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	<title>IGOPPGouvernance américaine &#8211; IGOPP</title>
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		<title>Boards Are Touting International Directors Amid Global Upheaval</title>
		<link>https://igopp.org/en/boards-are-touting-international-directors-amid-global-upheaval/</link>
		<comments>https://igopp.org/en/boards-are-touting-international-directors-amid-global-upheaval/#respond</comments>
		<pubDate>Tue, 10 Sep 2024 01:22:51 +0000</pubDate>
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				<category><![CDATA[IGOPP in the Medias]]></category>
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		<category><![CDATA[American governance]]></category>
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		<guid isPermaLink="false">https://igopp.org/boards-are-touting-international-directors-amid-global-upheaval/</guid>
		<description><![CDATA[For the first time since at least 2018, more than half of S&#38;P 500 boards say they have members with international experience, according to data from ESGauge. As companies face geopolitical crises, increased globalization and foreign competition, boards are recruiting directors — or at least touting the ones they already have — who can help oversee these [&#8230;]]]></description>
		<content><![CDATA[For the first time since at least 2018, more than half of S&#38;P 500 boards say they have members with international experience, according to data from ESGauge. As companies face geopolitical crises [1], increased globalization and foreign competition, boards are recruiting directors — or at least touting the ones they already have — who can help oversee these risks, sources said.

These directors can also offer a boost to the bottom line, new research shows. Board members who are from or have worked abroad for a period of time and work cohesively with their fellow directors help companies' financial performance, according to a study [2] out of Binghamton University.

[...]

International experience is valuable as companies are facing a host of global risks and opportunities, sources said. Indeed, geopolitical instability was ranked the top issue that CEOs expect to influence or disrupt business strategy within the next year, according to 60% of 80 CEOs surveyed by [3] Deloitte this summer. And 67% of 100 CEOs surveyed by [4] KPMG earlier this year said they are undergoing "significant" strategic changes in response to geopolitical uncertainty, including wars, conflicts and elections happening around the world.

"When you talk about global experience ... you need to trust somebody with a broader view that understands not only the international business perspective but would understand the political tension of the region and more broadly the political environment there," said Guylaine Saucier, board chair at the Institute for Governance of Private and Public Organizations and a director on several private and public boards in Canada and France.

[...]

Meanwhile, roughly one-third of S&#38;P 500 directors are non-U.S. nationals, down slightly from 35.3% last year, according to ESGauge. Companies should not take their eyes off directors from international backgrounds, Saucier said.

"You have to have somebody who understands intimately the culture of the country in which you are working," Saucier said. "It's essential because that's where you'll have really the best input, the most value from this board member."

After recruiting such directors, it's important to "take the time to ensure that even if [a director is] coming from a different culture, they will be able to work collegially with your board," Saucier said. This may mean explaining cultural nuances or traditions here in the U.S and being respectful of theirs, sources said.

Read more [5]

[1] https://www.agendaweek.com/c/4536584/596334?referrer_module=article&#38;highlight=geopolitical&#38;referring_content_id=4618024&#38;referring_issue_id=611094
[2] https://www.binghamton.edu/news/story/5057/new-business-research-binghamton-leadership-international-experience-improve-company-performance
[3] https://www2.deloitte.com/content/dam/Deloitte/us/Documents/2024-Fortune-Deloitte-CEO-Survey.pdf
[4] https://kpmg.com/kpmg-us/content/dam/kpmg/pdf/2024/kpmg-2024-us-ceo-outlook-pulse-survey.pdf
[5] https://www.agendaweek.com/c/4618024/611094]]></content>
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		<title>SEC Rule Amendments and Dual-class returns</title>
		<link>https://igopp.org/en/sec-rule-amendments-and-dual-class-returns-commentary/</link>
		<comments>https://igopp.org/en/sec-rule-amendments-and-dual-class-returns-commentary/#respond</comments>
		<pubDate>Thu, 20 Aug 2020 18:38:47 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[Commentary]]></category>
		<category><![CDATA[News Articles]]></category>
		<category><![CDATA[Actions multivotantes]]></category>
		<category><![CDATA[American governance]]></category>
		<category><![CDATA[Dual-class shares]]></category>
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		<guid isPermaLink="false">https://igopp.org/?p=12824/</guid>
		<description><![CDATA[1. ISS is finally leashed: SEC Amends Rules for Proxy Advisors On July 22, 2020, the Securities and Exchange Commission (SEC) adopted amendments to better regulate the activities of proxy advisors, such as ISS and Glass Lewis, and to ensure that clients of proxy voting advice businesses have reasonable and timely access to more transparent, [&#8230;]]]></description>
		<content><![CDATA[1. ISS is finally leashed: SEC Amends Rules for Proxy Advisors

