Corporate governance - Vigil

Limited operational experience is not necessarily a barrier to the top job. Here’s what CFOs and others must do to jump to the next level.

Over the last three decades, U.S. and global securities markets have undergone tremendous change, driven by globalization, advances in information technology, and regulatory choices at the federal and international levels.

Wells Fargo & Co. Chief Executive Officer Tim Sloan and Chairman Stephen Sanger bought more than $5 million of the company’s stock a week after the board published a report into its bogus account scandal to help rebuild investor confidence.

Corporate Board Leaders' Blog

Post-Financial Crisis regulatory reform requires banks to fund themselves more fully through common equity. By maintaining deeper equity buffers, banks are better positioned to absorb losses and to prevent the spread of contagion through the financial sector. [1] Under the Dodd-Frank Act’s Orderly Liquidation Authority, shareholders of a failing bank must pay for its risk-taking by seeing the value of their equity be extinguished to meet the bank’s obligations to short-term and secured creditors. [2] In this way, equity reserves can help stem the spread of losses.

#OccupyWallStreet, #WomenOnBoards, etc. Now, through #BuyThisPlatform, Twitter is being called on to explore its own form of corporate governance – how the company itself can be more democratic and inclusive. The results could have implications for the future of capitalism.

Most successful companies share several characteristics. In particular, they focus on building and maintaining relevance in a digitized and networked marketplace. This requires them to design and re-design their products or services to constantly improve consumer satisfaction. In order to achieve this goal, the most competitive companies embrace what can be thought of as unmediated and technology-driven corporate governance.

Elliott Management Corp. has called a special meeting of Akzo Nobel NV shareholders to try to oust the chairman of the company’s supervisory board, ramping up pressure on the Dutch paint giant to engage in sale talks.

Activist investor Elliott Management Corp. has informed the Dutch paint company that it plans to call a shareholder meeting to try to oust the chairman of Akzo Nobel’s supervisory board.

A corporation’s governance structure does not exist in a vacuum: It can impose externalities on other firms. The existing literature has argued that those externalities can arise because companies interact with each other through various types of relationships.

Several big businesses, including International Business Machines and Charles Schwab, are resisting investors’ demands for greater boardroom clout ahead of this year’s annual shareholder meetings.

In fact, 59% of directors report that their boards find it challenging to oversee cyber risk, and only 19% report that their boards possess a high level of knowledge about cybersecurity, the former Homeland Security secretary said, citing a study released in March by the National Association of Corporate Directors.

Nascent discussions about repealing discrete sections of the Sarbanes Oxley Act should be monitored closely by proponents of effective corporate governance. As the federal regulatory pendulum swings hard to an extreme, even the most limited proposals to amend the Act could conceivably invite unintended consequences. This is particularly the case if caught in the tailwind of efforts to amend or repeal Dodd-Frank and other financial regulations. If unchecked, such actions could severely undermine the culture of corporate responsibility that has been a crucial legacy of Sarbanes.

Debate about the ideal tenure length for directors has been reignited with the recent international proposals to limit the terms of independent directors. The underlying motivation for such proposals is to ensure that “the purpose behind the independent director rule is not lost.”[1]  While some firms already have term limits, such limits tend to be rather long.[2] Because the average length of director tenure has been increasing, practitioners and regulators have begun questioning whether there is such a thing as optimal board tenure. Firms and regulators understand and acknowledge the benefits of long tenure, such as knowledge continuity and boardroom collegiality. However, some drawbacks of long director tenure, including a loss of independence, the prevalence of routines, and the lack of agility and adaptability, have recently been raised by governance experts.[3]

Activist investors are usually frank. This time, activist Elliott Management is fighting over BHP Billiton's franking.

Gap between men and women’s pay has barely narrowed in three decades, advocates say.

We may stand at the threshold (or is it precipice?) of repeal of important parts of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“the Dodd-Frank Act”) in the House of Representatives.  (Prospects for repeal in the Senate seem much dimmer.