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January 28, 2011 11:57 AM Age: 10 yrs
STAY TUNED – Shareholders Get Ready To Speak Out – Say-on-Pay and Other Issues are in Focus for 2011 VotingCategory: Hank Boerner Articles
Source: Hank Boerner, Featured Commentator – Governance & Accountability Institute
Jauary 27, 2011 - Good news: We seem to be moving further away from the depths of the recent Great Recession, which apparently ended some months ago (at least for Wall Street interest and much of Corporate America, if not for Main Street and large segments of the American Consumer). The National Bureau of Economic Research (NBER), which officially calls the play for start and stop of recessionary periods, says the severe downturn was brief, and the nation exited the recession in June 2009 (announced by NBER in September 2010).
Of course, it may not seem like the good times are quite rolling again for those individuals and families involved in the 4 million homes in default or in foreclosure. Or the 7 million+ (estimates range up to 9 million) of us who lost jobs in the Great Recession. Or the 3 or 4 million or more (estimated) so long out of work that they have given up looking. Or the retirees now cautiously watching their state pension fund(s) to see what whacking will take place for their monthly payments or healthcare benefits. Or the healthcare industry workers who anxiously await the latest news on cuts for third party payments for services rendered.
But, happily for many on Wall Street, the big bucks are returning and over the coming days we will learn the details of the generous bonuses paid out to those who work with OPM – Other People’s Money – in trading and investment banking activities. That includes money made with your OPM – government TARP rescue money, loaned by Uncle Sam at zero interest basis and with no rules attached – and which contributed to recent bank profits. (Along with tweaking of accounting rules that allowed moving of reserves to “earnings” to enable bonuses at some institutions.)
Also – we will be learning more of the details about executive compensation at large-cap American companies as the proxy voting and annual reporting and annual meeting season moves into high gear. The growing army of shareowner advocates – now working very effectively in domestic and global coalitions – have been working on the specifics of their proxy voting campaigns since last summer and early fall. New rules from the Securities & Exchange Commission – proposed in October 2010 and approved by the SEC this week – will govern the “Say on Pay” voting in 2011 shareholder voting.
STAY TUNED to…Say-on-Pay activities at many US public corporation annual “connections” with the owners (as in, “shareowners,” some 100+ million of us). Every year the boards and executives of publicly-traded companies communicate with owners on a variety of issues. Reporting the 4Q / year-end results (most companies are on calendar year basis for their fiscal years). This means come March we will be seeing the results – in red and black ink or color digits – as companies report and file results with SEC. The email in box and postal mail boxes will fill with the corporate 10-ks and Annual Reports and required proxy voting documents.
Along with the resolutions ginned up by management and board for shareowner approval (or not) will be resolutions proposed by shareowners – those that made it through the attempted denials by management to include, as approved by the SEC for inclusion. (Note on your ballot the recommendations of management – they advise you to vote NO on most of these pesky attempts to tell management and board how to govern/run the company.)
STAY TUNED to…new SEC rules in action in 2011 voting. The Commission in January approved rules for this proxy season (part of the implementation actions of the Dodd-Frank legislation, Section 951). Shareowners will be able to vote on “Say-on-Pay” plans for executive compensation – a non-binding vote, for sure, but woe to the company officials ignoring the wishes of the owners. Voters will vote on whether such votes will be on annual basis or as long as every two or three years. “Golden Parachutes” for executives when they sell or merge their company and trigger big-bucks payouts for themselves – OK or not? Voters will be able to decide with their votes in 2011.
STAY TUNED to…shareholder expectations, requests, demands for 27 corporate managements and boards in this year’s elections. The AFSCME union (covering public employees), part of the AFL-CIO alliance, signaled this year’s issues: more transparency, regarding corporate lobbying and especially the financing for political parties and individual campaigns. At least Citi and Lockheed are in focus in 2011. Risk assessment by the board (the SEC reminded boards of this responsibility in 2009). Director accountability and independence of board actions and oversight – in focus at Dell, including demands for separation of CEO and Chair.
Members of The Council of Institutional Investors (CII), a very powerful coalition of pension funds and other asset owners, are looking at the bonuses and pay practices at the top 6 banks in the USA – where, it’s widely believed, the wrong kind of financial incentives led to reckless behavior and the subsequent financial industry meltdown that helped to bring on the Great Recession. (So thinks the majority of members of the Financial Crisis Inquiry Commission, that the meltdown and financial mess was avoidable.) More on this in a later commentary.
From January 26th -- It looks like more than a few Spring 2011 corporate proxy voting campaigns will be spirited and contentious. The headlines and details will provide us with a look inside large companies and see how the sausages are being made – and how the sausage-makers are being rewarded. Do stay tuned in!
Hank Boerner is a featured commentator of Governance & Accountability Institute, publishers of Accountability Central.
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