On July 22, 2020, the Securities and Exchange Commission (SEC) adopted amendments to better regulate the activities of proxy advisors, such as ISS and Glass Lewis, and to ensure that clients of proxy voting advice businesses have reasonable and timely access to more transparent, accurate and complete information on which to make voting decisions.
In essence, proxy advisors have always benefited from an exemption from the information, legal risks and filing requirements of proxy solicitation. The SEC has now stipulated that this exemption will apply in the future only if proxy advisors abide by the following conditions:

 	They must provide specified conflicts of interest disclosure in their proxy voting advice or in an electronic medium used to deliver the proxy voting advice;
 	They must have adopted and publicly disclosed written policies and procedures reasonably designed to ensure that corporations that are the subject of proxy voting advice have such advice made available to them at or prior to the time when such advice is disseminated by the proxy advisors to their clients;
 	They ensure their clients will receive, in a timely manner, any statement, explanation and contestation issued by the corporations that are the object of the voting recommendation.

The SEC is thus responding to oft-stated concerns of many issuers about these heretofore lightly regulated but influential market participants.

Proxy advisory firms are not required to comply with the amended regulations until December 1, 2021.

Of course, ISS has already announced its intention to challenge in court this SEC ruling.

IGOPP is particularly pleased with the SEC’s amended regulations as it called for such actions in a 2013 Policy Paper [1], The Troubling Case of Proxy Advisors: Some policy recommendations.

The complete press release of the SEC, and the links to retrieve pertinent materials, can be accessed here [2].

2. New study on relative performance of US dual-class companies

In a novel approach to the subject, researchers have “constructed” an index of dual class shares for the period 2009-2019. The intention here is to assess the performance of a hypothetical fund that would be made up of all dual class shares in proportion to their stock market capitalization. The performance of the fund may then be compared to other index funds, such as, in this case, the CRSP US Total Market Index. The results for dual class voting structures speak for themselves, as shown in the Table below.



Clearly, the volatility-adjusted return ratio of the Dual Index (a close variant of the Sharpe ratio where the higher the ratio the better) is clearly superior to the ratio of the Market Index.

The Index includes all dual-class companies with ordinary common shares listed on NYSE, NASDAQ, or AMEX and total market capitalization in excess of $100 million. A reconstitution process of the Dual Index is carried out semiannually, at the end of June and December. In case of a delisting or collapse of the dual-class structure, the researchers reinvested the proceeds in the portfolio until the next Dual Index reconstitution.

As of December of 2019, the Dual Index included 178 dual-class companies valued at $3.4 trillion. The Index accounts for 89% of the market capitalization of all dual-class companies listed across major U.S. stock exchanges.

The next figure shows the cumulative growth of a one-dollar investment in the Dual Index (green line) relative to the cumulative growth of a one-dollar investment in the market index (blue line). The performance of the Dual Index is especially strong in the second half of the decade .



The complete study by authors Byung Hyun Ahn, Jill E. Fisch, Panos N. Patatoukas &#38; Steven Davidoff Solomon, released as Research Paper on July 28, 2020, is available here [3].

