Votermedia Finance Blog

December 3, 2015

Why I’m voting WITHHOLD on Fission Uranium (FCU)

Filed under: Uncategorized — Tags: , , — Mark Latham @ 9:11 am

Fission Uranium

“Using the internet for shareowner proxy voting … will awaken the sleeping giant of corporate governance – individual investors.” My optimism was premature when I wrote that in 1999. But finally the giant has awakened and is starting to stir.

Retail shareowners of Fission Uranium Corp (FCU) have joined forces via internet media, including their Stockhouse.com discussion forum, to challenge the incumbent board’s control of the company. It’s significant that retail investors own a majority of Fission’s shares, in contrast to the institutional investor dominance typical of larger firms. (more…)

August 20, 2013

#Cisco Proxy Advisor Proposal #corpgov

Filed under: Uncategorized — Tags: — Mark Latham @ 9:39 am

Cisco Systems’ ($CSCO) proxy statement in October will include a Proxy Advisor Competition proposal submitted by shareowner James McRitchie, editor of the leading Corporate Governance blog. Jim just published this post explaining it. [2013-11-05 PS: Jim has published another post, responding to Cisco management’s objections.]

Jim and I have worked together for years developing improved versions of this proposal (which is part of the broader votermedia project). It would increase competition in the market for proxy advice, and make professional advice available to all Cisco shareowners, not just the large institutions who now subscribe to advisory services. It helps solve the voters’ free-rider problem by paying for advice with their collectively owned corporate funds.

July 23, 2012

Proxy Advisor Competition Proposal

Filed under: Uncategorized — Tags: , — Mark Latham @ 11:07 am

I am pleased to be working with James McRitchie again on a shareowner proposal for improving corporate governance. In 1999 we drafted, and Jim submitted, the first in a series of proposals for shareowners to vote corporate funds to pay competing proxy advisors. We have recently drafted the latest in this series, which Jim plans to submit to Costco soon. Compared to our earlier proposals, this new version would support four advisors instead of just one; it would take two years to implement instead of three years; and shareowners would vote after seeing the proxy advice instead of before. These changes are based on successful test implementations at the University of British Columbia — see “Experiments in Voter Funded Media” at votermedia.org/publications.

Here is our new proposal draft:

PROXY ADVISOR COMPETITION

WHEREAS many shareowners lack the time and expertise to make the best voting decisions, yet prefer not to always follow directors’ recommendations;

WHEREAS shareowners could benefit from greater competition in the market for professional proxy voting advice;

THEREFORE BE IT RESOLVED that Costco (Wholesale Corporation) shareowners request the Board of Directors, consistent with their fiduciary duties and state law, to hold a competition for giving public advice on the voting items in the proxy filing for the Costco 2014 annual general meeting, with the following features:

  • The competition will be announced and open for entries no later than six months after the Costco 2013 annual general meeting. To insulate advisor selection from influence by Costco’s management, any person or organization can enter by paying an entry fee of $2,000, and providing their name and website address. Each entry will be announced publicly, promptly after it is received. Entries’ names and website addresses (linked) will be shown promptly on a publicly accessible Costco website page, in chronological order of entry. Entry deadline will be a reasonably brief time before Costco begins to print and send its 2014 proxy materials.
  • The competition will offer a first prize of $20,000, a second prize of $15,000, a third prize of $10,000, and a fourth prize of $5,000.
  • Winners will be determined by shareowner vote on the Costco 2014 proxy. The proxy will show this question: “Which of the following proxy advisors do you think deserve cash awards for how they have been informing Costco shareowners? (You may vote for as many advisors as you like. See each advisor’s website for their information for Costco shareowners.)” Then the name and website address of each advisor entered will be listed in chronological order of entry, with a check-box next to each. The advisor receiving the most votes will get first prize, and so on.
  • It is expected that each proxy advisor will publish advice on its website regarding the Costco 2014 proxy, but there will be no formal requirement to do so. The incentive to win shareowner voting support and to maintain the advisor’s reputation will be considered sufficient motivation for giving quality advice.
  • The Costco filing that reports the final 2014 proxy voting results will show the total number of shares voted for each proxy advisor.
  • The competition will continue annually with the same terms, except that competitors who renew their entries for a subsequent year, by paying the entry fee within 30 days after the Costco filing of voting results, will have their names listed on the website page and on the subsequent proxy in the order of their voted ranking in the most recent year. New competitors can enter at any time before the entry deadline, and will be listed after renewed entries, in chronological order of entry.

