Tag archives: Wall Street Journal

Non-standard accounting measures: The media, regulators, and shareholders zero in

Non-standard accounting practices have been gaining in popularity among Canadian publicly traded companies. Issuers that rely solely on standard accounting metrics now make up a small minority of the companies listed in the S&P 500 and S&P/TSX 60.

Many issuers believe that non-standard measures are a better reflection of performance than Generally Accepted Accounting Principles (“GAAP”), which for Canadian issuers typically conform to International Financial Reporting Standards (“IFRS”). Yet there are growing concerns that non-GAAP measures are being used to inflate earnings and present a more positive picture of financial performance. These concerns have been expressed in the media, including … Continue Reading

Shareholder activism on the rise

According to recent studies, the rate of successful shareholder activism is on the rise. While historically high when compared to the relative ownership percentage of those campaigning, new data from North America and Europe demonstrates a climbing success rate for activist campaigns.

Studies that measure shareholder activism often organize their success-rate analysis by either a success-per-shareholder-demand variable, which measures the amount of successful changes to a company against the amount of total activist demands, or based on overall “engagement outcomes”,[1] which measure success against the amount of total activist campaigns (which may contain multiple demands).   Both indicators attempt to … Continue Reading

SEC Chair says SEC will propose new rules on universal proxies

In a recent speech focusing on proxy-related issues, Securities and Exchange Commission (SEC) Chair Mary Jo White has indicated that the SEC is working to propose new rules concerning universal proxies. She also encouraged companies to adopt them even before the SEC weighs in on this area.

Currently in the United States, it is generally not possible for shareholders to choose freely from among the management and dissident slates in contested director elections unless they attend the meeting and vote in person. Accordingly, in most circumstances shareholders are required to vote for entire slates of directors.

Universal proxies allow shareholders … Continue Reading

Shareholder activism goes mainstream: investment giants increasingly focused on corporate governance

The Wall Street Journal reports that Vanguard Group, the largest mutual fund firm in the U.S., and BlackRock Inc., the world’s largest asset manager, are becoming more assertive in exercising their influence over companies in which they invest. This is a significant development, given Vanguard and Blackrock’s immense shareholdings in large American companies.

BlackRock’s recently revised its U.S. voting guidelines, which now indicate that the company may oppose a director’s re-election over concerns such as insufficient board diversity, inappropriately lengthy tenures, and poor attendance, even over short periods.

A recent letter from Vanguard CEO F. William McNabb III sent to … Continue Reading