This document summarizes key corporate governance provisions in the Dodd-Frank Act relating to executive compensation, including say on pay votes, compensation committee independence, clawback policies, and pay versus performance disclosure requirements. It compares the clawback provisions in Dodd-Frank to those in the Sarbanes-Oxley Act. The document is authored by Stephen M. Bainbridge and is intended to concisely outline major corporate governance reforms targeting both large financial institutions and other public companies.
This document discusses several factors for purchasers to consider when evaluating the financial soundness of an owners corporation (OC). It suggests checking that the OC's savings are in line with budgets, that defects will be covered, levies are sufficient, and that hidden tax liabilities do not exist. The document also provides benchmarks for acceptable levy arrears rates and signs of good levy management policies and practices.
A New Arrow for The Pension Practitioners Quiver: Pension Risk TransferJay Dinunzio
Webinar Presentation Slides
Gone are the days of group annuity contracts only being able to satisfy the plan termination objectives of a pension plan sponsor. Today, there are a wide variety of useful applications for guaranteed institutional annuity contract structures to provide an alternative to traditional fixed income investments. Are you or your pension clients:
•Struggling with cost and volatility issues surrounding a defined benefit pension plan?
•Considering a liability driven investment strategy that will de-risk the plan investment and allow for stable, predictable funding?
•Limited by fixed income funds that only allow for simple duration matching, and expose the plan to cash flow mismatch risks?
•Unaware of the variety of customized institutional insurance contract structures available?
•Lacking a fiduciary process for evaluating and monitoring the attractiveness of insured pension solutions?
WEBINAR SLIDES: The next big thing in the pension market...liability settlementsJay Dinunzio
1) Pension settlements involve an employer discharging some or all of its pension benefit obligations by purchasing annuities from an insurance company or offering lump sum payments to plan participants.
2) The costs of a pension settlement can vary significantly depending on factors like the demographics of plan participants, election rates for lump sums versus annuities, and interest rates used to calculate lump sum amounts.
3) Companies with mature, frozen defined benefit plans that are financially flexible and focused on de-risking are often good candidates to consider a pension settlement. Next steps may include evaluating service providers, monitoring settlement cost environments, and discussing options within a pension committee.
Presentation on Corporate Governance and the changing financial landscape. Includes up to date discussion (as of April 2011) of Dodd-Frank Act elements as well as current topics and research. Links to papers via box.net.
The document summarizes a GMAC Fixed Income Investor Presentation from April 2006. A consortium led by Cerberus Capital will acquire a 51% controlling stake in GMAC from GM. Cerberus will invest $500 million in preferred stock and help arrange $25 billion in credit facilities to improve GMAC's liquidity and credit ratings. The transaction aims to strengthen GMAC's capital base, reduce its credit exposure to GM, and allow it to expand as an independent finance company. GM will retain a 49% stake and certain lease assets, and sign long-term services agreements to preserve its relationship with GMAC.
This document summarizes a presentation on the pensions crisis in Ireland. It discusses the origins of the crisis stemming from market downturns in the early 2000s. It outlines the major impacts of the global financial crisis on pensions in Ireland, including high deficits and falling membership levels. The document also reviews regulatory responses and measures taken by the Irish government to address the crisis, such as the pensions levy and moratorium on funding requirements. It concludes by discussing current events and an uncertain future for pensions in Ireland.
AIG Residential Mortgage Presentation - November 8, 2007finance2
AIG is involved in various segments of the US residential mortgage market. It provides mortgage insurance through United Guaranty and originates mortgages through American General Finance. It also provides credit protection on CDO structures containing US residential mortgage securities through AIG Financial Products. While certain segments of the mortgage market have experienced credit deterioration affecting AIG's mortgage guaranty insurance business, AIG remains comfortable with the size and quality of its investment portfolios and its overall role in the residential mortgage market.
This document discusses several factors for purchasers to consider when evaluating the financial soundness of an owners corporation (OC). It suggests checking that the OC's savings are in line with budgets, that defects will be covered, levies are sufficient, and that hidden tax liabilities do not exist. The document also provides benchmarks for acceptable levy arrears rates and signs of good levy management policies and practices.
A New Arrow for The Pension Practitioners Quiver: Pension Risk TransferJay Dinunzio
Webinar Presentation Slides
Gone are the days of group annuity contracts only being able to satisfy the plan termination objectives of a pension plan sponsor. Today, there are a wide variety of useful applications for guaranteed institutional annuity contract structures to provide an alternative to traditional fixed income investments. Are you or your pension clients:
•Struggling with cost and volatility issues surrounding a defined benefit pension plan?
•Considering a liability driven investment strategy that will de-risk the plan investment and allow for stable, predictable funding?
•Limited by fixed income funds that only allow for simple duration matching, and expose the plan to cash flow mismatch risks?
•Unaware of the variety of customized institutional insurance contract structures available?
•Lacking a fiduciary process for evaluating and monitoring the attractiveness of insured pension solutions?
WEBINAR SLIDES: The next big thing in the pension market...liability settlementsJay Dinunzio
1) Pension settlements involve an employer discharging some or all of its pension benefit obligations by purchasing annuities from an insurance company or offering lump sum payments to plan participants.
2) The costs of a pension settlement can vary significantly depending on factors like the demographics of plan participants, election rates for lump sums versus annuities, and interest rates used to calculate lump sum amounts.
3) Companies with mature, frozen defined benefit plans that are financially flexible and focused on de-risking are often good candidates to consider a pension settlement. Next steps may include evaluating service providers, monitoring settlement cost environments, and discussing options within a pension committee.
Presentation on Corporate Governance and the changing financial landscape. Includes up to date discussion (as of April 2011) of Dodd-Frank Act elements as well as current topics and research. Links to papers via box.net.
The document summarizes a GMAC Fixed Income Investor Presentation from April 2006. A consortium led by Cerberus Capital will acquire a 51% controlling stake in GMAC from GM. Cerberus will invest $500 million in preferred stock and help arrange $25 billion in credit facilities to improve GMAC's liquidity and credit ratings. The transaction aims to strengthen GMAC's capital base, reduce its credit exposure to GM, and allow it to expand as an independent finance company. GM will retain a 49% stake and certain lease assets, and sign long-term services agreements to preserve its relationship with GMAC.