[1] https://igopp.org/wp-content/uploads/2014/04/pp_troublingcaseproxyadvisors-pp7_short_3_.pdf
[2] https://www.sec.gov/news/press-release/2020-161
[3] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3645312]]></content>
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		<title>Companies Send More Cash Back to Shareholders</title>
		<link>https://igopp.org/en/companies-send-more-cash-back-to-shareholders/</link>
		<comments>https://igopp.org/en/companies-send-more-cash-back-to-shareholders/#respond</comments>
		<pubDate>Tue, 26 May 2015 15:41:11 +0000</pubDate>
		<dc:creator><![CDATA[mlamnini]]></dc:creator>
				<category><![CDATA[IGOPP in the Medias]]></category>
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		<category><![CDATA[Activism]]></category>
		<category><![CDATA[American governance]]></category>
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		<category><![CDATA[Shareholders]]></category>

		<guid isPermaLink="false">http://igopp.org/companies-send-more-cash-back-to-shareholders-2/</guid>
		<description><![CDATA[U.S. businesses, feeling heat from activist investors, are slashing long-term spending and returning billions of dollars to shareholders, a fundamental shift in the way they are deploying capital. Data show a broad array of companies have been plowing more cash into dividends and stock buybacks, while spending less on investments such as new factories and [&#8230;]]]></description>
		<content><![CDATA[U.S. businesses, feeling heat from activist investors, are slashing long-term spending and returning billions of dollars to shareholders, a fundamental shift in the way they are deploying capital. Data show a broad array of companies have been plowing more cash into dividends and stock buybacks, while spending less on investments such as new factories and research and development. Activist investors have been pushing for such changes, but it isn't just their target companies that are shifting gears. More businesses sitting on large piles of extra cash are deciding to satisfy investors by giving some of it back. Rock-bottom interest rates have made it cheap to borrow to buy back shares, which can boost a company's stock price. And technology-driven productivity gains are enabling some businesses to do more with less.

[...]

If they aren't, then we have to worry about the impact," says Yvan Allaire, the executive chairman of the Institute for Governance of Private and Public Organizations. “It has to be a fairly significant impact on the economy.

Read more [1]

[1] https://www.wsj.com/articles/companies-send-more-cash-back-to-shareholders-1432693805]]></content>
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		<title>How Pershing Square found success at Canadian Pacific Railway</title>
		<link>https://igopp.org/en/comment-expliquer-les-succes-de-pershing-square-au-cp/</link>
		<comments>https://igopp.org/en/comment-expliquer-les-succes-de-pershing-square-au-cp/#respond</comments>
		<pubDate>Tue, 03 Feb 2015 16:08:21 +0000</pubDate>
		<dc:creator><![CDATA[mlamnini]]></dc:creator>
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		<description><![CDATA[In 2011, Pershing Square Capital Management, an activist hedge fund founded by William (Bill) Ackman, acquired some 14.2% of Canadian Pacific Railway’s outstanding shares and proceeded to require several changes in the management and governance of the company. The CP board resisted fiercely his entreaties. A memorable proxy fight ensued, which was won by Pershing [&#8230;]]]></description>
		<content><![CDATA[In 2011, Pershing Square Capital Management, an activist hedge fund founded by William (Bill) Ackman, acquired some 14.2% of Canadian Pacific Railway’s outstanding shares and proceeded to require several changes in the management and governance of the company. The CP board resisted fiercely his entreaties.

A memorable proxy fight ensued, which was won by Pershing and resulted in a new CEO, new board members and a new strategy for CP.

Results of this palace revolution were, in share price terms at least, remarkable — astounding, actually. From September 2011 to Dec. 31, 2014, CP’s stock jumped from less than $49 to north of $220, a compounded annual rate of return of 62% (including dividends).

Why was the CP intervention such an apparent success, when, in several other instances, Pershing’s brand of activism was far less successful? Mr. Ackman’s forays into J.C. Penney, Target, and Borders gave results ranging from mediocre to abysmal.

