Dell Inc. (NASDAQ: DELL) will be making corporate governance changes soon as a result of a lawsuit settlement.

Dell did not admit any wrongdoing (naturally) after a recent lawsuit accused certain Dell directors and employees of engaging in insider trading practices, as well as making false statements about the state of the company's business.

Continue reading Dell agrees to corporate governance changes to settle lawsuit

Dell agrees to corporate governance changes to settle lawsuit originally appeared on BloggingStocks on Wed, 30 Sep 2009 14:20:00 EST. Please see our terms for use of feeds.

Obama wants a non-binding vote on executive pay originally appeared on BloggingStocks on Fri, 17 Jul 2009 15:20:00 EST. Please see our terms for use of feeds.

When The Blackstone Group (NYSE: BX) went public, many observers -- myself included -- were concerned by the total lack of corporate governance checks and balances.

But at the time, the private equity industry was so hot that Blackstone could do no wrong, and no one cared enough to complain. But now that KKR is mulling a plan to list on the New York Stock Exchange, things could be different. The wheels have come off the industry, at least for now, and the arrogant attitude of "We'll tell you what we feel like telling you and you'll like it" may not play so well.

Continue reading Will private equity finally find good governance with the KKR IPO?

Will private equity finally find good governance with the KKR IPO? originally appeared on BloggingStocks on Thu, 02 Jul 2009 10:50:00 EST. Please see our terms for use of feeds.

Continue reading General Motors hires firm to find new board of directors

General Motors hires firm to find new board of directors originally appeared on BloggingStocks on Mon, 11 May 2009 16:30:00 EST. Please see our terms for use of feeds.

The largest pension fund in the country, the California Public Employees' Retirement System (Calpers), wants Ken Lewis and every single one of Bank of America's (NYSE: BAC) 17 other directors sent packing for not disclosing mounting losses at Merrill Lynch or the company's secret meeting with the Treasury Department looking for money to complete the acquisition.

Calpers joins the Service Employees International Union, CtW Investment Group, and a number of other influential shareholders and proxy advisors in voting for Ken Lewis to be kicked off the company's board of directors.

Continue reading Calpers calls for ousting of Bank of America board of directors

Calpers calls for ousting of Bank of America board of directors originally appeared on BloggingStocks on Wed, 29 Apr 2009 07:00:00 EST. Please see our terms for use of feeds.

Continue reading Bank of America urged to split CEO and chairman roles

Bank of America urged to split CEO and chairman roles originally appeared on BloggingStocks on Fri, 17 Apr 2009 08:44:00 EST. Please see our terms for use of feeds.

Continue reading Australia clamps down on CEO pay the right way

Australia clamps down on CEO pay the right way originally appeared on BloggingStocks on Thu, 19 Mar 2009 12:40:00 EST. Please see our terms for use of feeds.

Continue reading Bank of America compensation committee can't muster much criticism

Bank of America compensation committee can't muster much criticism originally appeared on BloggingStocks on Wed, 04 Mar 2009 11:40:00 EST. Please see our terms for use of feeds.

With a wave of shareholder meetings about to hit the United States, directors could be in for the first real test they've faced in a long time.

With shareholders looking at portfolio statements showing losses of 30%, 40%, 50% and more, directors are expected to face a tougher time retaining their seats. And a new trend of brokerages changing the way they vote customers' shares could make changes even more likely.

Continue reading Investors might actually start kicking directors out

Investors might actually start kicking directors out originally appeared on BloggingStocks on Mon, 02 Mar 2009 14:00:00 EST. Please see our terms for use of feeds.

Continue reading Bank of America sponsors the NFL Experience ... a bad move?

Bank of America sponsors the NFL Experience ... a bad move? originally appeared on BloggingStocks on Mon, 02 Feb 2009 19:00:00 EST. Please see our terms for use of feeds.

Continue reading Sandy Weill gives up Citigroup corporate jet

Sandy Weill gives up Citigroup corporate jet originally appeared on BloggingStocks on Mon, 02 Feb 2009 17:45:00 EST. Please see our terms for use of feeds.

Carl Icahn calls for a corporate governance stimulus originally appeared on BloggingStocks on Fri, 23 Jan 2009 17:00:00 EST. Please see our terms for use of feeds.

In The New York Times, Cornell economics professor Robert H. Frank makes the case that executive compensation isn't as big of a problem as so many are convinced it is.

Frank writes that "In the past, a C.E.O. could often stay in the job for many years despite lackluster performance. Today, a C.E.O. who fails to deliver is often dismissed after a year or two."

I'm not sure what planet Mr. Frank is on. It might be true that executives don't last as long as they used to on average, but the financial markets are full of underperforming companies run by ineffective CEOs. When changes are made, it's often as a result of prodding by activist shareholders rather than by proactive decisiveness on the part of the board of directors. Then there's this ridiculous point:

If the market for executive talent is competitive, critics ask, why are C.E.O.'s in an industry paid about the same, regardless of performance? That's because no one knows with certainty how a particular executive will perform.

Exactly. But the point of pay for performance is to align executive compensation with performance. If they do well they make a lot of money, and if they don't then they don't. Mr. Frank seems to concede here that pay for performance is essentially a myth.