This document summarizes a presentation on the pensions crisis in Ireland. It discusses the origins of the crisis stemming from market downturns in the early 2000s. It outlines the major impacts of the global financial crisis on pensions in Ireland, including high deficits and falling membership levels. The document also reviews regulatory responses and measures taken by the Irish government to address the crisis, such as the pensions levy and moratorium on funding requirements. It concludes by discussing current events and an uncertain future for pensions in Ireland.
AIG Residential Mortgage Presentation - November 8, 2007finance2
AIG is involved in various segments of the US residential mortgage market. It provides mortgage insurance through United Guaranty and originates mortgages through American General Finance. It also provides credit protection on CDO structures containing US residential mortgage securities through AIG Financial Products. While certain segments of the mortgage market have experienced credit deterioration affecting AIG's mortgage guaranty insurance business, AIG remains comfortable with the size and quality of its investment portfolios and its overall role in the residential mortgage market.
Hiring a Fiduciary Can Reduce Company Owners’ HeadachesAllanHenriques
Owners of small companies want their corporate retirement plans to serve their employees well and are legally required to do so. Unfortunately, it is commonly recognized that many owners of companies with less than $50 million in retirement assets don’t really get what it means to be a fiduciary. Employers need to understand what they’re up against—and the solution for these challenges. To help them, this report discusses the following:
- Definition of a retirement plan fiduciary and employer\' duties as fiduciaries
- Risks of not acting as a fiduciary
- Owner\'s ability to delegate some fiduciary responsibility, thus strengthening risk management
This document provides an investor update from GMAC's CFO in June 2006. It discusses GMAC's business lines and financial performance. It also summarizes GM's plan to sell a 51% controlling stake in GMAC to a consortium led by Cerberus Capital Management. The sale aims to strengthen GMAC's capital base, improve its credit ratings and liquidity, while preserving its relationship with GM. It is expected to benefit both GMAC and GM over the long term.
World Wildlife Fund Banking on Cod: Finance Lab at the Social Finance Forum 2012Social Finance
The document discusses WWF's strategy to generate new sources of financing for sustainable fisheries by raising the "sunken billions" lost annually from depleted fisheries stocks. It proposes creating a financial institution that provides loans to fishery enterprises implementing management measures, to be repaid from increased catches and ecosystem services as stocks recover over time. A pilot program is proposed for Newfoundland's Grand Banks fishery, where recovered fish stocks could generate $1 billion annually. However, scaling the initiative poses challenges around balancing impact versus financial viability. The key question is how to structure an early success that can both prove the model and expand its application.
Fanniemae has produced the PowerPoint for agents to get an overview of their role in the process. You can find it on Matthew Rathbun webpage www.TheAgentTrainer.com
LegalShield offers a monthly membership that provides access to legal advice and identity theft protection services. For a flat monthly fee, members can consult with attorneys on any legal matter without worrying about hourly costs. They also receive identity monitoring and restoration services. The presentation promotes LegalShield's business opportunity, which allows associates to earn commissions from their own membership sales and by building a sales team.
Directors and officers (D&O) liability insurance protects directors and officers from legal liabilities arising from their managerial duties. Some key risks include regulatory investigations, shareholder lawsuits, and employment claims. Successful claims can cost millions in legal fees and damages. It is important for companies to carefully consider their D&O coverage needs, key policy terms and exclusions, and ongoing risks from mergers or director retirements. Purchasing adequate D&O insurance can help protect personal assets and support good corporate governance.
Compensation critics are pressuring companies to hold advisory votes on executive pay packages. Supporters believe that large shareholder votes against excessive pay will influence compensation committees to better align pay with performance. The UK has passed legislation requiring advisory votes, and the US House may do the same. Proponents argue this accountability strengthens the link between executive pay and performance. However, others note performance targets are sometimes easy to meet, undermining that link.
Videonot.es discusses the concepts of affordances and constraints as they relate to video annotations. Affordances refer to what actions seem possible or intuitive based on an interface's design, while constraints limit or guide the possible actions. In conclusion, the document examines how video annotation tools can be designed to best support their intended uses through effective affordances and constraints.
Videonot.es discusses the concepts of affordances and constraints as they relate to video annotations. Affordances refer to what actions seem possible or intuitive based on an interface's design, while constraints limit or guide the possible actions. In conclusion, the document examines how video annotation tools can be designed to best support their intended uses through effective affordances and constraints.
Revitalizing Rule 14a-8's ordinary business exclusion for shareholder proposalsStephen Bainbridge
Who decides what products a company should sell, what prices it should charge, and so on? Is it the board of directors, the top management team, or the shareholders? In large corporations, of course, the answer is the top management team operating under the supervision of the board. As for the shareholders, they traditionally have had no role in these sort of operational decisions. In recent years, however, shareholders have increasingly used SEC Exchange Act Rule 14a-8 (the so-called shareholder proposal rule), to not just manage but even micromanage corporate decisions.
The rule permits a qualifying shareholder of a public corporation registered with the SEC to force the company to include a resolution and supporting statement in the company’s proxy materials for its annual meeting. In theory, Rule 14a-8 contains limits on shareholder micro-management. The rule permits management to exclude proposals on a number of both technical and substantive bases, of which the exclusion in Rule 14a-8(i)(7) of proposals relating to ordinary business operations is the most pertinent for present purposes. Rule 14a-8(i)(7) is intended to permit exclusion of a proposal that “seeks to ‘micro-manage’ the company by probing too deeply into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment.”
Unfortunately, court decisions have largely eviscerated the ordinary business operations exclusion. Corporate decisions involving “matters which have significant policy, economic or other implications inherent in them” may not be excluded as ordinary business matters, for example, which creates a gap through which countless proposals have made it onto corporate proxy statements.
I'm giving a talk today at the 2014 National Business Law Scholars Conference on the pending Supreme Court decision in Halliburton Co. v. Erica P. John Fund, Inc. It would have been easier, of course, if the Supreme Court had decided the case by now, but ....
