ProxyMatters.com

Our friend Broc Romanek at CorporateCounsel.net writes an excellent post, breaking down each presidential candidate’s feelings on executive compensation.

Most importantly, Broc let’s us know how divided he personally is on the issue, detailing the following pros and cons:

• CON: Compensation is a board task.  Leave it to them.
• CON: Say on Pay gives RiskMetrics (formerly ISS) even more clout.
• CON: Say on Pay could shield directors from deserved liability.
• PRO: Compensation has not changed for the better.

For Broc’s well-written discourse, click here.

No, there is no typo in this post’s title.

Kudos to Michelle Leder over at Footnoted.org for highlighting this shareholder proposal gem, the first of 17 shareholder proposals listed in Exxon Mobil’s proxy statement:

“Resolved: That the Company amend its bylaws to no longer permit shareholders to submit precatory (non-binding or advisory) proposals for consideration at annual shareholder meetings, unless the board of directors takes specific action to approve submission of such proposals. Stock ownership has become politicized. Many shareholders own stock in publicly-owned corporations in order to use the corporations as a means of advancing the particular shareholders’ social or political agenda. A primary tool of ‘activist’ or ‘nuisance’ shareholders is the submission of non-binding precatory (advisory) proposals for discussion and vote at annual meetings of shareholders.”

To read Michelle’s take, click here.

Blockbuster shareholder Carl Icahn has indicated that he will provide any financing required for Blockbuster to purchase electronics retailer Circuit City.

And Circuit City dissident shareholder Steve Wattles, who is currently waging a proxy fight vs. Circuit City’s management, has told Reuters that any bid above $6/share (representing a 54%+ premium) “looks attractive”.

Meanwhile, Blockbuster’s shares are down 16% in market trading.  King Carl must see something that the market doesn’t.

Jim Kersetter at NewsBlog adds the following insight:

“Apple has around 200 retail stores and can meticulously control what is sold in them and how they are run… By comparison, the combined Blockbuster and Circuit City would have 9,300 retail stores, with 5,500 in the United States (though I have to think more than a few of them would be shut down). Quality control? They’re going to have to bring in a logistics expert from the military for that one.”

Click here to read the full piece.

For a look at the Reuters blurb, click here.

Circuit City, already facing a proxy fight with dissident investor Wattles Capital Management (see prior posts here and here), has received a cash buyout offer from Blockbuster Inc.

According to The WSJ Online, Circuit City’s board received the offer in February and summarily rejected it, doubting Blockbuster’s ability to secure the required financing.

Frustrated with Circuit City’s lack of action (sound familiar?), Blockbuster has gone public with its offer. 

Could we have two competing proxy fights at the same company?  Wattles’ earlier efforts appeared more about controlling the electronics retailer, akin to Wattles’ experience with its portfolio company Ultimate Electronic, and may lead Wattles to compete with both Circuit City’s board and Blockbuster’s offer.

Click here to read Blockbuster’s offer letter, and click here to read Circuity City’s response to the public announcement.

To read more at The WSJ Online, click here.

The Wall Street Journal is running an entire section on CEO compensation in today’s print edition.

The online version of the keynote article, “Boards Flex Their Pay Muscles”, can be found here.

That article’s subtitle offers an astute summary analysis:

“Directors are increasingly exercising more clout in setting CEO compensation.  And in some cases, the boss is actually feeling a little pain.”

The Wall Street Journal is reporting that Yahoo’s board will meet on Friday to discuss both the Microsoft offer and the potential News Corp. deal.

Be prepared for an “unnamed source” to leak key details of this meeting, but realize that this unnamed source will be reading from a script written by Yahoo’s p.r. firm and approved by Yahoo’s board.  The leak will serve merely as an attempt to extort a higher price from Microsoft.

Stay tuned…

The New York Times is reporting that Microsoft is in talks with News Corp. for a possible business combination with the MySpace business unit.

Yes, Microsoft wants to acquire everyone.

It’s a great maneuver to eliminate a possible white knight for Yahoo, increasing the chances of a Microsoft-Yahoo deal.  And if consummated, the News Corp. deal would give Microsoft a giant step up in social media applications and talent in its fight versus Google.

