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This proxy season is shaping up as one of shareholder revolt, as more and more directors fail to receive the support of a majority of owners.
While the Corporate Library, a corporate governance research firm, is still collecting data, early indications suggest that many more directors will fail to win support from less a majority of their shareholders than in previous years.
Shareholders recently voiced fresh dissatisfaction with director R. Bruce LaBoon, who is also "of counsel" at Locke Lord Bissell & Liddell, a law firm that provides services to the company.
In its proxy statement, the company cliams that the "attorney fee arrangement with Locke Lord is negotiated on the same basis as arrangements with other outside counsel and is subject to the same terms and conditions."
While the US economy struggles to recover and the unemployment rate continues to hover around 10 percent, several companies have increased dividend payments in recent weeks for lack of opportunities to invest in their business.
In early June, Target authorized a 47 percent increase in its quarterly dividend, citing the fact that "cash generation is well above the amount needed for optimal reinvestment in its core business."
Advocates of good corporate governance believe there is a link with stock market performance.
Trouble is, there has never really been a study that convincingly concludes that companies that are good corporate citizens are better investments than those who conduct does not meet the standards of the governance set.
With so much uncertainty over the economic outlook, the upcoming annual meeting season could prove challenging for finance executives. Here are the concerns that accounting and consulting firm BDO Seidman says you should expect to address this year.
Planning for a recovery. Given many forecasts for a slow, uneven economic recovery, shareholders will want to know if the company has adopted a comprehensive plan based on real-time reporting that will provide management with the ability to react quickly to opportunities or risks.
PepsiCo is boosting its cash return to shareholders by increasing its annual dividend and its share buyback program, but it may not be enough to make up for the beverage company's slowdown in internal growth.
Pepsi said on Monday that its board approved a 7 percent increase in the annual dividend on its common stock and authorized the repurchase of up to $15 billion of shares through June 2013. It plans to repurchase $4.4 billion in 2010.
Anyone looking for signs that companies will eventually start investing the cash hoards they've been building will be disappointed by Sara Lee's latest move.
The food company decided to spend a ton of cash, including the proceeds from a divestiture, and sacrifice its credit profile in the process, just to buy back shares.
Posted by Stephen Taub in shareholders, shareholder acttivism, Securities and Exchange Commission, Sarbanes-Oxley, Merrill Lynch, executive pay, executive compensation, directors, compliance, CFO, CEOs, bonuses, Bank of America
Bank of America's agreement to pay $150 million to settle SEC charges also includes a bunch of corporate governance goodies designed to satisfy the activist shareholder set.
, of course, told you all about the settlement when it broke last week. The deal stems from charges that the financial giant failed to properly disclose employee bonuses and financial losses at Merrill Lynch before shareholders approved the merger of the companies in December 2008. Bank of America also said it entered into an agreement to settle charges with the Office of the Attorney General for the State of North Carolina related to the Merrill Lynch merger.
Of course, the proposed settlement will be submitted for approval to the Honorable Jed S. Rakoff of the United States District Court for the Southern District of New York. This is the same judge who last year rejected the original $33 million settlement.
PNC Financial on Tuesday announced that it reached an agreement with its banking regulators and the Treasury Department permitting it to redeem the $7.6 billion of preferred shares it sold under the Troubled Asset Relief Program.
As part of the plan, as most banks repaying TARP funds have done, PNC announced it will sell common stock. In its case, PNC will offer $3 billion worth of shares.
But unlike other banks, PNC concurrently announced the sale of a division, its investment-servicing unit, to BNY Mellon for $2.3 billion, the proceeds of which will go toward the TARP payment.
The Securities and Exchange Commission just voted to require that public companies disclose to investors any risks to their businesses from climate change. And it's ultimately a good thing for corporations--really.
Up until now, the SEC has mandated that companies disclose risks posed by environmental problems without specifying climate-change-related issues. And, no surprise, few companies have made climate-change risk disclosures. A study by the organization Ceres of more than 6,000 SEC filings for S&P 500 companies from 1995 to 2008 showed that 5 percent of annual reports included information about managing climate change risks. And 80 percent disclosed nothing at all.
The move seems to have come in response to a rash of petitions from environmental and shareholder groups, certainly not from corporate pressure. But, while companies aren't wild about the rule, it's in their best interest.
While the obvious enterprises impacted by climate change are insurance companies and utilities (think of insurers that cover properties in coastal regions. Or don't cover. Many have abandoned that market), many, if not most companies face their own risks. That could be anything from an important plant in a hurricane-prone area or crops located in regions bedeviled by frequent drought to costs that might increase with cap and trade legislation. And, given the activism and ire of environmentally conscious investor groups, there's an increasing probability of lawsuits if a company experiences a financial hit and never adequately discloses those risks.
So, the heightened chance of both climate-change related problems and shareholder lawsuits means one thing: Companies need to protect themselves through better disclosure. Period.
Of course, disclosure has its own perils. Once you've revealed all those potential risks, you're obligated to do something about them. Boards would be wise to step up their oversight of any liability-prone climate-change issues. And they should do so sooner, not later.
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