The document discusses the design elements and conventions used in a student-created music magazine. It describes using a maximum of 3 colors (pink, blue, black and white) on the cover, contents page, and double page spread to follow magazine conventions. Images of mid-shots are used to appeal to the target music and fashion magazine audience. Additional elements like skylines, mastheads, sell lines and fonts are implemented based on popular music magazine styles. Rotated article blocks and larger fonts are used to make the content more fun and visually engaging for readers.
Amy discusses the technology she used to create her magazine. She used PowerPoint to present her research findings, a digital camera to take photos for the magazine without exceeding the camera's memory, and a video camera to record target audience research which provided feedback from the intended audience. This allowed her group to present their findings as a video. She utilized various technologies to conduct research, gather content, and present her work.
Amy discusses the technology she used to create her magazine project. She used PowerPoint to present her research findings, a digital camera to take photos for the magazine without exceeding the camera's memory, and a video camera to record target audience research and present the findings as a video.
Director versus Shareholder Primacy in New Zealand Company Law as Compared to...Stephen Bainbridge
Any model of corporate governance must answer two basic sets of questions: (1) Who decides? In other words, when push comes to shove, who has ultimate control? (2) Whose interests prevail? When the ultimate decision maker is presented with a zero sum game, in which it must prefer the interests of one constituency class over those of all others, whose interests prevail?
On the means question, prior scholarship has almost uniformly favored either shareholder primacy or managerialism. On the ends question, prior scholarship has tended to favor either shareholder primacy or various stakeholder theories. In contrast, this author has proposed a “director primacy” model in which the board of directors is the ultimate decision maker but is required to evaluate decisions using shareholder wealth maximization as the governing normative rule.
Shareholder primacy is widely assumed to be a defining characteristic of New Zealand company law. In assessing that assumption, it is essential to distinguish between the means and ends of corporate governance. As to the latter, New Zealand law does establish shareholder wealth maximization as the corporate objective. As to the former, despite assigning managerial authority to the board of directors, New Zealand company law gives shareholders significant control rights.
Comparing New Zealand company law to the considerably more board-centric regime of U.S. corporate law raises a critical policy issue. If the separation of ownership and control mandated by the latter has significant efficiency advantages, as this article has argued, why has New Zealand opted for a more shareholder-centric model? The most plausible explanation focuses on domain issues, which suggest that there are a small number of New Zealand firms for which director primacy would be optimal. The unitary nature of the New Zealand government may also be a factor, because the competitive federalism inherent in the U.S. system of government promotes a race to the top in which efficient corporate law rules are favored.
Teachers should let students explore the iPads on the first day to get comfortable with the technology. Students and teachers should then collectively decide on rules for appropriate iPad use in class and have students record the rules on their iPads. Examples of suggested rules include keeping screens covered when the teacher is talking, holding the iPad with two hands, and storing the iPad away from walkways. Teachers are advised to communicate expectations and rules with parents before sending iPads home and to have a sign out system in place.
The document summarizes reforms to executive compensation and corporate governance from the Dodd-Frank Act, including requirements for companies to hold regular non-binding votes on executive compensation ("Say on Pay") and golden parachutes. It discusses results from the first Say on Pay votes at large companies, where the average support was over 90%, and potential litigation related to boards approving pay increases despite negative Say on Pay votes. The last part notes that while boards should consider shareholder preferences, Delaware law does not require them to follow shareholder wishes or override the business judgment rule.
Studying law in the united states-A guide for foreign LLM candidatesStephen Bainbridge
This is a brief overview for foreign law graduates considering pursuing an LLM degree at a U.S. law school, with specific application to the UCLA School of Law.
This deck presents an introduction and overview of the so-called Benefit Corporation (a.k.a. the Public Benefit Corporation). It contrasts benefit corporations to related entities such as B Corps, flexible purpose corporations, non-profit corporations, and traditional business corporations.
M&A Law: The Lawyer's Role; Recent Delaware DevelopmentsStephen Bainbridge
A two-hour presentation on the role of the lawyer in the M&A team, the place of legal due diligence in the overall buyer side's due diligence process, and a review of recent Delaware M&A legal developments. I'm available to give it to your law firm, company, or group.
Defending the Board Centric Model of Corporate GovernanceStephen Bainbridge
All organizations must have some mechanism for aggregating the preferences of the organization’s constituencies and converting them into collective decisions. As Kenneth Arrow explained in work that provided the foundation on which the director primacy model was constructed, such mechanisms fall out on a spectrum between “consensus” and “authority.” Consensus-based structures are designed to allow all of a firm’s stakeholders to participate in decision making. Authority-based decision-making structures are characterized by the existence of a central decision maker to whom all firm employees ultimately report and which is empowered to make decisions unilaterally without approval of other firm constituencies. Such structures are best suited for firms whose constituencies face information asymmetries and have differing interests. It is because the corporation demonstrably satisfies those conditions that vesting the power of fiat in a central decision maker—i.e., the board of directors—is the essential characteristic of its governance.
Shareholders have widely divergent interests and distinctly different access to information. To be sure, most shareholders invest in a corporation expecting financial gains, but once uncertainty is introduced shareholder opinions on which course will maximize share value are likely to vary widely. In addition, shareholder investment time horizons vary from short-term speculation to long-term buy-and-hold strategies, which in turn is likely to result in disagreements about corporate strategy. Likewise, shareholders in different tax brackets are likely to disagree about such matters as dividend policy, as are shareholders who disagree about the merits of allowing management to invest the firm’s free cash flow in new projects.
As to Arrow’s information condition, shareholders lack incentives to gather the information necessary to actively participate in decision making. A rational shareholder will expend the effort necessary to make informed decisions only if the expected benefits outweigh the costs of doing so. Given the length and complexity of corporate disclosure documents, the opportunity cost entailed in making informed decisions is both high and apparent. In contrast, the expected benefits of becoming informed are quite low, as most shareholders’ holdings are too small to have significant effect on the vote’s outcome. Accordingly, corporate shareholders are rationally apathetic.