Most likely, it’s nothing more than a simple tactic to corner Yahoo into have productive discussions.  Microsoft wins another round.  Stay tuned.

When Aflac provided its shareholders this year with an advisory vote on executive pay, Aflac CEO Dan Amos became an instant hero, poster child, Greek God, etc. to shareholder rights activisits everywhere.  Until he spoke with The Wall Street Journal. 

In an editorial published yesterday, Amos squashes “say on pay” fever with this quote:

“Frankly, I don’t care what anybody else does.  What a CEO makes shouldn’t be important to anybody but the owners of the company.  It’s not a public issue.”

As to why Alfac allowed the say on pay, Amos admits that it was an attempt to simply “calm down” criticism.  Not an attempt to assist shareholders.  Not an attempt to curtail out-of-control pay packages.  Basically, appease the natives, but don’t share any food with them.

If you are a tad confused and still unsure as to what side of the fence Mr. Amos stands on, he leaves no doubt behind with this gem:

“When you look at the billions of dollars that a corporation brings in, it doesn’t really matter what the CEO makes.”

Yep, that’s what he said.  Right there in print.  Read it again.  It doesn’t get much bolder than that.

On Monday, just one day before Morgan Stanley’s annual shareholder meeting, The Wall Street Journal printed a revealing article titled “Boards Give Up Taming Act“.

The article details how boards are less reluctant to fight dissident shareholders, often inviting these shareholders onto the board at an increasing rate.

The key insight offered is that the dissident shareholders have been promoting more qualified candidates, agitating not just to have their corporate cronies and personal friends to be placed on the board, but rather independent reputable corporate chieftians.

One only need to keep this in mind when reading the results of CtW’s failed shake-up at Morgan Stanley, which culminated yesterday with all of CtW’s targets receiving high marks from shareholders.  The key failing for CtW was that it failed to propose any alternate solution, any alternate slate of candidates.

Sure, shareholders could have voted no against Morgan Stanley’s board, but if they ultimately succeeded in winning the resignation of key board members, who would replace them?  Would those replacements be any better for shareholders?

Serving on a board is a tough job, particularly at an investment bank where the complexity of operations and financials require much study and insight.  Morgan Stanley isn’t selling simple widgets; they are borrowing some widgets, breaking them apart, loaning some parts back out, packaging some parts together to make something very unlike the original widget, trading for other widgets, selling widgets they don’t own, while advising and investing in other widget and non-widget businesses, all of which may or may not readily appear in financial statements.

The Vote No campaign at Walt Disney Co. in 2004 had an adequate level of success partly because Disney’s board appeared packed with personal friends of Chairman/CEO Michael Eisner, and partly because the average investor felt that he/she could, at a basic level, be capable of serving on Disney’s board.  “Make better movies”, “Make better tv shows”, and “Draw more people to the amusement parks and hotels” are simple directives.  Neither can be said for Morgan Stanley.

In the end, investors do not like protestors; they like problem solvers.

Almost lost in yesterday’s major media coverage of Motorola and Yahoo announcements was Morgan Stanley’s shareholder meeting today, where a campaign had been mounted by a union pension advisor, CtW Investment Group.

CNBC is reporting this morning that both the Vote No campaign and the Say on Pay campaign have failed.  With 85% of the shareholder votes accounted for, all directors have received more than 90% of the vote.  This includes Chairman/CEO John Mack (update: 94.5%) and director Robert Kidder, who were targets of most of the Vote No rhetoric. 

The Say on Pay proposal, which received 35% of the vote last year, will again draw under 50% (update: The Say on Pay proposal garnered only 37%).

Having led a less-than-spirited proxy battle that flew under the radar of most investors, CtW is wasting no time claiming victory on CNBC, noting that “twice the level” of no votes were achieved over last year.  CtW apparently is forgetting that it was attempting to fire Mack and six other directors, all of whom received 90%+ backing and kept their jobs.

For the record, if this how CtW judges victory, we at ProxyMatters.com wouldn’t want CtW to be in control of our pension fund.  “We lost 90% of your retirement savings in six months… victory!” 

Moving the goalposts is a common tactic in politics, but Wall Streeters are a little more savvy when it comes to lazy chicanery.  Not admitting defeat is a simple way to lose credibility with investors and corporate management alike.