new study released by the IRRC Institute provides a report card on some of the activities of compensation committees with insights into how well the committees are doing their job and who’s really running the show.