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.

Continue reading…

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?

Continue reading…

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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 POINT OF VIEW: Comments In: ‘Proxy Access’ A Step Too Far
 
By Neal Lipschutz 
A DOW JONES NEWSWIRES COLUMN
 
Monday was the final day for public comment about the Securities and Exchange
Commission’s governance-changing proposal to give large shareholders the ability
to nominate directors whose candidacy would be listed on the same proxy cards as
serving board candidates.

In the multi-step effort to shore up board of director independence and
shareholder rights in the aftermath of a decade’s worth of accounting scandals
followed by the credit crunch, this is a step too far. It invites the creation
of special interest directors beholden to a subset of powerful pension funds and
other large institutions.

Among the flurry of comments on the final day, came this from the nation’s
largest public pension fund, the California Public Employees’ Retirement System
(CalPERS). CalPERS “offers its full support for the proposed rule.” Continue reading…

NEW YORK — The huge if necessary U.S. government intervention into the economy is raising some fundamental questions about the nature of our capitalism.

Among them: Does patriotism trump the profit motive? Does morality? Whose definition of patriotism and morality do you use? Are globalization and national interest compatible?

Things were simpler when business and finance were robust. It was easier then to argue that market rules — straightforward if sometimes brutal — paved a path to the greater economic good. Yes, there were casualties. But globalization trumped the national interest, and self-interest topped empathy. It isn’t that simple anymore.

Examples of these conflicts abound. Let’s start with the latest.

Continue reading…

A Dow Jones Newswires Column by Neal Lipschutz stated:

  NEW YORK (Dow Jones)–This week’s big business headline is improbably turning out to be “Big U.S. Banks Start Year Profitably; All Is Well.”

  Well, maybe not all is well, but compared with the talk of bank nationalization and zombie banks that dominated conversations just a few weeks ago, it’s a banker’s grin from ear to ear.

  Citigroup Inc. (C) Chief Executive Vikram Pandit got the ball rolling early in the week by saying the beleaguered bank was profitable in January and February. JPMorgan Chase & Co. (JPM) CEO Jamie Dimon kept things going Wednesday with a similar claim. Continue reading…