Comments on: Time for a shareholder revolt http://blogs.reuters.com/great-debate/2009/10/27/time-for-a-shareholder-revolt/ Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: thoma http://blogs.reuters.com/great-debate/2009/10/27/time-for-a-shareholder-revolt/#comment-40811 Wed, 04 Jan 2012 22:23:14 +0000 http://blogs.reuters.com/great-debate/?p=5583#comment-40811 The problem of course is that institutional investors use and abuse other people’s money in the same manner as teh ceos and directors. The victims are mostly small investors, including the mom- and-pop’s saving for their retirement. This money is play money for the top level executive and money manager. They get to leverage your money for their gain.For an example look at AMR American Airlines with a market cap of $100 million. Although they are in bankruptcy they are able to order $5 billion worth of planes. Compare it with CPA Copa airlines a tiny but profitable airline with a market cap of $2.6 billion. AMR’s assets are $25 billion, yet there is almost nothing for shareholders from one of the world’s largest and once esteemed airlines. Its a disgrace a two year old could run the company better.

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By: LA_Crystal http://blogs.reuters.com/great-debate/2009/10/27/time-for-a-shareholder-revolt/#comment-26752 Fri, 06 Nov 2009 08:19:28 +0000 http://blogs.reuters.com/great-debate/?p=5583#comment-26752 Hey – I’ve got an idea. Why don’t we find the brightest investment bankers in India and outsource the jobs for pennies on the typical Wall Street compensation package. Could they do worse?

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By: borisjimbo http://blogs.reuters.com/great-debate/2009/10/27/time-for-a-shareholder-revolt/#comment-26751 Fri, 06 Nov 2009 07:52:46 +0000 http://blogs.reuters.com/great-debate/?p=5583#comment-26751 Damn straight.

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By: Casper http://blogs.reuters.com/great-debate/2009/10/27/time-for-a-shareholder-revolt/#comment-26553 Mon, 02 Nov 2009 14:20:06 +0000 http://blogs.reuters.com/great-debate/?p=5583#comment-26553 Great article, good finance/legal theory. Now we must just cut out attorneys too, the more wicked half of the Middleman. One question begs, what is the distribution of owners of shares in banks on a histogram or bell curve ? Most probably highly leptokurtotic towards the super wealthy individuals.

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By: Dagfinn http://blogs.reuters.com/great-debate/2009/10/27/time-for-a-shareholder-revolt/#comment-26337 Thu, 29 Oct 2009 13:40:51 +0000 http://blogs.reuters.com/great-debate/?p=5583#comment-26337 The key point that lawmakers neeed to understand is that 1) Shareholders need to have a say in the pay of e.g. the 10 or 20 best paid people in the group, i.e. including wholly-owned subs.After all it is the shareholders’ money which ranks before and not after top management’s discretionary and excessive income.

2) Board compensation committees comprised of members effectively selected by the CEO will be inherently conflicted – often owing their board-seats to the CEO and, or chairman (often one and the same person) since, particularly in the USA, proxy-rules makes it nearly impossible for an open vote by shareholders for alternative board members.

3) The rules for nominating and electing board members must become fully transparent, conflicts of interest must be eliminated and the above mentioned proxy rules must be changed.

4) It is time that shareholders took back real control over their companies.
When this happens, we won’t need government functionaries to tell bankers what they should earn. Keep in mind, it isn’t generally the “normal bankers” i.e. the lenders we are talking about, but the traders and M&A deal-makers. Some, but not all, of these sometimes earn their bonuses by taking inordinate risks for their employers, but without any financial risk to themselves, and often with little down-side or reduction in bonuses if the bank looses money.

However, in the mean-time, it may be necessary.
That is unless / until bank boards “start to listen”, and stop adhering blindly to the “pay for talent” theory. After all, there are just so many hedge funds and “foreign” banks” that could pilfer talent (not all of which are attractive places to work otherwise, i.e. except for the money), and not even all top performers are only interested in money. You can after all only eat one dinner par day as they say and life e.g. on the Cayman Islands can get pretty boring quickly. This mess will sort itself out if bank management, boards and shareholders come to their senses.

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By: dave http://blogs.reuters.com/great-debate/2009/10/27/time-for-a-shareholder-revolt/#comment-26287 Wed, 28 Oct 2009 13:19:36 +0000 http://blogs.reuters.com/great-debate/?p=5583#comment-26287 I would have liked this article to be more focused. I got the message and agree. The financial industry must revise the “free-for-all” compensation for management. Pay for performance is a good start but not the total solution. Shareholders should and must have a hand in approving compensation packages. Investors should be paid first with everyone else in-line behind them. I’ve heard over and over “we must pay to keep talent”. The culture has clearly crossed many lines with this mantra. Managers expect to be (handsomely) paid – success or failure. Paying for talent has only managed to keep large companies large which translates into less competition in the market. Instead of a market player you have a market maker.

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By: Peter Swinson http://blogs.reuters.com/great-debate/2009/10/27/time-for-a-shareholder-revolt/#comment-26285 Wed, 28 Oct 2009 13:01:34 +0000 http://blogs.reuters.com/great-debate/?p=5583#comment-26285 I came to the conclusion a while back that investing in the stock market is a foolish thing to do with my retirement funds. After reading the lies in annual reports, seeing unpunished fraud and watching share price falloff a month before the bad news was public I decided that anyone without inside knowledge had no business in stocks. There are better local investments that do have more transparency.

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By: R Gilyead http://blogs.reuters.com/great-debate/2009/10/27/time-for-a-shareholder-revolt/#comment-26284 Wed, 28 Oct 2009 12:42:17 +0000 http://blogs.reuters.com/great-debate/?p=5583#comment-26284 Although there has been a lot of focus on management rewards lately, it interesting that little has been said about punishment. Under Corporate law, Boards are responsible for ensuring adequate risk management processes within their organisations. They are also required to report material risks to their shareholders. It is self-evident that many Boards of financial companies have proved incompetent in this regard. Why are there no prosecutions? Is the corporate legal framework, intended to protect sharehoders, really so toothless?

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By: yr http://blogs.reuters.com/great-debate/2009/10/27/time-for-a-shareholder-revolt/#comment-26282 Wed, 28 Oct 2009 12:20:32 +0000 http://blogs.reuters.com/great-debate/?p=5583#comment-26282 That’s what I call real, constructive financial innovation!

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By: James Reginald Harris, Jr http://blogs.reuters.com/great-debate/2009/10/27/time-for-a-shareholder-revolt/#comment-26281 Wed, 28 Oct 2009 12:04:25 +0000 http://blogs.reuters.com/great-debate/?p=5583#comment-26281 I believe that when you have pooling of capital, as we do today, that the investment managers will not critique their own decissions through shareholder activism. When returns are harder to come by in the long term, then activist shareholders will have better returns as money managers and subsequently their will be more activist shareholder money managers.

If we have a market of these type of money managers, we will certainly see an effort (and potentially through a majority lead stakeholder) moving for divestiture of various business lines (breakup) of several of our major banks. As regulations will tighten firstly on the most sizeable institutions, which should notably sell higher risk, higher profit ventures, pay down government held debt positions and increase efficiencies in their core businesses.

Now if I managed 5 billion dollars and said that, it would mean something.

In today’s market of the BIG, shareholder activists are not the ones in possession of the money, therefore their is no shareholder activism. Our system has been more active stripping down any potential shareholder activist to protect the benefits and rewards that are enjoyed by self-indulgent managments.

Who just so happen to have a very large lobby to assure a shareholder activist will never have a piece of the economic pie.

Any shareholder activist has been stripped like an abandon Porsche under a bridge in the bronx.

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