Talk Back

By Neal Lipschutz

A DOW JONES NEWSWIRES COLUMN

The debate about shareholder rights and corporate democracy in the U.S. often omits a key fact: individual investors typically don’t get involved.

When that’s taken into account, the dynamics of issues such as whether to grant proxy access for the director nominees of certain large shareholders take on a different hue.

Rather than a scene where all-powerful corporations and their boards are set against powerless individual investors, who desire a bigger voice, you have in reality a variety of powerful players: companies and their executives, boards, big pension funds, mutual funds and activist investors among them.

The lack of retail participation in corporate governance and a proposal to fix it were the subjects of a recent posting on the Harvard Law School Forum on Corporate Governance and Financial Regulation.

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These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

Goldman Sachs, J.P. Morgan and other big Wall Street banks are awarding multi-million dollar bonuses to the same financiers who pushed the nation to the brink of financial ruin.

President Barack Obama voices outrage but fails to stem the abuse.

Wall Street leaders argue those bonuses were earned, much like jewel thieves refer to a big heist snatched from an impenetrable safe.

Wall Street has kept its mischief legal by salting the pockets of politicians running for Congress and president, and by making certain that key policy makers at the Treasury Department and the Federal Reserve are faithful Goldman Sachs alumni. Continue reading…

By Neal Lipschutz
A DOW JONES NEWSWIRES COLUMN

The first paragraph of The Wall Street Journal article uses the verb “pushed” to describe the decision by outgoing Bank of America Corp. (BAC) Chief Executive Kenneth D. Lewis to go without compensation for 2009.

The pusher, of course, was Kenneth Feinberg, the so-called pay czar put in place by the Obama administration to oversee pay practices at the companies receiving major federal assistance.

Imagine for a moment that this is not about Ken Lewis (a Bank of America spokesman, it should be noted, told the Journal Lewis  voluntarily agreed to go without 2009 pay), but instead about a theoretical CEO at a theoretical company.

The company is performing badly. The shareholders over a sustained amount of time have taken a big hit on their investments. There is significant if not uniform disenchantment with the CEO’s performance based on a number of objective and even subjective variables. Continue reading…

By Neal Lipschutz
   A DOW JONES NEWSWIRES COLUMN 

The fine imposed on Bank of America Corp. for allegedly misleading investors about big bonuses it agreed could be paid to Merrill Lynch & Co. executives just before the struggling Merrill was subsumed into BofA illustrates the Securities and Exchange Commission’s punishment conundrum.

There’s no doubt the BofA action, or lack of disclosure, is a serious matter. Yes, it was a frantic time in the annals of American capitalism. The system was rocked. Still, basic tenets of shareholder rights, such as disclosure of material information, must always be respected.

Imagine the position of a theoretical, long-time shareholder of Bank of America. He was an owner when the merger was coming together. He is  frustrated and angry by the SEC’s allegations against Bank of America.

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By Neal Lipschutz
   A DOW JONES NEWSWIRES COLUMN 

The resignation of Eric Schmidt, the chief executive officer of Google Inc. (GOOG), from the board of directors of Apple Inc. (AAPL) is just a glaring example of a poor industry practice. Currently serving CEOs should not be board members of other public companies.

In the Schmidt/Apple affair it took head-on competition in some areas between the two companies before the announced mutual decision that Schmidt should take his leave. Dow Jones Newswires also noted there has been a Federal Trade Commission look at the boards of Apple and Google, as they not only shared Schmidt as a member on both but also Genentech Inc. (DNA) Chairman Arthur Levinson.

Apple CEO Steve Jobs thanked Schmidt for being “an excellent board member,” but added, “as Google enters more of Apple’s core businesses, with Android and now Chrome OS, Eric’s effectiveness as an Apple board member will be significantly diminished, since he will have to recuse himself from even larger portions of our meetings due to potential conflicts of interest.”

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