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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By Neal Lipschutz

A DOW JONES NEWSWIRES COLUMN

At least for the day, the most powerful man in the U.S. financial industry and for equities markets is 82 years old, a man who ended his leadership of the Federal Reserve more than 20 years ago.

But Paul Volcker is back. Big time. Reportedly on the margins of the Obama administration even in his current role as an adviser, “the tall guy behind me,” in the words today of President Barack Obama, is back on stage figuratively and literally.

As the president announced two major initiatives that would radically change the world of America’s big banks, he was flanked by Treasury Secretary Timothy Geithner and adviser Larry Summers. He also had with him two key Congressional leaders, Rep. Barney Frank (D., Mass.) and Sen. Christopher Dodd (D., Conn.).

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NEW YORK — Summarizing the extremes of the Senate Banking Committee hearing today on the renomination of Ben Bernanke to lead the Federal Reserve will take two quotes.

We’ll start with Sen. Jim Bunning (R., Ky.), the only member of the upper chamber to vote against Bernanke the first time around and a time-tested antagonist of the U.S. central bank.

“In short, you are the definition of moral hazard,” he said.

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By Neal Lipschutz
A DOW JONES NEWSWIRES COLUMN

The U.S. Federal Reserve missed a low-cost opportunity to reassure those investors worried about future inflation while burnishing its own reputation.

All it would have taken was omitting or changing a word or two or three.

Instead, the U.S. central bank ended a two-day meeting of its rate-setting Federal Open Market Committee with a statement barely changed from the one issued at the conclusion of the prior get-together in late September.

The rate decision, of course, was not in doubt. The federal funds rate will stay effectively near zero for some time. And there was some further and understandably reserved positive talk today about the continued pick-up in the U.S. economy. Continue reading…

By Neal Lipschutz 
   A DOW JONES NEWSWIRES COLUMN

NEW YORK (Dow Jones)–Federal pay czar Kenneth Feinberg isn’t just halving the pay for 25 top earners at the seven fallen angels under his control. He’s apparently also forcing some changes in governance.

Feinberg, who technically is called the special master of compensation at the U.S. Treasury Department, delved into some of the issues that have been talked about for years in U.S. boardrooms and among activist investors.

He will insist on a split between chairman and chief executive jobs, a model already followed in other countries. Staggered board terms will be eliminated. And boards of directors will have to create risk committees. This according to reporting by Deborah Solomon of The Wall Street Journal. 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

NEW YORK (Dow Jones)–The recommendations on U.S. executive pay from the Conference Board, a nonprofit business research group, could just as easily have been proposed by a government agency.

That shows we seem to know what needs to be done to put a lid on over-the-top compensation at publicly traded companies.

What we can’t agree on is who we want to enforce such principles. Do we want it to be a function of government, even in the sensitive and important banking industry? Or do we want to leave it to boards of directors and company shareholders?

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By Neal Lipschutz
   A DOW JONES NEWSWIRES COLUMN

NEW YORK (Dow Jones)–Bond guru William Gross’s economic outlook for America, while logically defensible, is downright depressing.

It’s a place where growth is slow, old people break down (ironically helping GDP via spending on health care) and the government involves itself heavily in the economy.

The view seems to imply all the animal spirits and innovation will have been drained from the U.S. and other advanced economies for a generation. Did we really use all of that up in the economic and market frenzy of the past 20 years?

“It’s time to recognize that things have changed and that they will continue to change for the next – yes, the next 10 years and maybe even the next 20 years,” Gross, managing director of the big bond investment firm Pimco, writes Tuesday in his latest monthly commentary.

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