PORTLAND, Maine Treasury Secretary Henry M. Paulson Jr.s plan to commission a study on corporate financial restatements should not create a disincentive for restatements, said Nell Minow, editor and chairwoman of the board at The Corporate Library, a corporate governance and executive compensation research firm.
The Treasury Department is still working out details on the scope of the study and whether it will search for an external firm to assist with it, Jennifer Zuccarelli, public affairs specialist at the Treasury Department, said in an interview.
Mr. Paulson expressed concern in a statement about the soaring number of financial restatements rising to 1,876 in 2006 from 116 in 1997 posing significant costs on our capital markets and potentially confusing investors and eroding public confidence in financial reporting.
Ms. Minow said: You can't look at restatements as one monolithic variable. A lot of restatements were the result of (the Sarbanes-Oxley corporate reform act) or other reforms, which means they are working. Some are significant; some are huge. Some relate to changes in accounting rules; some relate to the uncovering or discovery of mistakes or fraud. Some are benign, and some are toxic. I trust that any study will have categories to make that clear. The last thing we want to do is create a disincentive for restatements.
CalPERS backs revised Clear Channel buyout
SACRAMENTO, Calif. CalPERS will support the revised Clear Channel Communications Inc. buyout deal announced May 18 by the company. The $245.3 billion California Public Employees Retirement System which has 3,336,611 shares in the company had planned to vote against the original deal.
We like the latest offer, said Clark McKinley, CalPERS spokesman. Its slightly higher, and it gives us a chance to participate in the private equity component. In our experience, private equity has generally restructured companies, improved performance and given us a good return.
A private equity group co-led by Thomas H. Lee Partners and Bain Capital Partners, which proposed acquiring the company, increased its offer to $39.20 in cash per share from $39, according to a company statement. It also offered Clear Channel shareholders an alternative of exchanging Clear Channel shares for up to 30% in total, or $1.2 billion in value, of stock in the new corporation.
CalPERS has committed $740 million to four partnerships of Thomas H. Lee Partners, according to a CalPERS report. CalPERS is not an investor in Bain partnerships, the report said. Mr. McKinley declined to say if CalPERS has a stake in either THL or Bain.
and seeks support for Kellwood proposal
SACRAMENTO, Calif. CalPERS sent letters to Chesterfield, Mo.-based Kellwood Co. shareholders, urging them to approve a proxy proposal to have board members face re-election annually, according to a news release from the pension fund. Currently, directors are divided into two classes, each serving two-year terms with staggered elections.
If this resolution passes and is adopted by the board, shareowners would be able to register their views at each annual meeting on the performance of the board as a whole and on each director individually, Russell Read, CIO at the $241.7 billion California Public Employees Retirement System, Sacramento, said in the release. Donna Weaver, spokeswoman at Kellwood, an apparel company, did not return a call for comment.
The annual meeting is June 7.
Verizon shareholders back say on pay
NEW YORK Verizon Communications Inc., announced May 18 that shareholders voted 50.18% in favor of a say-on-pay proposal calling for an annual shareholder advisory vote on executive compensation. The company had said the vote at its May 3 annual meeting was too close to call and waited for a final tabulation to determine its outcome.
In furthering shareholder interests, the board of directors has established senior executive compensation practices that are closely linked to company performance, according to a company statement issued with the vote tally. The board is committed to continuous review of the companys compensation practices and will further consider its policies in light of the high level of shareholder interest and the active discussion taking place with respect to the advisory vote issue in a variety of forums, including in the U.S. Congress.
On May 9, shareholders of Blockbuster Inc., Dallas, passed the only other say-on-pay proposal at a U.S. company.
Northrop, JPMorgan shareholders reject proposals
Shareholders at Northrop Grumman Corp. and JPMorgan Chase & Co. defeated several proposals at the companies annual meetings.
At Northrop Grumman, shareholders on May 16 defeated proposals calling for a say on pay and separation of the roles of chairman and CEO, said Tom Henson, spokesman. He said a tally of the preliminary voting results werent immediately available. The $1.7 billion Service Employees International Union Master Pension Trust, Washington, sponsored the "say-on-pay proposal.
At JPMorgan Chases annual meeting May 15, shareholders defeated all eight shareholder proposals. According to preliminary results announced at the meeting, 38.6% voted in favor of say on pay; 15.4% for separation of the roles of chairman and CEO; and 46.4% for majority voting to elect directors.
The $1.7 billion Service Employees International Union Master Pension Trust, Washington, co-sponsored the say-on-pay proposal.
The $850 million American Federation of State, County and Municipal Employees Pension Plan, Washington, sponsored a proposal on performance-based compensation, which received 41.1% of the vote. The $9 million AFL-CIO Reserve Fund, Washington, sponsored a proposal on political contribution disclosures, which received 10.3% of the vote.
The board said in a statement it amended corporate bylaws in 2006 to adopt majority vote for director election.
Directors were elected with at least 94% of the vote each.
CVS/Caremark directors resignation sought
Roger L. Headrick, CVS/Caremark Corp. director, was asked to resign by CtW Investment Group because of a 43% vote against his election. When The Walt Disney Co.s shareholders withheld an unprecedented 45% of their votes from Chairman and CEO Michael Eisner in 2004, the board stripped Mr. Eisner of his chairmanship within hours, William B. Patterson, CtW executive director, wrote in a letter to David W. Dorman, chair of CVS/Caremarks nominating and corporate governance committee. CtW is a corporate governance consultant to union and public pension funds.
We fear phantom votes those cast by brokers exercising discretion under NYSE Rule 452 to vote certain client shares may have provided Mr. Headricks margin of victory, the letter said. The results are even more extraordinary given that CVS/Caremark has a majority vote policy for the election of directors. Votes cast against Mr. Headrick therefore cannot be dismissed as mere symbolic expressions of shareholder concern.
CVS/Caremark, in a filing with the Securities and Exchange Commission filing May 16, disclosed the results of the voting at its May 9 annual meeting. Mr. Headrick got 606,585,338 votes in favor and 453,175,142 against, according to the filing.
Erin Pensa, CVS/Caremark, public relations manager, couldnt be reached for comment.