In sum, it would be surprising if the modern public corporation’s governance arrangements attempted to make use of consensus-based decision making anywhere except perhaps within the central decision-making body at the apex of a branching hierarchy. Given the collective action problems inherent with such a large number of potential decision makers, the differing interests of shareholders, and their varying levels of knowledge about the firm, it is “cheaper and more efficient to transmit all the pieces of information to a central place.
This presentation provides an overview of several perspectives on corporate social responsibility, including a review of the famous Berle-Dodd debate of the 1930s and Milton Friedman's very famous NY Times article.
Hiring a Fiduciary Can Reduce Company Owners’ HeadachesAllanHenriques
Owners of small companies want their corporate retirement plans to serve their employees well and are legally required to do so. Unfortunately, it is commonly recognized that many owners of companies with less than $50 million in retirement assets don’t really get what it means to be a fiduciary. Employers need to understand what they’re up against—and the solution for these challenges. To help them, this report discusses the following:
- Definition of a retirement plan fiduciary and employer\' duties as fiduciaries
- Risks of not acting as a fiduciary
- Owner\'s ability to delegate some fiduciary responsibility, thus strengthening risk management
This document provides an investor update from GMAC's CFO in June 2006. It discusses GMAC's business lines and financial performance. It also summarizes GM's plan to sell a 51% controlling stake in GMAC to a consortium led by Cerberus Capital Management. The sale aims to strengthen GMAC's capital base, improve its credit ratings and liquidity, while preserving its relationship with GM. It is expected to benefit both GMAC and GM over the long term.
World Wildlife Fund Banking on Cod: Finance Lab at the Social Finance Forum 2012Social Finance
The document discusses WWF's strategy to generate new sources of financing for sustainable fisheries by raising the "sunken billions" lost annually from depleted fisheries stocks. It proposes creating a financial institution that provides loans to fishery enterprises implementing management measures, to be repaid from increased catches and ecosystem services as stocks recover over time. A pilot program is proposed for Newfoundland's Grand Banks fishery, where recovered fish stocks could generate $1 billion annually. However, scaling the initiative poses challenges around balancing impact versus financial viability. The key question is how to structure an early success that can both prove the model and expand its application.
Fanniemae has produced the PowerPoint for agents to get an overview of their role in the process. You can find it on Matthew Rathbun webpage www.TheAgentTrainer.com
LegalShield offers a monthly membership that provides access to legal advice and identity theft protection services. For a flat monthly fee, members can consult with attorneys on any legal matter without worrying about hourly costs. They also receive identity monitoring and restoration services. The presentation promotes LegalShield's business opportunity, which allows associates to earn commissions from their own membership sales and by building a sales team.
Directors and officers (D&O) liability insurance protects directors and officers from legal liabilities arising from their managerial duties. Some key risks include regulatory investigations, shareholder lawsuits, and employment claims. Successful claims can cost millions in legal fees and damages. It is important for companies to carefully consider their D&O coverage needs, key policy terms and exclusions, and ongoing risks from mergers or director retirements. Purchasing adequate D&O insurance can help protect personal assets and support good corporate governance.
Compensation critics are pressuring companies to hold advisory votes on executive pay packages. Supporters believe that large shareholder votes against excessive pay will influence compensation committees to better align pay with performance. The UK has passed legislation requiring advisory votes, and the US House may do the same. Proponents argue this accountability strengthens the link between executive pay and performance. However, others note performance targets are sometimes easy to meet, undermining that link.
Videonot.es discusses the concepts of affordances and constraints as they relate to video annotations. Affordances refer to what actions seem possible or intuitive based on an interface's design, while constraints limit or guide the possible actions. In conclusion, the document examines how video annotation tools can be designed to best support their intended uses through effective affordances and constraints.
Videonot.es discusses the concepts of affordances and constraints as they relate to video annotations. Affordances refer to what actions seem possible or intuitive based on an interface's design, while constraints limit or guide the possible actions. In conclusion, the document examines how video annotation tools can be designed to best support their intended uses through effective affordances and constraints.
Revitalizing Rule 14a-8's ordinary business exclusion for shareholder proposalsStephen Bainbridge
Who decides what products a company should sell, what prices it should charge, and so on? Is it the board of directors, the top management team, or the shareholders? In large corporations, of course, the answer is the top management team operating under the supervision of the board. As for the shareholders, they traditionally have had no role in these sort of operational decisions. In recent years, however, shareholders have increasingly used SEC Exchange Act Rule 14a-8 (the so-called shareholder proposal rule), to not just manage but even micromanage corporate decisions.
The rule permits a qualifying shareholder of a public corporation registered with the SEC to force the company to include a resolution and supporting statement in the company’s proxy materials for its annual meeting. In theory, Rule 14a-8 contains limits on shareholder micro-management. The rule permits management to exclude proposals on a number of both technical and substantive bases, of which the exclusion in Rule 14a-8(i)(7) of proposals relating to ordinary business operations is the most pertinent for present purposes. Rule 14a-8(i)(7) is intended to permit exclusion of a proposal that “seeks to ‘micro-manage’ the company by probing too deeply into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment.”
Unfortunately, court decisions have largely eviscerated the ordinary business operations exclusion. Corporate decisions involving “matters which have significant policy, economic or other implications inherent in them” may not be excluded as ordinary business matters, for example, which creates a gap through which countless proposals have made it onto corporate proxy statements.
I'm giving a talk today at the 2014 National Business Law Scholars Conference on the pending Supreme Court decision in Halliburton Co. v. Erica P. John Fund, Inc. It would have been easier, of course, if the Supreme Court had decided the case by now, but ....
The document discusses the design elements and conventions used in a student-created music magazine. It describes using a maximum of 3 colors (pink, blue, black and white) on the cover, contents page, and double page spread to follow magazine conventions. Images of mid-shots are used to appeal to the target music and fashion magazine audience. Additional elements like skylines, mastheads, sell lines and fonts are implemented based on popular music magazine styles. Rotated article blocks and larger fonts are used to make the content more fun and visually engaging for readers.
Amy discusses the technology she used to create her magazine. She used PowerPoint to present her research findings, a digital camera to take photos for the magazine without exceeding the camera's memory, and a video camera to record target audience research which provided feedback from the intended audience. This allowed her group to present their findings as a video. She utilized various technologies to conduct research, gather content, and present her work.
