Corporate governance - Vigil

University of California regents this week will consider new restrictions on when top administrators can accept outside work after months of controversy about lucrative board positions UC Davis Chancellor Linda P.B. Katehi had with a textbook publisher and for-profit university.

When faced with an impending negative earnings surprise, CEOs have to decide whether or not to voluntarily issue earnings warnings. A warning (defined as negative earnings guidance) might be issued when a firm expects that its actual earnings will fall short of existing market expectations. Such a warning is typically issued near or after the end of a fiscal quarter, but before quarterly or annual earnings are announced. The extant literature on U.S. firms documents a number of reactions to the issuance of an earnings warning, including: an adjustment by the market of its expectations, typically through a reduction in share prices; a decrease in litigation costs; less information asymmetry among investors; increased analyst following; and increased chances of meeting or beating analysts’ forecasts. Given that these firms tend to be performing poorly (or at least below market expectations), the issuance of warnings appears to be an integral part of the timely disclosure of bad news.

In approving H.R. 5311, the so-called “Corporate Governance Reform and Transparency Act of 2016,” last month, members of the House Financial Services Committee delivered a blow to institutional investors, and, by extension, those on Main Street who invest their retirement hopes, college savings, pension dollars, and other hard-earned money in public companies. In a largely party line vote, committee members took the first step toward stifling the work of proxy advisory firms like mine, Institutional Shareholder Services (ISS), that help institutional investors monitor and vote at the companies they invest in, and, by doing so, hold CEOs and corporate directors accountable. If the lobbyists and powerful corporations behind H.R. 5311 get their way, we should all be deeply concerned that the significant progress made in corporate accountability over the past 30 years will be rolled back.

On June 29, 2016, the Federal Trade Commission (“FTC”) announced an increase in the maximum civil penalties it may impose for violations of the Hart-Scott-Rodino Act (“HSR Act”) and various other rules and orders governed by the FTC. The maximum civil penalty for HSR violations has increased from a daily fine of $16,000 per day, to a much larger fine of $40,000 per day. While these higher maximum civil fines will apply to any penalties assessed after August 1, 2016, they will also apply to violations that predate the effective date.

Asia accounts for more than a third of the world’s $1 trillion business-travel sector, and the region’s growth is accelerating. Do you understand its customers?

In our paper, Scoundrels in the C-Suite: How Should the Board Respond When a CEO’s Bad Behavior Makes the News?, which was recently made publicly available on SSRN, we examine the actions that corporations take in response to CEO misconduct that is questionable but not strictly illegal. The full text of this paper follows.

Zhang Bo has added his name to the list of board members leaving troubled China solar firm Hanergy Thin Film. In May, the company’s billionaire ex-chairman Li Hejun left the board for “the reason of strengthening corporate governance.”   CEO Frank Dai and deputy chairman Feng Dianbo also stepped down at that [...]

Activist-only funds start fewer campaigns, continue board focus in first half of 2016.

Through the collective efforts of large institutional investors, including public and private pension funds, and other shareholder proponents, shareholders are increasingly gaining the power to nominate a portion of the board without undertaking the expense of a proxy solicitation. By obtaining proxy access (the ability to include shareholder nominees in the company’s own proxy materials), shareholders will have yet another tool to influence board decisions. Approximately 40% of companies in the S&P 500 have now adopted proxy access. We expect that proxy access will become a majority practice among S&P 500 companies within the next year.

Seemingly “excessive” top management compensation has been the subject of a fiery public debate for a long time. Especially disturbing to many is top management compensation that is only loosely related to the performance of the firms they run. Indeed, the topic featured prominently in the presidential campaigns of all major candidates.

Active—not just activist—institutional investors are reshaping the corporate governance landscape and challenging how boards think about fundamental issues such as strategy, risk, capital allocation and board composition. Large asset managers are increasingly outspoken on governance expectations and urging companies to think long term—and also making clear that they view corporate governance not as a compliance exercise but as an ownership responsibility tied to investment value and risk mitigation.

ValueAct Capital Management agreed to pay a record $11 million fine to settle a Justice Department lawsuit over the activist hedge fund’s disclosure of two investments.

I want to thank the International Corporate Governance Network (“ICGN”) for inviting me to speak today [June 28, 2016] before this impressive international gathering, which represents some 47 countries with approximately $26 trillion under management. I am grateful to you and your many members for, among other things, commenting on our rule making projects and serving on the Public Company Accounting Oversight Board’s (“PCAOB”) two advisory groups. I also want to thank CalPERS and CalSTRS for sponsoring this conference.

A financial institution established in the UK can provide banking, fund management, payment and investment services throughout the rest of the EU using “passports” available under various EU directives. Since the outcome of the Brexit referendum was announced, the continuing availability of these financial services passports has emerged as the primary concern of larger financial institutions.

The promotion and advancement of effective governance and corporate secretarial practice in organisations in the private, public, not-for-profit and other sectors through the continued development and application of governance and corporate secretaryship best practices.

The Canadian Society of Corporate Secretaries (CSCS) is the voice of Corporate Secretaries and governance professionals in Canada. Its members deal with disclosure and matters affecting corporate governance, including the structure and meetings of the board of directors and its committees, the proxy process and annual meetings. As such CSCS strives to provide valuable and timely information on recent changes and developments which affect our members – in all sectors.