(Further information on proxy advisor competitions: “Proxy Voting Brand Competition,” Journal of Investment Management, First Quarter 2007; free download at http://votermedia.org/publications.)

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The idea is that we shareowners can use our voting power to hold boards accountable more effectively if we have high quality professional voting advice. Although many institutional investors pay for proxy advice from the two major U.S. advisors, ISS and Glass Lewis, there is not enough economic incentive to pay for more than a minimal amount of proxy research, as explained on page 82 of “Proxy Voting Brand Competition“. The result: complaints about lack of insight, and insufficient competition.

From the March 2011 Altman Group Report on Proxy Advisory Firms:

“… one of the primary complaints from corporate issuers is that proxy advisory firms rely heavily on a ‘cookie cutter’ or ‘one-size-fits-all’ approach, and may base recommendations on inaccurate and unreliable information in particular cases.” [page 9]

“The investment manager for one of the world’s largest sovereign wealth funds indicated that it would like to see measures taken to promote competition among proxy advisory firms.” [page 31]

The above Proxy Advisor Competition Proposal would increase competition among proxy advisors, and pay them enough to provide higher quality advice, tailored to the specific corporation. The proposal organizes a corporation’s shareowners as a group, pays for proxy advice once, and shares the advice with the whole group. This “advice consumers’ union” approach may well get better analysis for lower cost than the current system of paying for advice one (institutional) investor at a time. It would also make the advice available to all Costco shareowners, including retail investors who typically do not get professional voting advice now. This proposal is designed as a template to improve the governance of any publicly traded corporation.

We welcome your comments. How can we improve this proposal? If it is implemented, what results would you expect?

July 10, 2012

Sad News: @MoxyVote is Closing #corpgov

Filed under: Uncategorized — Tags: , — Mark Latham @ 9:19 am

Since 2009, MoxyVote.com has been a great pioneer in building a Client Directed Voting (CDV) system to empower individual investors to vote shares intelligently, by linking their votes with advice from respected sources. Unfortunately, the regulatory changes needed to make CDV financially sustainable have not yet been forthcoming. From Moxy’s closing blog post today:

It seems appropriate at this time to explain our rationale for closing. The simple answer is that we were unable to make any tangible progress on several key barriers to our success. These obstacles have been known for some time. In fact, we documented them very clearly nearly two years ago in our response to the Securities and Exchange Commission’s request for public comment on its publication entitled Concept Release on the U.S. Proxy System. For those that are interested, our comments can be read here.

In summary, our efforts thus far lead us to conclude that there are two primary obstacles that will prevent any individual investor-focused proxy voting websites from being successful. They are the following:

  1. Individual shareholders have no legal grounds to compel their brokers to deliver ballots electronically to internet voting platforms. And, unfortunately, many brokerage firms have stated clearly to us that they will send them only when required to do so by regulators.
  2. Proxy distribution/collection agents are presently charging significant fees to internet voting platforms for vote collection – a fee that should be paid by public companies and one that proves substantially more burdensome to individual voters than institutional voters.

The Moxy Vote team did a great job against tough odds. I hope they will come back to life at some point. But either way, their substantial contributions to showing what is possible in proxy voting reform will stand, and others will build on that foundation. Thank you Moxy Vote!

October 1, 2010

My comments on the SEC Proxy Concept Release

Filed under: Uncategorized — Tags: , , , — Mark Latham @ 10:29 am

My comments (dated September 29) are now available on the SEC website page for comments on their proxy concept release.