Amy discusses the technology she used to create her magazine project. She used PowerPoint to present her research findings, a digital camera to take photos for the magazine without exceeding the camera's memory, and a video camera to record target audience research and present the findings as a video.
Director versus Shareholder Primacy in New Zealand Company Law as Compared to...Stephen Bainbridge
Any model of corporate governance must answer two basic sets of questions: (1) Who decides? In other words, when push comes to shove, who has ultimate control? (2) Whose interests prevail? When the ultimate decision maker is presented with a zero sum game, in which it must prefer the interests of one constituency class over those of all others, whose interests prevail?
On the means question, prior scholarship has almost uniformly favored either shareholder primacy or managerialism. On the ends question, prior scholarship has tended to favor either shareholder primacy or various stakeholder theories. In contrast, this author has proposed a “director primacy” model in which the board of directors is the ultimate decision maker but is required to evaluate decisions using shareholder wealth maximization as the governing normative rule.
Shareholder primacy is widely assumed to be a defining characteristic of New Zealand company law. In assessing that assumption, it is essential to distinguish between the means and ends of corporate governance. As to the latter, New Zealand law does establish shareholder wealth maximization as the corporate objective. As to the former, despite assigning managerial authority to the board of directors, New Zealand company law gives shareholders significant control rights.
Comparing New Zealand company law to the considerably more board-centric regime of U.S. corporate law raises a critical policy issue. If the separation of ownership and control mandated by the latter has significant efficiency advantages, as this article has argued, why has New Zealand opted for a more shareholder-centric model? The most plausible explanation focuses on domain issues, which suggest that there are a small number of New Zealand firms for which director primacy would be optimal. The unitary nature of the New Zealand government may also be a factor, because the competitive federalism inherent in the U.S. system of government promotes a race to the top in which efficient corporate law rules are favored.
Teachers should let students explore the iPads on the first day to get comfortable with the technology. Students and teachers should then collectively decide on rules for appropriate iPad use in class and have students record the rules on their iPads. Examples of suggested rules include keeping screens covered when the teacher is talking, holding the iPad with two hands, and storing the iPad away from walkways. Teachers are advised to communicate expectations and rules with parents before sending iPads home and to have a sign out system in place.
The document summarizes reforms to executive compensation and corporate governance from the Dodd-Frank Act, including requirements for companies to hold regular non-binding votes on executive compensation ("Say on Pay") and golden parachutes. It discusses results from the first Say on Pay votes at large companies, where the average support was over 90%, and potential litigation related to boards approving pay increases despite negative Say on Pay votes. The last part notes that while boards should consider shareholder preferences, Delaware law does not require them to follow shareholder wishes or override the business judgment rule.
Studying law in the united states-A guide for foreign LLM candidatesStephen Bainbridge
This is a brief overview for foreign law graduates considering pursuing an LLM degree at a U.S. law school, with specific application to the UCLA School of Law.
This deck presents an introduction and overview of the so-called Benefit Corporation (a.k.a. the Public Benefit Corporation). It contrasts benefit corporations to related entities such as B Corps, flexible purpose corporations, non-profit corporations, and traditional business corporations.
M&A Law: The Lawyer's Role; Recent Delaware DevelopmentsStephen Bainbridge
A two-hour presentation on the role of the lawyer in the M&A team, the place of legal due diligence in the overall buyer side's due diligence process, and a review of recent Delaware M&A legal developments. I'm available to give it to your law firm, company, or group.
Defending the Board Centric Model of Corporate GovernanceStephen Bainbridge
All organizations must have some mechanism for aggregating the preferences of the organization’s constituencies and converting them into collective decisions. As Kenneth Arrow explained in work that provided the foundation on which the director primacy model was constructed, such mechanisms fall out on a spectrum between “consensus” and “authority.” Consensus-based structures are designed to allow all of a firm’s stakeholders to participate in decision making. Authority-based decision-making structures are characterized by the existence of a central decision maker to whom all firm employees ultimately report and which is empowered to make decisions unilaterally without approval of other firm constituencies. Such structures are best suited for firms whose constituencies face information asymmetries and have differing interests. It is because the corporation demonstrably satisfies those conditions that vesting the power of fiat in a central decision maker—i.e., the board of directors—is the essential characteristic of its governance.
Shareholders have widely divergent interests and distinctly different access to information. To be sure, most shareholders invest in a corporation expecting financial gains, but once uncertainty is introduced shareholder opinions on which course will maximize share value are likely to vary widely. In addition, shareholder investment time horizons vary from short-term speculation to long-term buy-and-hold strategies, which in turn is likely to result in disagreements about corporate strategy. Likewise, shareholders in different tax brackets are likely to disagree about such matters as dividend policy, as are shareholders who disagree about the merits of allowing management to invest the firm’s free cash flow in new projects.
As to Arrow’s information condition, shareholders lack incentives to gather the information necessary to actively participate in decision making. A rational shareholder will expend the effort necessary to make informed decisions only if the expected benefits outweigh the costs of doing so. Given the length and complexity of corporate disclosure documents, the opportunity cost entailed in making informed decisions is both high and apparent. In contrast, the expected benefits of becoming informed are quite low, as most shareholders’ holdings are too small to have significant effect on the vote’s outcome. Accordingly, corporate shareholders are rationally apathetic.
In sum, it would be surprising if the modern public corporation’s governance arrangements attempted to make use of consensus-based decision making anywhere except perhaps within the central decision-making body at the apex of a branching hierarchy. Given the collective action problems inherent with such a large number of potential decision makers, the differing interests of shareholders, and their varying levels of knowledge about the firm, it is “cheaper and more efficient to transmit all the pieces of information to a central place.
This presentation provides an overview of several perspectives on corporate social responsibility, including a review of the famous Berle-Dodd debate of the 1930s and Milton Friedman's very famous NY Times article.
