Uber founder Travis Kalanick resigns as CEO amid a shareholder revolt – The Washington Post

After several tumultuous months that culminated in a shareholder revolt, Travis Kalanick stepped down Tuesday as chief executive of the ride-hailing giant Uber.Kalanick, who helped founded Uber in 2009 and established it as Silicon Valley’s highest flying start-up, will stay on Uber’s board of directors, a company official confirmed. He was asked to resign in a letter from five major shareholders.

Source: Uber founder Travis Kalanick resigns as CEO amid a shareholder revolt – The Washington Post

A better boardroom can reverse Uber’s cultural woes | TechCrunch

Board veteran Betsy Atkins has some excellent advice for Uber. The third edition of her book Behind Boardroom Doors was published this month.

Build internal career networks.  At Volvo Car AB, where I serve on the board, we’ve launched a regular program where I have the opportunity to meet with senior and mid-level women executives on personal career development.  We work with these execs to build on their strengths, clarify their career aspirations, and offer advice on advancement.  This is a new program, but it is already proving a success in energizing and motivating the paths of these current and future female leaders.

Make mentoring personal.  On the board of Schneider Electric, I make it a point to directly mentor a number of women on the company’s senior executive team.  Women in management find it tremendously helpful to have someone in the boardroom take a personal interest in their career strategy and development.  At Uber, new board member Ariana Huffington will be in an ideal position to put her mentoring and career savvy to work in helping rising women execs rebuild the company. The key is a regular ongoing program of mentoring and support.

Go beyond mentoring.  The tech industry, in particular has too few role models for rising female talents.  The mentoring aid above is helpful… but why not go one better?  Companies can ask their Male and Female Execs (and Board Members) to either mentor or sponsor their Female Execs. There is a big difference between mentoring which is periodic advising and coaching and sponsoring where you take ownership for introducing and more actively helping sponsor an individual for their next step up in their career. Women who are already senior managers or board members can kick mentoring up a notch by “sponsoring” women hi-pots.  Take personal ownership of career coaching for your top talents.  Give them advice, introduce them to the people they need to sharpen their skills, and introduce their names at strategic moments.Recognize the women making a difference. 

When I served as chair of the board’s compensation committee at tech firm Polycom, we were active in the annual recognition event for sales staff.  I noted that women were leaders in sales, making up less than 10 percent of the sales force, but were 34 percent of our “President’s Circle” top sales performers.  Making an added effort to celebrate (and promote) this talent is crucial in sending the message that sales is not just a “guy thing” in the company.

While Uber’s woes make the news, they can also serve as a spark for making the support and advancement of women in your company a boardroom mission.

Source: A better boardroom can reverse Uber’s cultural woes | TechCrunch

FTSE Russell Index Considers Booting Firms With Lots of Non-Voting Shares – WSJ

A proposal being floated by a large index firm could force finance chiefs at companies like Alphabet Inc., Facebook Inc. and Ford Motor Co. to choose between keeping their places in broad stock benchmarks or changing their share class structures.FTSE Russell is proposing possible restrictions on the inclusion of companies with unequal voting rights in its indexes, but the firm will weigh input from clients and investors before working out specifics.

Source: FTSE Russell Index Considers Booting Firms With Lots of Non-Voting Shares – WSJ

How Wells Fargo’s Cutthroat Corporate Culture Allegedly Drove Bankers to Fraud| Vanity Fair

An important analysis of the corrupt corporate culture that led to widespread fraud.

Hambek began to see things that shouldn’t have been happening: bankers persuading customers to take out large loans and then immediately repay part of them so that the banker could get credit for the bigger loan, for instance.

Source: How Wells Fargo’s Cutthroat Corporate Culture Allegedly Drove Bankers | Vanity Fair

Airlines, Stock Splits and Voting – Bloomberg

Matt Levine writes in Bloomberg:

[C]ross-ownership of many U.S. airlines by the same diversified institutional investors — index funds and “quasi-indexers” — discourages the airlines from competing on price and quality, and encourages them to focus on margins. An airline that cuts fares or spends money on better service to win market share isn’t necessarily doing its shareholders any favors: The increased market share comes at the expense of other airline companies that the shareholders also probably own….I think the “index funds ruin capitalism” story is best read as just one strand of a larger “financial capitalism ruins capitalism” story, and while the index funds story is still pretty niche, the financial capitalism story has become very popular. In this story, managers and investors have stopped thinking of companies as companies, as human networks of employees and customers and investors, and now think of them instead as numbers, as sets of financial factors to be optimized. There are many explanations for this: Developments in graduate business education, or the rise of corporate activism, or the cultural role of Wall Street. But the basic story is that companies used to balance the interests of workers, customers and investors; now they have adopted a fully investor-centric model in which profits are the only goal and customer service and workers’ rights are sacrificed. Sheelah Kolhatkar writes that “the investors-above-all doctrine seems to have triumphed over the more inclusive approach.”