A close examination of the CP saga reveals a number of differentiating features absent from other less successful interventions:

First, this was a rare case of perfectly transferable managerial talent. The recently retired CEO of Canadian National Railways (CN), the best performing railroad company in North America, was soon to be freed from the legal (if not the ethical) constraints on his joining a direct competitor. This man, Hunter Harrison, is acknowledged as a highly skilled and innovative railroader and he was ready and willing to take over as CEO of CP.

In the Canadian context, such behaviour is not quite gentlemanly. Imagine the high performing CEO of Royal Bank Canada who, soon after retirement, would join the Bank of Montreal as CEO. But both Ackman and Harrison are Americans who could not care less about the mores and values of the Canadian business world.
In several other instances, Pershing’s brand of activism was far less successful
So, an “activist” hedge fund unhappy with the performance of the current CEO of a targeted company calls on the recently retired CEO of its best-performing, direct competitor who happens to be ready to jump ship and hit the ground running. How rare is that?

Second, the North American Railroad Industry is extremely well defined. The same companies have been serving this market for decades; their networks are well-established. Performance measures are standard across the industry, which makes for easy comparability across firms. Thus, it is a simple task for management, the board of directors and investors to benchmark any company against its peers.

Read more [1]

[1] http://business.financialpost.com/opinion/how-pershing-square-found-success-at-canadian-pacific-railway/wcm/b22d0e11-b7e8-48f4-8326-0cf80d7eb740]]></content>
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		<title>Why Tim Hortons is not buying Burger King?</title>
		<link>https://igopp.org/en/pourquoi-tim-hortons-nachete-pas-burger-king/</link>
		<comments>https://igopp.org/en/pourquoi-tim-hortons-nachete-pas-burger-king/#respond</comments>
		<pubDate>Tue, 02 Sep 2014 23:36:35 +0000</pubDate>
		<dc:creator><![CDATA[mlamnini]]></dc:creator>
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		<description><![CDATA[Although smaller than Burger King, Tim Hortons (TI) is more profitable and better managed than Burger King. Their stock market valuation is comparable. Why then is it not Tim Hortons that is trying to buy Burger King? TI becomes a target of hedge funds One must recall that in early 2013, two activist funds (Scout [&#8230;]]]></description>
		<content><![CDATA[Although smaller than Burger King, Tim Hortons (TI) is more profitable and better managed than Burger King. Their stock market valuation is comparable. Why then is it not Tim Hortons that is trying to buy Burger King?

TI becomes a target of hedge funds
One must recall that in early 2013, two activist funds (Scout Capital Management and Highfields Capital, two hedge funds) started circling around TI. The two funds, which, at the time, held respectively 7% and 4% of TI’s shares, wanted to be heard by management and the board of directors.The managers of the two funds said and wrote that although TI was extremely well managed and enjoyed tremendous commercial success, its stock was lagging in performance. TI could create a lot more shareholder value if it implemented their recommendations. Essentially, the two hedge funds contended that TI’s board of directors lacked financial savvy, was not conversant enough with the tricks of financial engineering. So, they urged the board of TI to:


 	increase the company’s indebtedness in order to buy back a large number of its shares;
 	stop (or slow down) the company’s expansion in the United States;
 	spin-off its real estate holdings in an exchange listed “real estate investment trust” (REIT);
 	tie executive compensation to earnings per share and total shareholder return (TSR);
 	bring in new board members drawn from the financial community.

These measures, the hedge funds asserted, would increase earnings per share and the return on equity of TI and would, ipso facto, boost its share price. In what has to be an iconic statement about what differentiates financial capitalism from industrial capitalism, a hedge fund wrote:

“In fact, we would argue that the earnings growth created through this [financial engineering] approach would be far superior (at much lower execution risk) than attempting to drive growth through continuing to invest in the U.S. market at sub‑par returns.” [Letter sent by HIGHFIELDS CAPITAL MANAGEMENT to Tim Hortons on March 21, 2013.]