The document discusses the major components of financing deals, including senior debt, long term debt, subordinated debt, seller takebacks, and equity. It describes how factors like historical cash flow, industry, and available debt financing drive deal structures. Key guidelines for leveraged financing are to maximize the lowest cost debt while ensuring cash flow can cover debt payments and flexibility for problems. Bank loan decisions consider management quality, industry trends, collateral, equity levels, and fees. Senior debt includes asset-based loans and revolving credit lines secured by assets. Subordinated debt is junior to bank debt and has high interest rates and equity kickers. Inter-creditor agreements define priorities between creditors. Proper management and realistic projections are important
Danajamin Nasional Berhad is Malaysia's first financial guarantee insurer established by the Prime Minister with an initial capital of RM1 billion from the government. It will provide insurance guarantees of up to RM15 billion to facilitate the issuance of private debt securities. Danajamin will assess companies' creditworthiness and provide risk-based guarantees in exchange for premiums, enabling issuers access to long-term capital at competitive rates. This aims to stimulate the economy by improving credit availability, particularly for deserving lower investment grade firms.
The document provides an overview of the Integrity with GFD solution, a new wealth accumulation and protection solution for business owners. It addresses main challenges business owners face like not having enough money for retirement or rewarding family. The Integrity solution offers accelerated wealth accumulation, additional life insurance protection, and significant tax advantages. It works by providing an upfront loan that is deposited into a universal life insurance policy to grow tax-deferred. Business owners can then enjoy multiple exit strategies like selling the business, using it for retirement income, or leaving a financial legacy.
Manageable Debt Solutions is a full-service financial institution that aims to provide ethical and honest financial services. It specializes in offering a variety of services like debt consolidation, debt settlement, bankruptcy processing, mortgage relief programs, credit restoration, and financial education to help clients manage their finances. The company is dedicated to customer service and chooses caring, ethical employees, and it guarantees customer satisfaction.
This document discusses wealth management services that a credit union could offer to its members. It begins by asking what members' needs and fears are currently. Then it discusses how the credit union relationship is the most valuable asset and asks what the answer is for both members and the credit union. The document goes on to define wealth management and describe how a credit union could implement holistic wealth management services across a member's lifetime. Key considerations for becoming a wealth manager like products, marketing, technology, compliance and training are also outlined. Examples of three families' financial situations with and without wealth management services are provided.
Credit Union Fee Income Through Wealth Management Webinar Handouts | Money Co...NAFCU Services Corporation
This document discusses wealth management services that a credit union could offer to its members. It begins by asking what members' needs and fears are currently. Then it outlines demographic groups among members and the high, medium, and low needs they may have. The rest of the document discusses what wealth management entails, how a credit union can develop wealth management as an integrated platform, marketing and educational support available, sample seminar topics, compliance considerations, and technology solutions. It provides examples of three families' financial situations and returns under different wealth management strategies. The overall message is that wealth management can be a valuable service for credit unions to offer members.
Regaining control of your pensions scheme conferenceBlake Morgan
Blake Lapthorn solicitors' Pensions team held a conference during November 2009 on regaining control of your pensions scheme, taking a look at some of today's challenges and tomorrow's issues.
2011 Senior Executive Forum Final Presentationphil_waldeck
The document summarizes key points from a conference on managing employee benefits. It discusses increased focus by finance executives on pension benefits risk management and cost reduction due to challenges posed by healthcare reform and pension regulations. Specific solutions covered for mitigating pension plan risks include liability driven investing, buy-ins where an insurer takes over a portion of liability, and buy-outs where the insurer fully assumes the plan's liability. Developing a long-term strategy to transition pension plans through selective buy-ins or full buy-outs is recommended.
Studies have repeatedly shown that green buildings out perform their peers with respect to rent, sale price, and other financial performance metrics. Investors have taken notice, and they are looking for the tools and information needed to guide investments in green. This expert panel will introduce cutting-edge research and new tools to help understand the financial performance of green buildings as individual assets and as part of real estate investment trusts and mortgage-based securities. This exceptional group will provide state-of-the-art insights into the present and future of green building finance.
External accountant, specially the Big 4s, and their performance and liability around the long list of financial scandals and corporate fraud the last decade.
Corporate-owned life insurance provides more benefits than bank-owned life insurance. It is usually less expensive, provides more control and flexibility, and offers a significant tax advantage. Specifically, corporate-owned life insurance will let the business choose the beneficiary, provide multiple payout options to beneficiaries, guarantee some protection from creditors, offer help settling the estate, pay out even in the case of suicide after two years, waive premiums if the insured becomes disabled, allow changing to permanent coverage, and continue coverage after debts are paid off.
Cambridge Realty Capital Companies CEO Jeff Davis speaks at the Wisconsin Assisted Living
CEO Roundtable Discussions.
Follow him on Twitter: @jdaviscambridge
XYZ LTD is restructuring its debt through securitization of assets. It proposes two options: 1) using inter-firm lending to offset money owed between clients and units, and 2) implementing fees to offset funds owed between clients and units. The document then discusses internal debt restructuring through capitalizing debt and classifying lending as working capital or asset leasing. It proposes a simple securitization model using a special purpose vehicle to sell asset-backed securities to investors. This would transfer credit risk to investors while providing XYZ LTD with funds to repay debt.
This document discusses thin capitalization and arm's length pricing. It begins by explaining capital structuring and the importance of determining an ideal capital structure for a company. It then defines thin capitalization as occurring when a company's capital is made up of a much greater proportion of debt than equity, creating risks. Various countries employ different approaches to thin capitalization rules, including fixed debt-to-equity ratios, subjective analysis of financing terms, and rules concerning hidden profit distributions. The document provides a brief comparative analysis of thin capitalization rules in countries like Australia, Germany, France, the US, India, and Japan.
This document provides an overview of key concepts related to a company's balance sheet. It discusses how business activities affect balance sheet accounts, how companies keep track of balances, and common account titles that appear on the balance and income statements. The document also covers the accounting equation, analyzing transactions, preparing journal entries, and using T-accounts to track balances over time.
- The document discusses how corporate pension plans can impact stock prices. It analyzes the relationship between pension liabilities and stock performance.
- The study found empirical evidence that stocks of companies with large pension liabilities relative to their market cap (over 25%) underperformed during the 2007-2009 financial crisis but then outperformed during the recovery from 2009-2010.
