The broker-dealer business model is broken and won’t be fixed by the SEC’s proposed Regulation Best Interest. That was the picture painted by all but one of five witnesses called to testify on the effectiveness of the proposed rule at a Congressional hearing Thursday.“The brokerage business model, with all of these and other perverse incentives,…
Tag: institutional investors
CII Spring Meeting 2019
The Council of Institutional Investors meets in Washington DC every spring, and as fascinating and timely as the presentations and panels are, what goes on behind the scenes is increasingly even more significant. VEA Vice Chair Nell Minow made presentations at two of these behind-the-scenes events, discussing buybacks with members of the CII board and…
PIC struggles to improve quality of corporate governance
South Africa’s PIC pension fund adjusts its corporate governance priorities (emphasis added): More than half of the companies in which the PIC has a substantial investment ignore its views on the need for independent auditors.Almost half of them also ignore its view on what is, or is not, an acceptable remuneration policy, and a substantial…
Brunel’s Stewardship Policy
We recommend Brunel’s excellent stewardship policy as a model for institutional investors everywhere. Stewardship is defined as the job of taking care of something, such as a company or property. As investors, we use the term assets. Brunel is committed to responsible stewardship and seeks to contribute to the ‘care’ of all the assets under…
‘Quiet diplomacy’ the weapon of choice for passive funds | Financial Times
About a fifth of the freely traded shares of the US equity market are now owned by index-tracking funds and passive institutional mandates, according to S&P Dow Jones Indices. This underlines the vital role played by the three largest managers in this space — BlackRock, Vanguard and State Street — in policing corporate standards.Larry Fink,…
SSGA’s Kumar warns companies on ESG progress | Corporate Secretary
Rakhi Kumar, global head of asset stewardship and ESG with State Street Global Advisors (SSGA), has warned that her firm’s patience is running out with portfolio companies that aren’t heeding the asset manger’s warnings on topics such as board diversity, refreshment and climate change.‘Given that we started talking about some of these issues in 2011,…
Mutual Fund Transparency and Corporate Myopia
We often hear that corporate executives believe the pressure to issue quarterly figures and guidance leads to over-emphasis on short-term returns. A new paper by Vikas Agarwal (Georgia State University), Rahul Vashishtha (Duke University), and Mohan Venkatachalam (Duke University) provides some welcome focus on another source of short-term pressure, the reporting requirements imposed on mutual…
Asset managers accused of grandstanding on Persimmon pay | Portfolio Adviser
Asset managers who slammed Persimmon pay packages this AGM season have been silent when questioned over their voting record at the UK housebuilder, which enabled executive remuneration to soar.<P><P>At this year’s AGM, held in April, 48.5% of shareholder votes were cast against the pay report, which sees chief executive Jeff Fairburn receive a whopping £75m.<P><P>But…
Felix Salmon: Index funds are not to blame for excessive CEO pay.
We have heard a lot of weird and convoluted theories about excessive CEO pay, but the one Felix Salmon takes on here may be the ultimate: Who is to blame for bloated CEO pay? Your favored answer to that question will tend to reflect your prior beliefs, which is why high pay is now being…
How Long-Term Investors Influence Corporate Behavior
Annotated opening paragraphs of an article on the impact of long-term investors in the MITSloan journal: In his recent letter to CEOs, Larry Fink, CEO and chairman of the mutual fund giant BlackRock Inc., based in New York City, repeated his call for organizations to share their strategies for creating sustainable value. He also added…
