Corporate Governance

Could Bear shareholders sue? Count the ways

19 Mar 2008

Even with JPMorgan's new higher price for Bear Stearns, some aggrieved shareholders could still head to court. They could challenge the price, the merger agreement, apparent pay imbalances, and statements made by executives. They may have most luck with the last.

Bear shareholders have little leverage, should be realistic

18 Mar 2008

Some shareholders are indignant about JPMorgan s $2 a share purchase. But they have little leverage. Bear was rescued from insolvency, and its businesses are already winding down. Potential bidders will be wary of upsetting regulators. JPMorgan holds almost all the cards.

Bear shareholders may still have some wriggle room

17 Mar 2008

JPMorgan s $2ashare offer might seem pretty final. But it relies on rapidly made assumptions that could swing either way. While Bear s shareholders shouldn t expect anything like stated book value of $80 a share, they have little to lose by cleverly pushing for a bit more.

Toll shows CEO pay is tough to reform

14 Mar 2008

With share prices plunging, investors are paying careful attention to gaps between executive pay and performance. Efforts to give shareholders a sayonpay have been gaining momentum. But talk is cheap. As Toll Bros shows, changing pay practices can be much more difficult.

Financiers should be made to study history

13 Mar 2008

The current crisis might have been less severe if bankers, traders and fund managers knew more about previous bubbles. To qualify as financial professionals, they should have to pass exams quizzing them about the South Sea Bubble and the crash of 1929.

It’s not Charming to sue activists

12 Mar 2008

Plussize apparel seller Charming Shoppes is suing a pair of activist hedge funds. But as in some other cases, the rabblerousers' gripes merit real answers. Taking the argument to a courtroom looks like a play to avoid giving shareholders the explanation they deserve.

M&S rejig makes best of a bad job

10 Mar 2008

Stuart Rose is to move up from chief executive to executive chairman. Shareholders may think this corporate governance nono preferable to losing the architect of M&S s revival. But the absence of a credible successor pokes a hole in Rose s reputation.

No compensation without regulation

10 Mar 2008

Banker pay must be regulated but not micromanaged. The industry s oneway incentives have led it to run amok with other people s money. Regulators should set a general principle that headsIwintailsyoulose compensation structures are not acceptable.

Backdating casualty offers big upside

5 Mar 2008

Comverse Technology trades on the US pink sheets. Its founder absconded to Namibia. It hasn t released financial statements in two years. Lawsuits are flying. And the stock may be a great investment.

New York Times chooses one battle too many

21 Feb 2008

The newspaper company recommended that shareholders not vote for activist fund Harbinger Capital s slate of board candidates. That looks foolish. Other shareholders are rooting for Harbinger. There s a good chance the Times will lose a proxy battle.

Ospel’s concessions to UBS investors not enough

21 Feb 2008

The UBS chairman is to be reelected every year rather than every three, and to come under greater oversight from the board. That goes some way to improving the Swiss bank s corporate governance. But it falls short of the exit he owes investors for leading the bank into crisis.

Zumwinkel tax scandal exposes Germany’s dark underbelly

18 Feb 2008

The Deutsche Post boss's resignation for evading taxes is the latest in a series of scandals that suggest something is rotten in the state of German corporatism. The country needs to modernise its business practices and lower personal tax rates. At least heads are rolling now.

Comcast heads off shareholder gunfight

14 Feb 2008

The US cable group will channel a chunk of its free cash to restore its dividend and buy back stock, signalling it s not going shopping. It also rectified the most medieval aspects of its governance. Comcast did the right thing in the nick of time.

Johansson unlikely to offer UBS magic bullet

13 Feb 2008

The Swiss bank s new hire ticks a lot of boxes. His background in institutional equities, to which UBS is retrenching, will come in handy. But the appointment won t solve UBS's root problem risk control. UBS still needs to show how it will avoid repeating errors.

New York Times should open up to activists

12 Feb 2008

Hedge funds Harbinger and Firebrand plan to nominate 4 directors to the board of the familycontrolled newspaper group. Rather than engage in a fight it will almost certainly lose with angry investors, the company should reach a truce and take on two of the activists' directors.

Children’s fund throws tantrum over train set

8 Feb 2008

The Children s Investment Fund wants CSX shareholders to have more influence in choosing the US railway company s directors, and says a recent bylaw change is disingenuous . It s part of a valid US governance debate. But this particular complaint doesn't look wellaimed.

Will Deutsche practice what it has been preaching?

6 Feb 2008

Josef Ackermann, the bank s boss, has given two speeches urging banks to disclose their subprime and structured credit exposure. Most listened and followed Deutsche s lead. Now investors are spooked by many more credit worries. Ackermann needs to be transparent about these too.

Berlusconi redux wouldn’t be good economic news

5 Feb 2008

Silvio Berlusconi is favoured to regain his old job as Prime Minister. His record last time was mixed some reforms, too little budgetary restraint and not much for struggling industry. More action is needed now. Unfortunately, his campaign promises point in the wrong direction.

Should Lloyd Blankfein have made $1.5bn?

30 Jan 2008

That s what the Goldman Sachs boss deserved by the wacky metrics of Lazard s compensation scheme. Chairman Bruce Wasserstein took home $41m 13% of the firm s profits and more is on the way. If he s worth that much to the business, Lazard doesn t deserve its premium rating.

What bank CEOs should know

29 Jan 2008

Wall Street was hammered by repackaged subprime mortgages. SocGen took a hit on equity futures. Modern finance is about taking risk through complex instruments. Bank CEOs need to understand these products, but many don t. Here s a starter kit of questions for shareholders to ask.