- The analysis also found that stocks of companies with larger pension liabilities tend to have higher betas, meaning their prices are more volatile, and the difference in volatility between pension-heavy and non pension-heavy stocks grew after the financial crisis began.
This document provides information about an upcoming two-day workshop on loan and mortgage fraud to be held in Kuala Lumpur, Malaysia on February 24-25, 2009. The workshop will be led by Tommy Seah and will cover topics such as defining mortgage fraud, common schemes, detecting fraud, investigating suspected wrongdoing, and preventing fraud. It provides an agenda with sessions on understanding the environment, conducting interviews and investigations, ethics, and case studies. Details on registering and payment are also included.
MBA Panel on the crisis, Montreal November 2008JanneEricsson
This document discusses structured finance products like collateralized debt obligations (CDOs) and credit default swaps (CDS) that contributed to the recent financial crisis. It explains how CDOs pooled and tranched various debt obligations, and how CDS allowed entities to synthetically buy and sell credit risk. It also describes how low interest rates, rising home prices, and securitization of lower quality loans created a loop that increased risk. When the crisis emerged, it was initially seen as a liquidity problem, but government takeovers of Fannie Mae, Freddie Mac, and Lehman Brothers showed it was also a solvency issue.
Although the prohibition on taking of organizational opportunities is well established, the standards applied to this problem in corporate law disputes are vague and imprecise. Corporate directors and officers lack clear guidance as to when a business venture may be taken for themselves or must first be offered to the corporation. This article reviews the relevant Delaware case law, focusing on the ambiguities inherent therein. It then offers a proposed alternative regime, providing greater certainty and predictability.
The article then turns the question of why Delaware courts have resisted adopting a more determinate standard, such as the one offered here. It argues that — at least in this context — Delaware judges are concerned neither with maximizing the number of Delaware incorporations or promoting the interests of the Delaware bar. Instead, mandatory indeterminacy with respect to corporate opportunities is driven by the Delaware courts’ self-interest in maximizing their reputation.
In the Parable of the Talents, neither the master nor any of the servants make any appeal to legal standards, but it seems improbable that there was no background set of rules against which the story played out. To the legal mind, the Parable thus raises some interesting questions: What was the relationship between the master and the servant? What were the servants’ duties? How do the likely answers to those questions map to modern relations, such as those of principal and agent? Curiously, however, there are almost no detailed analyses of these questions in Anglo-American legal scholarship.
I've put together a report for a family meeting to choose our next car. We want a compact SUV that can be flat towed behind our Itasca Navion motorhome. When various other filters are applied we ended up with four choices: Chevrolet Equinox, GMC Terrain, Jeep Cherokee, and Jeep Wrangler. This report provides an overview of the pros and cons of the various cars.
New Zealand Takeovers Code versus USA Williams Act and Delaware Corporate LawStephen Bainbridge
I was privileged to guest lecture the Takeovers course at the University of Auckland Faculty of Law on May 22, 2014. This presentation provides an overview of some key differences between the New Zealand Takeovers Code and US law.
Shareholder Activism in the United States: Managing Shareholder InterventionsStephen Bainbridge
This is a presentation I gave at the University of Auckland Faculty of Law on May 19, 2014. It is based on my paper Preserving Director Primacy by Managing Shareholder Interventions (August 27, 2013), which is available at SSRN: http://ssrn.com/abstract=2298415.
Even though the primacy of the board of director primacy is deeply embedded in state corporate law, shareholder activism nevertheless has become an increasingly important feature of corporate governance in the United States. The financial crisis of 2008 and the ascendancy of the Democratic Party in Washington created an environment in which activists were able to considerably advance their agenda via the political process. At the same time, changes in managerial compensation, shareholder concentration, and board composition, outlook, and ideology, have also empowered activist shareholders.
There are strong normative arguments for disempowering shareholders and, accordingly, for rolling back the gains shareholder activists have made. Whether that will prove possible in the long run or not, however, in the near term attention must be paid to the problem of managing shareholder interventions.
This problem arises because not all shareholder interventions are created equally. Some are legitimately designed to improve corporate efficiency and performance, especially by holding poorly performing boards of directors and top management teams to account. But others are motivated by an activist’s belief that he or she has better ideas about how to run the company than the incumbents, which may be true sometimes but often seems dubious. Worse yet, some interventions are intended to advance an activist’s agenda that is not shared by other investors.
This paper proposes managing shareholder interventions through changes to the federal proxy rules designed to make it more difficult for activists to effect operational changes, while encouraging shareholder efforts to hold directors and managers accountable.
A Quick Comparison of USA Corporate Law and New Zealand Company LawStephen Bainbridge
This document provides an overview and comparison of corporate governance laws in the United States and New Zealand. It discusses three key points:
1. Corporate laws in the US give directors primacy over shareholders in public corporations, while New Zealand law assumes shareholder primacy. However, director primacy may still apply in New Zealand given the small number of public corporations and concentrated share ownership.
2. US laws greatly limit shareholder power and involvement in business decisions, while New Zealand laws allow for more direct shareholder participation and removal of directors.
3. The domain of director primacy is defined by the separation of ownership and control in large public corporations, which mostly exist in the US but not in New Zealand where
A review of insider trading law, with emphasis on its application to recent cases involving hedge funds. Reviews Preet Bharara’s scorecard, the Galleon case, materiality and the “Mosaic Theory," and tipping chains.
This document discusses the new normal of governance expectations for nonprofit directors. It outlines that directors are now expected to provide real oversight and understand their fiduciary duties, rather than just rubberstamping decisions. Directors must use reasonable care and ensure compliance, manage conflicts of interest, and have proper oversight systems. As long as directors act in good faith and apply due diligence, the risk of liability remains low.
