Proxy statements underrated, a critical review of GE

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I have heard from fellow value investor Jacob Wolinsky (of ValueWalk) that Paul Sonkin, manager of the Hummingbird Value hedge fund, believes proxy statements are the most underrated of statements; Wolinsky perhaps inspired by that says rather than refer to the 3 key financial statements it really should be “4.” I couldn’t agree more. As I have been doing since 2010, I prepared an in-depth review of GE’s 2012 proxy statement. It really is imperative that investors read their companies’ proxies and not only vote more often but of course vote better informed.

Furthermore, with more governance and shareowner-rights minded investors gathering at sites like the United States Proxy ExchangeMoxyVote, Proxy Democracy, as well as TheShareholderActivist, we may gain enough critical mass to do more reviews like mine of GE, and light a fire under the large institutional holders that too often vote with management. Please see my review of GE, which appears exclusively on Seeking Alpha (dot-com). The comments there show that investors do care and are voting. The future is bright with Seeking Alpha recently hitting 1 million registered readers and Moxy Vote hitting the 100,000 mark.

In response to lobbyist nonsense on compensation disclosure

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I submitted the letter that follows below to the SEC on February 6th, largely in response to the January 19th letter 23 co-signers amongst business lobby groups sent to the SEC in regards to the Dodd-Frank provision about disclosure of median worker compensation and the ratio of median worker to CEO compensation. The SEC has understandably been very busy on numerous fronts and thus my letter has yet to appear among the comment letters submitted to the SEC (none have appeared since the Jan. 19th letter). Rather than wait for its eventual publication, I wanted to share my thoughts with readers without further delay.
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Reuters publishes Nader’s entreaty to Cisco, blocks comment

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Great to see Ralph Nader write something on the very important matter of dividends and stock buybacks, see, “It’s time for Cisco to cough up shareholder cash.” (Hyperlink visible in full article view) And great to see it published by a mainstream outlet like Reuters. Billions of dollars, if not tens of billions, at companies like Cisco and General Electric for example, are being blown on buybacks while dividends are a much lower priority. Unfortunately, however, Reuters blocked my comment to Mr. Nader’s article. Following is a copy of what I wrote. Continue reading

GE, Gibson Dunn vs. SEC & Me Take II

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Serendipitously on Martin Luther King, Jr. Day, I was able to relay great news for shareowners of General Electric (GE) and all publicly-traded companies. The SEC ruled the prior week that GE cannot omit my critical proposal (hyperlink appears in full article view; see page 2 of PDF) requesting its board reexamine dividend policy. GE has since resubmitted dubious arguments to the SEC seeking a reversal of opinion so that it can kill my proposal and ensure the truth of my findings and the merit of my resolution do not appear before us shareowners. Continue reading

When the proxy system works: SEC allows critical dividend proposal at GE

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As I pen this article on this day of remembering/honoring Martin Luther King Jr., an icon of activism, I am elated to share great news for General Electric (GE) and all public equity shareholders alike: the Securities and Exchange Commission has informally ruled that GE cannot omit my proposal from its 2012 Annual Meeting and proxy statement. In short, my proposal involves allowing shareholders to vote whether GE’s board should reexamine the company’s dividend policy. This may not sound terribly important in light of MLK’s efforts and accomplishments, but believe me, in light of the injustice that has taken place at GE (and at other listed companies), the SEC’s ruling is significant. Allow me to explain some of the procedure and reasoning behind my proposal, as well as GE’s reaction thus far. Continue reading

Is GE’s dividend really a top priority?

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Please see Seeking Alpha (“GE Dividend Still Taking Back Seat to Buybacks“) for my latest installment in the saga of General Electric’s (GE) reluctance to share the wealth with its shareholders. *Click “Read Full Story” below for hyperlink to Seeking Alpha.*

The high price of GE’s stock repurchases

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Beware the stock buyback story. While Berkshire Hathaway (BRK.A) (BRK.B) investors and the media were mostly pleasantly surprised by the company’s (i.e. Buffett’s) announcement yesterday saying it may buy back its stock under certain conditions, the situation is quite different at General Electric (GE). The most recent buybacks at GE have cost approximately $30/share, which is almost double the stock’s market price. And buybacks leading up to the 2008 crash were extremely destructive to value. Find out more in my exclusive article about GE’s buybacks on Seeking Alpha (dot-com).

General Electric: buybacks vs. dividends

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Heads up to readers that I have an exclusive article about GE published at Seeking Alpha, “General Electric: Eschew the Buybacks, Hike the Dividend More Meaningfully.” Shareholders and potential investors will be pleased to know that in fact, GE has a good problem on its hands of a much improved balance sheet, large cash pile, and robust cash flows. Now, what to do with the excess cash? See the preceding hyperlink for the article. Also, bookmark or visit back to see all of my articles on General Electric discussing matters pertinent to shareholders.

Board directors get lucky

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Dodd-Frank delivered “say-on-pay,” seemingly empowering shareholders (key word is seemingly), but the results thus far have largely been a director’s dream come true: overwhelming support for pay packages and as Fortune reports, a noticeable decrease in votes against directors. In other words, despite shareholders at last getting a say-on-pay (a right to vote — albeit a non-binding one — against excessive, runaway executive pay), the status-quo is alive and well. Making matters worse, directors may be patting themselves on the back, as (the sideshow? of) say-on-pay possibly distracted shareowners from connecting the dots that compensation committee members are amongst the directors. Not to mention other issues such as dubious director independence and their own excess remuneration and spreading themselves too thin. Regardless, a majority vote against a director counts. Whether you deny there’s a problem, didn’t know one exists, or are unsure about what to do, please read on. Continue reading

CEO pay: how much is enough?

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We have a problem in the United States, a destructive problem of gross inequality that is unlike any other developed economy and perhaps as bad or worse than so-called third-world economies.  Chief executive officers at large companies earn a multiple of 300-times or more than what the average worker earns — meantime unemployment remains high, and companies continue to guard margins by, among other things, reducing or limiting their overhead. We cannot blame companies for being cost conscious, but there is a fundamental fallacy when at the same time executive pay shows no sign of slowing. As a coauthor of the United States Proxy Exchange’s just-released “Draft Guidelines for Say-on-Pay Voting,” (PDF document) I kindly ask that readers review our report and provide comment. In fact, we have prepared our report as a request for comment in the hope that the feedback received will allow us to provide final guidelines. The USPX is a grassroots organization whose mission is to facilitate shareowner rights. Say-on-pay, as imperfect as it is, represents an opportunity to send a message to executives and board directors.