MAJOR PAPERS:

• According to Yahoo! Inc (NASDAQ: YHOO), the Wall Street Journal reported that a severance plan investor Carl Icahn said is "excessively expensive" would come into play if Icahn is successful in his plan to take control of the company's board; Yahoo! maintained that the plan is structured to prevent Yahoo! from altering or dismantling it while under a proxy challenge.
• The Financial Times reported that Lehman Brothers Holdings Inc (NYSE: LEH) almost reached a strategic deal with a group of Korean financial institutions as part of its recent capital raising initiative, and the investment bank may still sign an agreement with the Korean companies this year, inside sources said.
• According to the Financial Times, Merrill Lynch & Co Inc (NYSE: MER), UBS AG (NYSE: UBS) and Citigroup Incorporated (NYSE: C), which are most exposed to MBIA Inc (NYSE: MBI) and Ambac Financial Group Inc (NYSE: ABK), are facing further write downs of up to $10B after the bond insurers lost the battle to keep their triple A credit ratings in tact.
• A source familiar with the matter told dealReporter that Barnes & Noble Inc (NYSE: BKS) is conducting due diligence, but has not established whether it will competitively bid for Borders Group Inc (NYSE: BGP). Should Barnes & Noble indicate real interest, the biding process could be delayed, the source said.

OTHER PAPERS:

• The Detroit News reported that Ford Motor Company (NYSE: F), in an effort to keep up with changing consumer demand in the U.S., is assembling a plan that will shift entire truck plants to car production.

With pretty much everyone -- including most CEOs -- agreeing that executive compensation is out of control and corporate governance in America is pretty much a joke, you'd hope that shareholders would take one opportunity they have each year -- proxy season -- to let their voices be heard.

Sadly, the New York Times DealBook reports that individual investor participation in proxy voting has plunged: "Of 92 firms that have held their annual meetings this season, the average participation among "retail" shareholders - individuals, as opposed to institutions - dropped more than 75 percent from the previous year, according to statistics from Broadridge Financial cited on RiskMetrics' Risk & Governance Blog."

The drop is probably largely attributable to a recent SEC rule change that allows companies to use "e-proxies," forcing shareholders online to cast their vote.

There's no question that, in time, proxy voting will be conducted online exclusively. But obviously that time has not yet come.

In the meantime, there's still no excuse for not voting your shares each year -- if only so you have the right to complain about what a mess the shareholder democracy is.

The newspaper industry has been struggling of late, battling online classified sites, job listings, and free blogs. While readership of offline paper has been steadily decreasing, readers have been drawn more and more to the online versions of newspapers.

Last Thursday, Reuters published the results of a recent study from the Newspaper Association of America reporting the number of unique visitors to newspaper websites last year rose more than 6% to a monthly average of 60 million.

So, it's not surprising to see that one hedge fund in particular is reported to be readying itself for a proxy battle to make a move for the New York Times Co. (NYSE: NYT). Marketwatch reports that the New York Times has said that Harbinger Capital Partners Master Fund has recently informed them of plans to seek seats on their board.

In an editorial titled Union Proxies (subscription required), the Wall Street Journal argues that the SEC's decision to allow companies to bar third-party candidates for the board of directors from the ballot was actually the right move.

I argued just the opposite here and here, but the Journal does bring up a point that's worth responding to:

"Access" sounds good in theory. But in practice, what really matters is whether such proxy slates serve the interests of all shareholders, or merely a few. In the case of proxy challenges, the main agitators are unions and their political allies who run public pension funds. These groups have their own political agendas that they want companies to pursue, and those agendas may or may not serve the larger interest of increasing shareholder value. In the worst case, such agitation could empower special-interests on boards that reduce a company's value.

Here's the flaw in the Journal's reasoning: If the union-backed pension funds are supporting ideas that are wildly out of touch with the interests of other shareholders, then those shareholders have a right to vote against them, and presumably they would.

And if the majority of a company's shareholders vote for the candidate, then they should gain a seat on the board. This is basically about voting rights: shareholders in public companies should have a right to put the people they want on the board of directors. Denying proxy access because many candidates would have special interests is like arguing that union members shouldn't be allowed to vote or run in political elections because they have ulterior motives. Maybe they do, but that's up to the voters to decide!

We've seen enough examples of supine boards of directors and managers who stayed in their roles as Chief Value Destroyer for far too long because of these boards. Proxy access would have been a great way to make directors more accountable to shareholders, and it's a really sad day for corporate governance when the SEC gets in the way of that.

It's coming up on that time of year again! Proxy season: the one time where corporate management teams can actually be held accountable to their shareholders. According to the Wall Street Journal (registration required), only about one third of individual shareholders actually vote their proxies, which allow them a say in electing directors, certain corporate policy proposals and, more often now, executive compensation.

How well is a stock you own doing on the corporate governance front? Institutional Shareholder Services prepares Corporate Governance Quotients on many publicly traded companies. You can view the company score on Yahoo!finance. For example, on the profile page for McDonald's, we see that: "McDonald's Corp.'s Corporate Governance Quotient (CGQ®) as of 1-Mar-07 is better than 59.5% of S&P 500 companies, and 94.3% of Consumer Services companies." For a more detailed look at a company CGQ score, you can go to the ISS's Issue Atlas page for the company.

Factors influencing the CGQ, according to the ISS website include: (1) board structure and composition, (2) audit issues, (3) charter and by-law provisions, (4) laws of the state of incorporation, (5) executive and director compensation, (6) qualitative factors, (7) D&O stock ownership, and (8) director education. The score for each core topic reflects a set of key governance variables.

Use the CGQ to examine the corporate governance of every stock you own. Browse around on the ISS page for additional information about corporate governance and proxy voting.

For major shareholders such as Carl Icahn, a so-called "proxy fight" can be a useful tool to change management and maybe even take over a company. It's such a popular tool that a former chairman of the SEC, Richard Breeden, has raised a fund to focus on this.

However, proxy fights are expensive and time-consuming.

But this week, the SEC made things a little easier for anyone who wants to start one. The agency has adopted a proposal that allows proxies to be delivered via the web, which should help cut-down printing costs. There is an exception, though: a shareholder can request a printed copy.

The new initiative goes into effect in July 2007. So this will mostly be helpful for transactions in 2008.

Nevertheless, even with lower printing costs, proxy fights will still be expensive. After all, securities attorneys aren't cheap. And with all the M&A activity lately, they aren't likely to get cheap anytime soon.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates DealProfiles.com.