Source: Airlines, Stock Splits and Voting – Bloomberg

BlackRock, Vanguard and State Street bulk up governance staff

BlackRock, Vanguard and State Street have expanded their corporate governance teams significantly in response to growing pressure from policymakers and clients to demonstrate they are policing the companies they invest in.The move by the world’s three largest asset managers, which together control nearly $11tn of assets, will help address fears that investors are not doing enough to monitor controversial issues around executive pay and board diversity at the companies they invest in.

Source: BlackRock, Vanguard and State Street bulk up governance staff

New York City Retirement Systems divests from private prison companies – Pensions & Investments

New York City Retirement Systems has completed divesting $48 million in private prison companies. City Comptroller Scott Stringer said, “Our criminal justice system has failed a generation of Americans because, for decades, we built bigger prisons instead of greater schools, and we were ‘tough on crime’ instead of ‘smart on crime.’ Society used mass incarceration as an economic development strategy at the expense of communities of color. Today, we’re taking action.”

Source: New York City Retirement Systems divests from private prison companies – Pensions & Investments

Renault Shareholders Narrowly Pass CEO Pay Over Government Opposition

Renault SA shareholders approved Carlos Ghosn’s 7 million-euro ($7.8 million) compensation for last year over the objections of the French government, which argued that the automaker’s chief executive officer is overpaid.

Shareholders voted 53 percent in favor of the CEO’s 2016 pay in an advisory decision at the company’s annual meeting on Thursday in Paris. The French state, which owns 19.7 percent of Renault, opposed Ghosn’s remuneration for the fourth time, a spokeswoman for the state’s participation agency said. In July last year, Renault’s board cut the variable component of Ghosn’s pay package by 20 percent, which wasn’t enough to satisfy the French government.

Source: Renault Shareholders Narrowly Pass CEO Pay Amid Controversy – Bloomberg

Value of Shareholder Proposals, Even When They’re Wrong

[S]hareholder activists can help improve long-term value, even when following the activists’ proposals would not.  That is just as true today and these proposals may well prime the pump for future board or shareholder actions.  That is, GM has conceded that its stock is undervalued and that change is needed.  GM argues those changes are underway, and for now, most voting shareholder agree.  But we’ll see how this looks if the stock price has not noticeably improved next year.  An alternative path forward on some key issues has been shared, and that puts pressure on this board to deliver.  They can do it their own way, but they are on notice that there are alternatives.  And shareholders now know that, too.

This knowledge underscores the value of shareholder proposals as a process.  They can and should create accountability, and that is a good thing. I agree with GM that the board should keep control of how it structures the GM leadership team.  But I agree with the shareholders that if this board doesn’t perform, it may well be time for a change.

 

Source: Business Law Prof Blog

WSJ CFO Network, Washington 2017

The Wall Street Journal’s CFO Network gathering is always engaging and informative. This year VEA Vice Chair Nell Minow attended to appear at breakout sessions on board effectiveness and shareholder activism, and reported back on what she learned:

The speakers included Senators John McCain on national security (he said his biggest fears are North Korea and Russia) and Elizabeth Warren (she noted pointedly that there is widespread support, even among Trump voters for maintaining or expanding the Consumer Financial Protection Bureau and cited the President’s often-claimed enthusiasm for breaking up the TBTF financial institutions), Chairman of the House Ways and Means Committee Kevin Brady (he insists that major tax reform, including filing on a postcard for most individuals, is going to happen), and Ranking Member Adam Schiff of the House Permanent Select Committee (he supports an independent investigation into Russian interference with the democratic process).

A presentation on the prospects for financial regulation/deregulation included former SEC Chairman Harvey Pitt and former Commissioner Paul Atkins. Atkins referred to Dodd-Frank as “mostly rubbish…littered with all sorts of gimmies to unions, trial lawyers, and activists,” mentioning the conflict mineral and pay ratio disclosures as examples. He and Pitt emphasized the importance of making sure the investors get material information and are not overwhelmed with data. They insisted that the new administration will bring tough cases. Since fines are paid by the shareholders, they suggested that they do not impose a meaningful penalty. Pitt recommended outsourcing audits of investment managers and broker-dealers, using the Commission’s authority to exempt issuers from regulatory burdens, and experimenting with pilot programs to test regulatory ideas. Another possibly experiment: summary disclosures with hyperlinks providing more information, to assess the way users access the data. Atkins said, “You read through this stuff and most of it is kind of baloney.”