Mainly I recommended the development of an open Client Directed Voting system. I’m pleased to see a growing consensus advocating CDV, including these diverse voices:

July 14, 2010

SEC Concept Release on Proxy Voting + Table of Contents

Filed under: Uncategorized — Tags: , — Mark Latham @ 4:09 pm

Today the U.S. Securities & Exchange Commission published its 150-page Concept Release on the U.S. Proxy System.

Its Table of Contents lacked page numbers, so I created one with page numbers, which you can download here in doc and pdf formats.

The SEC press release gives a brief overview.

Public comments linked here.

June 1, 2010

Ultimate Proxy Advisor Proposal – revised

Filed under: Uncategorized — Tags: , — Mark Latham @ 11:05 am

Thanks to comments from Jim McRitchie and John Richardson on the previous draft, I’ve revised it below to make it more attractive for advisors:

This shareowner proposal is an enhancement of my previous Proxy Advisor proposals, based on what we have learned from implementing this idea for the past four years at the University of British Columbia. The main idea is in section 3 of “Proxy Voting Brand Competition”, and the UBC implementations are described in “Global Voter Media Platform”, both at votermedia.org/publications. See also the current UBC ballot.

WHEREAS many shareowners lack the time and expertise to make the best voting decisions, yet prefer not to always follow directors’ recommendations;

WHEREAS shareowners could benefit from greater competition in the market for professional proxy voting advice;

THEREFORE BE IT RESOLVED that XYZ Corporation shareowners request the Board of Directors to hold a competition for proxy advisors giving public advice on the voting items in the proxy filing for next year’s XYZ annual general meeting, with the following features:

* The competition will be announced no more than six months after this year’s annual general meeting. To insulate advisor selection from influence by the Company’s management, any proxy advisory organization can enter by paying an entry fee of $10,000, and providing their name and website address. Each entry will be announced publicly, promptly after it is received.

* The competition will award a total prize pool equal to the sum of entry fees received plus $30,000 if there are three or more competitors. If there are two competitors, the total prize pool will be the sum of entry fees received plus $20,000.

* Prizes will be determined by shareowner vote on next year’s XYZ proxy. The proxy will show this question: “What percentage of the prize pool should we award to each of the following proxy advisors? (Your votes need not sum to 100%.)” Then the name and website address of each advisor entered will be listed in chronological order of entry, with the following voting choices for each advisor: 0%, 10%, 20%, 30%, 40%, 50% if there are three or more competitors; if there are fewer than three competitors, then the voting choices will be 0%, 20%, 40%, 60%, 80%, 100%.

* If there are two or more competitors, then a cutoff number of votes (i.e. shares voted) will be determined such that the sum of awards will be 100%, where each advisor is awarded the highest percentage such that the sum of its votes for that percentage or higher is greater than the cutoff.

* If there is only one advisor entered, then that advisor will receive $10,000 (i.e. their entry fee), plus the median voted percentage times $10,000.

* The XYZ filing that reports the final voting results will show the total number of shares voted for each percentage level, for each advisor.

* It is expected that each proxy advisor will publish advice on its website regarding next year’s XYZ proxy, but there will be no formal requirement to do so. The incentive to win shareowner voting support and to maintain the advisor’s reputation will be considered sufficient motivation for giving quality advice.

(Further information at http://votermedia.org/publications.)

I have no immediate plans to submit this proposal, but I think it would greatly benefit shareowners and improve corporate governance. I recommend anyone to submit it. Feel free to change it as you wish.

Your comments welcomed!

May 25, 2010

Client Directed Voting – Q&A

Filed under: Uncategorized — Tags: — Mark Latham @ 3:28 pm

I was recently asked to share my thoughts on client directed voting (CDV). I’ve written them in question-and-answer format, available at votermedia.org/publications.

I’ve been advocating and looking forward to this reform for many years, so am pleased with the recent increase in interest and momentum toward CDV! Your comments welcomed…

May 15, 2010

Ultimate Proxy Advisor Proposal

Filed under: Uncategorized — Tags: , — Mark Latham @ 5:15 pm

NOTE: This early draft has now been superseded by a revision linked here.

