Three unreported reasons behind Japan’s declining wages

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Value investors tend not to care much about monthly wages and labor reports published by the government. That’s not to say compensation practices and levels don’t matter at a particular company one is researching. In Japan it’s just they matter for different reasons. Here’s why wages seem like they are always reported to be falling in Japan:

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Shareowners learning the importance of corporate governance, the hard way

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The topic of corporate governance excites few, far fewer than it should, and of course much fewer than say a big (but ultimately boring) story like Facebook’s (FB) pending IPO; though even Facebook and also Google (GOOG) have some newsworthy corporate governance issues. Corporate governance is only hot when there is an Aubrey McClendon type figure making the news — Chesapeake Energy (CHK) shareowners deserve to be outraged — or when a shareowner proxy vote overcomes all odds and leaves corporate directors and management in an awkward position, think Citigroup (C) getting a “no” on its say-on-pay. Continue reading

GE’s undervaluation and poor corporate governance

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General Electric’s (GE) annual shareowner meeting is tomorrow (Weds.) in Detroit. I urge those that haven’t voted to do so as soon as possible today to ensure votes are counted. To help make readers better informed and to generate discussion, I prepared two write-ups surrounding GE’s annual meeting: (1) a review of each item for vote on its proxy, and (2) a look at why GE is undervalued. [Hyperlinks visible in full article view.] It’s unmistakable to me the market has been efficient in valuing GE shares when considering GE’s deficient corporate governance and management. Please continue reading even if you have read the above two linked articles. Continue reading

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

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.

Privilege trumps posterity at General Electric

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The vote results from General Electric’s (GE) annual meeting held on April 27th were filed with the SEC on Tuesday.  A “5th grader” reviewing the results could easily see that General Electric prevailed overwhelmingly: in reelecting its directors, approving executive pay, and voting down shareowner proposals. I question whether GE’s board and its executives could honestly tell said 5th grader that the vote results reflect a fair representation of the company’s stakeholders, which for instance include employees, retirees, investors, corporate partners, customers, and the residents in communities in which it operates. Could these very directors teach what they claim? Continue reading

ISS goes soft on GE, but you dear reader don’t have to

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Proxy advisory firm Institutional Shareholder Services (known as ISS; owned by publicly-traded MSCI Inc.), had initially advised a vote against General Electric’s advisory (i.e. non-binding) vote on executive compensation. In an April 6, 2011, report, ISS reportedly said, “there is a misalignment between long-term company performance and CEO pay.” GE took offense and took the offensive claiming that ISS mistakenly attributed increases in accumulated pension values. GE also pleaded with select shareowners to disregard ISS and vote in its favor. Subsequently, GE filed an amended proxy statement declaring CEO Jeff Immelt would have to meet some hurdles (of mere mediocrity in one case) in order to earn his stock options. Hold your applause. I take offense that ISS fell for the bait and switched its advice to support GE’s executive compensation practices. Continue reading