This presentation is based on Bainbridge, Stephen M., Dodd-Frank: Quack Federal Corporate Governance Round II (September 7, 2010). UCLA School of Law, Law-Econ Research Paper No. 10-12, forthcoming in the Minnesota Law Review. Available at SSRN: http://ssrn.com/abstract=1673575
Key provisionsSection 951’s so-called “say on pay” mandate, requiring periodic shareholder advisory votes on executive compensation.Section 952’s mandate that the compensation committees of reporting companies must be fully independent and that those committees be given certain specified oversight responsibilities.Section 953’s direction that the SEC require companies to provide additional disclosures with respect to executive compensation.Section 954’s expansion of SOX’s rules regarding clawbacks of executive compensation.Section 971’s affirmation that the SEC has authority to promulgate a so-called “shareholder access” rule pursuant to which shareholders would be allowed to use the company’s proxy statement to nominate candidates to the board of directors.Section 972’s requirement that companies disclose whether the same person holds both the CEO and Chairman of the Board positions and why they either do or do not do so.--Dodd Frank 404 relief for micro caps--mandatory risk management committees for BHCs and nonbank financial instituitions
It seems clear that systemic flaws in the corporate governance of Main Street corporations were not a causal factor in the housing bubble, the bursting of that bubble, or the subsequent credit crunch. To the contrary, “[a] striking aspect of the stock market meltdown of 2008 is that it occurred despite the strengthening of U.S. corporate governance over the past few decades and a reorientation toward the promotion of shareholder value.” Brian R. Cheffins, Did Corporate Governance “Fail” During the 2008 Stock Market Meltdown? The Case of the S&P 500, 65 Bus. Law. 1, 2 (2009).But what about bank corporate governance? Especially executive compensation practices. Here opinion is sharply divided.For a good overview see Skeel, David A., The New Financial Deal: Understanding the Dodd-Frank Act and its (Unintended) Consequences (October 27, 2010). THE NEW FINANCIAL DEAL: UNDERSTANDING THE DODD-FRANK ACT AND ITS (UNINTENDED) CONSEQUENCES, Wiley, November 2010 ; U of Penn, Inst for Law & Econ Research Paper No. 10-21. Available at SSRN: http://ssrn.com/abstract=1690979See also Kling, Arnold, Not What They Had in Mind: A History of Policies that Produced the Financial Crisis of 2008 (September 15, 2009). Available at SSRN: http://ssrn.com/abstract=1474430.
Limited liability means that corporate officers and directors, like shareholders, are not liable for the firm’s debts or other obligations. In contrast, options and other forms of incentive-based pay offered executives potentially enormous upside gains. Because risk and return are positively correlated, however, this meant taking on ever-increasing risks.Because shareholders have a long-term investment horizon, they prefer risk-return policies that produce sustainable share price appreciation. But when we put limited liability and option-based compensation together with the relatively short vesting period for compensatory stock options relative to the long maturity of mortgage loans, banks ended up rewarding executives for short term returns while not holding them responsible for long term risks. Stock options thus give management a short term investment horizon creating incentives to push the share price up, but not necessarily in a sustainable way.Scholars are divided as to whether this incentive structure causally contributed to either the housing or credit crunch. What seems clear, however, is that the problem was localized to the financial sector. Whether or not financial institution executive compensation practices contributed to the crisis, there is no evidence that executive compensation at Main Street corporations did so.
Key provisionsSection 951’s so-called “say on pay” mandate, requiring periodic shareholder advisory votes on executive compensation.Section 952’s mandate that the compensation committees of reporting companies must be fully independent and that those committees be given certain specified oversight responsibilities.Section 953’s direction that the SEC require companies to provide additional disclosures with respect to executive compensation.Section 954’s expansion of SOX’s rules regarding clawbacks of executive compensation.Section 971’s affirmation that the SEC has authority to promulgate a so-called “shareholder access” rule pursuant to which shareholders would be allowed to use the company’s proxy statement to nominate candidates to the board of directors.Section 972’s requirement that companies disclose whether the same person holds both the CEO and Chairman of the Board positions and why they either do or do not do so.--Dodd Frank 404 relief for micro caps--mandatory risk management committees for BHCs and nonbank financial instituitions
Curiously, there is disagreement as to whether Section 952 mandates that SRO listing standards require all listed companies to have an independent compensation committee. The issue has salience because current NASDAQ listing standards permit executive compensation decisions to be made either by a committee comprised solely of independent directors or by a majority of the independent directors. Nothing in § 952 or the legislative history addresses explicitly the status of those standards, thereby creating some uncertainty.
The pay equity disclosure requirement is going to be hugely burdensome:[It] means that for every employee, the company will have to calculate his or her salary, bonus, stock awards, option awards, nonequity incentive plan compensation, change in pension value and nonqualified deferred compensation earnings, and all other compensation (e.g., perquisites). This information would undoubtedly be extremely time-consuming to collect and analyze, making it virtually impossible for a company with thousands of employees to comply with this section of the Act.Warren J. Casey & Richard Leu, United States: New Executive Compensation Disclosures Under Dodd-Frank (August 3, 2010), Mondaq.com, http://www.mondaq.com/unitedstates/ article.asp?articleid=106962. See also Jean Eaglesham & Francesco Guerrera, Pay Law Sparks “Nightmare” on Wall St, Fin. Times, Aug. 31, 2010, at 1 (“The rules’ complexity means multinationals face a "logistical nightmare" in calculating the ratio, which has to be based on the median annual total compensation for all employees, warned Richard Susko, partner at law firm Cleary Gottlieb. "It's just not do-able for a large company with tens of thousands of employees worldwide.”).
Dodd-Frank § 951 creates a new § 14A of the Securities Exchange Act, pursuant to which reporting companies must conduct a shareholder advisory vote on specified executive compensation not less frequently than every three years. At least once every six years, shareholders must vote on how frequently to hold such an advisory vote (i.e., annually, biannually, or triannually). The compensation arrangements subject to the shareholder vote are those set out in Item 402 of Regulation S-K, which includes all compensation paid to the CEO, CFO, and the three other highest paid executive officers. In addition, a shareholder advisory is required of golden parachutes. Both such votes must be tabulated and disclosed, but neither is binding on the board of directors. The votes shall not be deemed either to effect or affect the fiduciary duties of directors. The SEC is given exemption power and is specifically directed to evaluate the impact on small issuers.S. Rep. No. 111-176, at 133 (2010).