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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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April 16, 2008 2:59 PM ET
The surprise resignation yesterday of a Washington Mutual director is the latest sign that activist shareholders are actually having some impact on the way companies are run. WaMu announced that Mary Pugh, the head of the thrift’s financial committee and the target of several shareholder groups, had stepped down. (For more on the developments at Washington Mutual, click here.) It’s unclear if any more directors will be resigning from the board of WaMu, which has found itself locked in a nasty proxy fight with union investors. What is clear: Hostilities between shareholders and corporate officers have reached a fever pitch this year. According to FactSet SharkWatch, 152 new activist campaigns were announced in the first quarter of 2008, and the number of formal proxy fights resulting from those announcements is increasing. The 50 new proxy fights during the quarter are the most since SharkWatch began tracking the data in January 2006. As a result of this increased fury, activist investors picked off 32 board seats—a surprising number given their general lack of success in previous years. “The number of activist campaigns against companies, the number of unsolicited offers, and the number of proxy fights are all way up, so all of those things give you a sense of what’s going on in this market,” said FactSet MergerMetrics analyst Jim Mallea. The current uprising against corporate boards is an extension of activist efforts to eliminate takeover defenses like poison pills and staggered board terms that have been going on for some time. Last year, 42 proxy proposals to destagger board member terms were announced. This year, 45 such proposals have been floated in the first quarter alone. According to shareholder proxy adviser RiskMetrics, the credit crisis is fueling much of this shareholder ire. The firm, which recently evaluated the governance structures of 11 financial institutions, including five banks, that are the subject of “no” vote campaigns, found that the majority of investor respondents felt boards lacked risk management expertise. Of the respondents that considered voting against directors for their role in creating credit crisis-related losses, 41% held the entire board responsible, and where one existed, 36% held the risk committee at fault. About a quarter faulted the audit committee. “Investors are looking to directors to strengthen their ability to effectively monitor risk in the future,” said Bimal Patel, manager of corporate governance and policy at RiskMetrics. This renewed focus on board accountability isn’t likely to die out anytime soon. Indeed, corporate boards that have been targeted by activist campaigns should be prepared for a tough fight. “If things really get heated, they may have to go on the road and meet with current shareholders,” said Rhonda Chiger, co-president of RxCommunications Group, an investor relations and public relations firm. Ms. Chiger also emphasized the importance of meeting with and getting the backing of proxy governance firms RiskMetrics/ISS, Glass Lewis and Eagan-Jones to help influence investor board votes. Case in point: The three proxy governance firms all called for “no” votes for several WaMu board members. Those recommendations likely played a role in yesterday’s resignation of Ms. Pugh.
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