I've Got Some Explaining To Do - Director Tenure and Other Tweets

I recently tweeted that  "I’m beginning to think that [director] term limits aren’t such a bad idea." Let me explain. I'm not a fan of age limits; for reasons of enlightened self-interest or otherwise, I object to the notion that a person ceases to be a valuable board member when he/she reaches a certain age. And this seems to be borne out by the fact that companies' retirement ages vary all over the lot. Moreover, some companies waive retirement ages when it's deemed to be "in the best interests of the company" (whatever that means), so they don't necessarily work.

At the same time, I don't buy the approach of some European investors that once a director has served for some period of time, he/she ceases to be independent. How can you be independent on Monday and not independent on Tuesday?

So maybe term limits provide a way for companies to ease out directors who become superannuated for one reason or another? I'm not sold on it, but in the absence of robust disclosure as to why Ms. X continues to be a great board member after 15 years of service (and, in fairness, that kind of disclosure is extremely difficult to provide), maybe it's worth thinking about. Surely a discussion wouldn't hurt?

I also tweeted that I oppose efforts to legalize insider trading. I know it's legal in some jurisdictions, and I've heard arguments that it's going to happen anyway so why not legalize it, but that's like saying that people still commit murder so why not legalize that too. Just saying....

Lamm's Lyrical Library

I've been looking for years for a satisfying recording of Don Giovanni. It's a difficult opera, because it is very dark at times and very funny at others and very beautiful throughout. I'd almost given up, but I recently came upon a recording conducted by John Eliot Gardner with Luba Orgonasova as Donna Anna, Rodney Gilfry as the Don and Ildebrando D'Arcangelo (don't you love that name?) as Leporello, among others. It's a lovely recording and comes as close to being a perfect recording of this classic as I've ever heard.

Lamm's Literary Lyceum

I just finished reading Sarah Dunant's novel about the Borgias. It's called Blood & Beauty. Unfortunately, I learned that the combination of the two yields boredom. The book is atmospheric but flat. Sorry!

The Devil in the Details - What's a Majority of "Votes Cast" and Other Musings on Shareholder Votes

Michael Dell continues to try to void the deal he and his investor group previously agreed to - namely, that the votes cast for his buyout deal must exceed not only votes against the deal but also abstentions.  In an earlier post, I found his request reasonable, and I still do.  My friend Ann Yerger of the Council of Institutional Investors informs me that "sometimes an abstention is a considered vote", but in my experience it's just as often a cop-out that an institution may use when it doesn't want to be perceived as supporting management.

Ann also decries some companies' practice of counting abstentions differently for shareholder proposals than for company proposals.  Sounds right to me!

Finally (for now), Broc Romanek's blog comments on a recent proposal from two professors at the University of Chicago that would permit the purchase and sale of votes.  I couldn't disagree more; despite the view that everything is a commodity (so typical of Chicago!), I believe that there needs to be a connection between ownership and voting.  This idea seems to rear its ugly head every so often; isn't it time to drive a stake through its heart?  (Broc also reports that Senator Warren wants to impose a new one share-one vote standard on listed companies - possibly more on that later.)

Lammentations

I understand (also from Broc) that Tom Kim is leaving the SEC staff after six years.  Tom is an incredibly smart and diligent man who typifies the high quality of the SEC staff.  He will be missed by those of us who continue to work with the SEC.  Good luck, Tom!

Every Vote Counts, But Not So Much

Today's Wall Street Journal reports that Michael Dell and his buyout group are trying to change the way votes are counted in his attempt to take the company private.  Lest you think that he's trying to move the goalposts after the game has begun, it appears that what he's trying to do is to have abstentions not count as votes.  I'm not sure why he agreed to have them count as votes in the first place, but it seems to me that abstentions (and broker non-votes) are, well, not votes.  

In an unrelated matter, the New York Stock Exchange recently announced a change in its listing standards on the shareholder vote required to approve an equity compensation plan.  The old standard required not only that the plan be approved by a majority of the votes cast, but also that the votes cast (for and against) constitute a quorum (i.e., more than 50% of the voting power on that matter).  The latter test was somewhat cumbersome and hard to explain.  The new standard merely requires that the plan be approved by a majority of the votes cast.  So far so good.  However, the standard specifies that "votes cast" includes - you got it - abstentions and, if I understand it correctly, broker non-votes.

It seems to me that if you are a shareholder who goes to the trouble of voting (not that it's a big deal), your vote in favor of something shouldn't be offset by an abstention or a non-vote.  Am I missing something here?

Lamm's Literary Lyceum

In my first posting, I told you that I might write about all sorts of stuff, and my profile states that I'm a voracious reader.  So I'm pleased to let you know that I've just finished The Son, by Philipp Meyer.  It's a tale of Texas history that is dark, somewhat disturbing, very well written and engrossing.  

Blogging? Me?

I've been thinking about starting a blog for a long time, but I've never had or made the time to do it.  At the moment, however, I'm on "hiatus" - i.e., between jobs - so I have a bit of time, and while it may be egotistical, I think I have some things to say.  So here goes.

I intend to write mostly about securities law and corporate governance - two subjects about which I'm passionate.  As the title of this blog may suggest, I'm most likely to write about the foibles and oddities of corporate America and its stakeholders, including the investor community, the legislative, regulatory and political environment in which companies operate, proxy advisory firms, lawyers, and so on.  I've spent 40+ years in that world, mostly as an in-house lawyer, but sometimes as outside counsel or advisor, and always as an observer of the weird stuff that goes on there.

If you've read my profile, you know that I'm also a voracious reader, an opera fanatic and a proud husband, father and grandfather, so you're going to see some posts about those subjects as well.  

Finally, since so many crazy things seem to happen every day all over the world, I will no doubt write about some of those as well.  I guess I'm saying that I'll write about whatever I want to write about.

I hope you enjoy my blog, but I welcome your comments (even critical ones).  And if you do enjoy it, tell your friends and family.