That said, I basically agree with Frank's point that imposing congressional limits on executive pay is a bad idea. Limiting tax deductibility would simply lower shareholder returns.

But maybe there's an alternative. If Congress imposed a limit on the tax deductibility of executive pay (one with teeth, not one that provides a giant loophole for anything that is tied to "performance") and then used the extra revenue produced to buy down capital gains tax rates, the result would be to provide an incentive for companies to limit executive pay while also giving a portion of the money back to shareholders when they pay excessively.

Congressional limits on executive pay? originally appeared on BloggingStocks on Sun, 04 Jan 2009 15:40:00 EST. Please see our terms for use of feeds.

RiskMetrics blasts companies paying compensation taxes originally appeared on BloggingStocks on Mon, 24 Nov 2008 13:24:00 EST. Please see our terms for use of feeds.

Carl Icahn plans corporate governance lobbying group originally appeared on BloggingStocks on Mon, 06 Oct 2008 15:55:00 EST. Please see our terms for use of feeds.

Free Dennis Kozlowski! Former Tyco chief pursues appeal originally appeared on BloggingStocks on Fri, 05 Sep 2008 10:30:00 EST. Please see our terms for use of feeds.

Most investors think Sarbanes-Oxley regulations have been the rule of the road in corporate governance since put into law in 2002. That has never quite been true. The law has been challenged in the courts for almost six years, accused of giving the federal government too much power to push public companies around.

What appears to be the final challenge to Sarbanes came to an end as a federal appeals court turned back a legal challenge to the act.

According to The Washington Post, "Businesses have protested that the act imposed costly burdens and provided too little benefit." The cost issue is entirely true, especially for small public companies that have had to stretch financial resources by spending hundreds of thousand of dollars to meet the requirements of the law.

But, it would be hard to make the case that the average shareholder is not better off with more independent corporate audit committees and accounting firms under pressure to perform flawlessly. A look at the number of companies that have had to restate financials because of errors uncovered and enforced by audit committees is a testament to the benefits of the law. The law has ended the habit of giving large institutions a "look" at company prospects and has taken away many of the disadvantages that individual investors have suffered for decades.

Sarbanes has been expensive, but the alternative would have done the common shareholder a great deal of damage.

Douglas A. McIntyre is an editor at 247wallst.com.

Sarbanes-Oxley passes final test originally appeared on BloggingStocks on Sun, 24 Aug 2008 11:40:00 EST. Please see our terms for use of feeds.

Directors meeting with investors: good or bad? originally appeared on BloggingStocks on Mon, 21 Jul 2008 17:31:00 EST. Please see our terms for use of feeds.

While calling Arthur Levitt's tenure as chairman of the Securities & Exchange Commission ineffective would be an understatement, he could, and still can, be relied upon to say the right thing. Now that the SEC finally has the quorum necessary to take action on a variety of issues, they should take Levitt's advice about proxy access changes.

Earlier this year the SEC made it impossible for shareholders to change the way directors are elected -- one of the most anti-investor events in recent history -- and it's time for that to change. Levitt writes in The Wall Street Journal that "While not a panacea, giving shareholders a bigger voice in the companies they own would go a long way in helping to restore trust."

Exactly. Some critics of strong corporate governance say that the SEC shouldn't meddle in these affairs. I basically agree: but the problem is that the SEC has meddled, making it impossible for shareholders to take control of their own companies when necessary.

Continue reading Arthur Levitt calls it right on corporate governance reforms

Arthur Levitt calls it right on corporate governance reforms originally appeared on BloggingStocks on Wed, 02 Jul 2008 14:07:00 EST. Please see our terms for use of feeds.

A new study out of Stanford's law and business schools suggests that the increasingly popular corporate governance quotients provided by firms like the Corporate Library and Institutional Shareholder Services may not be so helpful. The researchers found little or no correlation between the ratings at different firms, and higher scores do not appear to correlate with strong performance. Indeed, firms that performed well based on ISS metrics were found to be more likely to face shareholder class-action lawsuits, which is mystifying.

The companies that provide governance data do, in my opinion, provide a valuable service, but investors who really want to know what's going on at their companies should go read the proxy statements themselves, straight from the SEC's Edgar database (Look for "DEF 14A"). Here are some questions to ask as you look:

• Do the executives and directors own a large amount of stock in the company? Do they sell frequently or buy stock on the open market with their own money? An important, but often overlooked, area to look at is the ownership of the directors. Directors who own a large amount of stock are likely to be more vigilant in performing their duties.
• How does executive pay change from year to year? Does it go up every year by leaps and bounds regardless of performance, or do the top guys take a hit with the shareholders?
• Does the company have a staggered board, poison pill, or other devices designed to make it more difficult for shareholders to affect change?
• Does the company disclose any significant related party transactions?

If you can come up with detailed answers to those questions, you'll have a much better idea of the company's governance strengths and weaknesses than you can get from reading any third-party report.

How you can assess corporate governance originally appeared on BloggingStocks on Mon, 30 Jun 2008 18:29:00 EST. Please see our terms for use of feeds.