This shareowner proposal is an enhancement of my previous Proxy Advisor proposals, based on what we have learned from implementing this idea for the past four years at the University of British Columbia. The main idea is in section 3 of “Proxy Voting Brand Competition”, and the UBC implementations are described in “Global Voter Media Platform”, both at votermedia.org/publications. See also the current UBC ballot.

WHEREAS many shareowners lack the time and expertise to make the best voting decisions, yet prefer not to always follow directors’ recommendations;

WHEREAS shareowners could benefit from greater competition in the market for professional proxy voting advice;

THEREFORE BE IT RESOLVED that XYZ Corporation shareowners request the Board of Directors to hold a competition for proxy advisors giving public advice on the voting items in the proxy filing for next year’s XYZ annual general meeting, with the following features:

* The competition will be announced no more than six months after this year’s annual general meeting. To insulate advisor selection from influence by the Company’s management, any proxy advisory organization can enter by paying an entry fee of $20,000, and providing their name and website address. Each entry will be announced publicly, promptly after it is received.

* The competition will award a total prize pool no less than the lesser of $100,000 and the sum of entry fees received. For example, if three advisors enter then the prize pool is at least $60,000. If seven advisors enter then the prize pool is at least $100,000, and the extra (at most) $40,000 in entry fees is revenue to XYZ.

* Prizes will be determined by shareowner vote on next year’s XYZ proxy. The proxy will show this question: “What percentage of the prize pool should we award to each of the following proxy advisors? (Your votes need not sum to 100%.)” Then the name and website address of each advisor entered will be listed in chronological order of entry, with the following voting choices for each advisor: 0%, 10%, 20%, 30%, 40%, 50% if there are three or more competing advisors; if there are fewer than three advisors, then the voting choices will be 0%, 20%, 40%, 60%, 80%, 100%.

* If there are two or more advisors competing, then a cutoff number of votes (i.e. shares voted) will be determined such that the sum of awards will be 100%, where each advisor is awarded the highest percentage such that the sum of its votes for that percentage or higher is greater than the cutoff. (In the case of a tie at the cutoff, the discontinuity will be divided equally among the tied advisors.)

* If there is only one advisor entered, then that advisor will receive 100% of the award pool, regardless of how XYZ shareowners vote. The vote will simply serve as shareowner feedback on the quality of advice provided.

* The XYZ filing that reports the final voting results will show the total number of shares voted for each percentage level, for each advisor.

* It is expected that each proxy advisor will publish advice on its website regarding next year’s XYZ proxy, but there will be no formal requirement to do so. The incentive to win shareowner voting support and to maintain the advisor’s reputation will be considered sufficient motivation for giving quality advice.

(Further information at http://votermedia.org/publications.)

It’s written so that awards can be funded entirely from entry fees, although it leaves the board discretion to sweeten the pot with corporate funds if desired. This may seem unattractive to proxy advisors, but their reputations can benefit from the advertising exposure. Once the concept demonstrates its value to shareowners, it should spread to more corporations and get corporate funding.

I have no immediate plans to submit this proposal, but I think it would greatly benefit shareowners and improve corporate governance. I recommend anyone to submit it. Feel free to change it as you wish.

Your comments welcomed!

March 30, 2010

FINRA Foundation turns down voter funding proposal

Filed under: Uncategorized — Tags: — Mark Latham @ 4:57 pm

Yesterday I received this response from the FINRA Foundation to the Voter Funded Investor Education proposal I sent them last October:

Thank you for submitting your proposal. I apologize for not responding more quickly. At this time, we think our grant making process works very well. In addition, your proposal would be difficult to implement under the Global Research Analyst Settlement. I appreciate your thoughtfulness in preparing this proposal.

I will continue to look for ways of funding a pilot program to test how effective voter allocation can be, not only for investor education, but also to help us retail investors vote our proxies. Now that a consensus is building in support of Client Directed Voting, a little funding could go a long way toward supporting proxy voting advice and systems for sharing it freely.

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