In light of the SEC’s ban on broker voting, there is considerable concern about the conflicted business model of proxy advisory firms such as RiskMetrics, which provides proxy voting recommendations to institutional investors along with a proprietary governance rating while an arm of RiskMetrics sells advice on how companies can improve governance scores.
Directors shouldn’t spend too much time railing against these firms. Rather, it’s time for boards of directors to bypass these groups and review their own governance policies including charters, bylaws and compensation rules so that they are well versed on the company’s corporate governance policies. At the same time, boards should develop an understanding of its shareholders and their concerns. Continue reading
Ralph Ward of Boardroom Insider asked how boards should handle the ban on broker voting.
Naturally, boards will want to analyze the broker element of the proxy voting for their company. Yet any outreach to shareholders by the board should begin with a board-shareholder communication plan. Continue reading
The SEC’s July 1 decision to eliminate broker discretionary voting in directors’ elections could have significant consequences when it takes effect in the 2010 proxy season. In a press release last week, the Conference Board suggested board members analyze the company’s current vulnerabilities with regard to activist investors and to “regularly communicate in compliance with Regulation FD and insider trading rules with the 10 largest institutional shareholders to inform them of the business strategy, including new efforts for improving shareholder value.” Continue reading
In the wake of the economic collapse and the devastating impact of risky behavior by management in companies like Citigroup and Countrywide, corporate boards are paying more attention to their responsibility for oversight. While most of the problems developed in the financial sector, boards in other sectors are naturally concerned especially as they watch mounting legislation in Washington. Continue reading