At first, TI’s senior management and board of directors were underwhelmed with these recommendations and politely dismissed the two activist funds. But, these funds did not give up and, it seems, finally succeeded in convincing the board that their recommendations were sound (except for the REIT gambit).

So, TI added two board members from the financial community; then, on August 8, 2013, the company announced that the board of directors had approved  $900 million in new debt to buy back a billion dollars-worth of shares of TI over the next twelve months.

The results of these financial moves are captured in the following table:

In eighteen months, TI was transformed from a company with little leverage (debt-to-debt plus equity of 26.4%) into a highly leveraged company (77.3%). Shareholders’ equity has melted away, shrinking from $1.2 billion to $384 million (given that any buyback of shares at a market price higher than the book value of the shares triggers a reduction in equity equivalent to the difference between the two amounts).

TI’s stock price increased from $55 in July 2013 to $62 at the end of 2013, a 13% gain, just in time for some funds to sell their holdings at a profit; but the market quickly realized that, with its new capital structure and financial strategy, TI would have to slow down its growth in the United States, which caused the share price to drop back to $58 in July 2014.

Therefore, in the short term, the stock market reacted as predicted by the hedge funds, but in the longer term, because this financially engineered growth in earnings could not be sustained, the stock returned to its intrinsic value.

The TI of December 2012, with its very low leverage, could have considered making a bid for Burger King. However, the TI of July 2014 no longer had the financial flexibility and buffer to consider a Burger King transaction. So-called “activist” hedge funds, all too often, propose stratagems that work well for their funds’ performance but hamper the development of industrial firms and inflict considerable damage unto targeted companies.

Should TI really consider buying Burger King?
If TI still had the financial wherewithal, should it have bid to buy Burger King? After all, TI needs no “financial inversion” to benefit from the favourable Canadian corporate income tax regime, which is touted as a rationale for the transaction. (Some observers believe that another reason for transferring Burger King’s legal head office to Canada is to sooth Investment Canada, which will have to approve the transaction and assess whether it brings “tangible benefits for Canada.”)

Well, let’s remember that between 1995 and 2005, TI was part of the Wendy’s International Group (Wendy’s being a direct competitor of McDonald’s and Burger King). In 2005, some activist funds, including the omnipresent Bill Ackman (Pershing Square – which holds almost 11% of the Burger King shares), made the case forcefully that Wendy’s should spin-off Tim Hortons by listing it on the stock market.

In a letter addressed to Wendy’s senior management, Ackman, who, at the time, held 9.9% of its shares, wrote:

“We believe that many Wendy’s shareholders and members of the Wall Street research analyst community have frequently questioned the benefits of having Tim Hortons under the same corporate structure as Wendy’s given the minimal synergies that exist between the two companies. (…) As such, we believe that as long as Tim Hortons is owned under the Wendy’s corporate umbrella, the Company will trade at a depressed valuation.” [Letter by W. Ackman to the Chairman, CEO and President of Wendy’s International, dated July 11, 2005.]

In other words, it is a bad idea to merge two such disparate entities as Wendy’s (or Burger King) and Tim Hortons into one and the same company.

It would not be surprising if, a few years hence, some activist hedge funds make the case that Tim Hortons should again be spun off from Burger King. Maybe once the benefits of tax inversion become less significant…

(The opinions expressed in this article are those of the author.)


]]></content>
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		<title>Quebec’s tough anti-takeover talk is all to protect eight companies</title>
		<link>https://igopp.org/en/quebecs-tough-anti-takeover-talk-is-all-to-protect-eight-companies/</link>
		<comments>https://igopp.org/en/quebecs-tough-anti-takeover-talk-is-all-to-protect-eight-companies/#respond</comments>
		<pubDate>Tue, 25 Feb 2014 14:31:37 +0000</pubDate>
		<dc:creator><![CDATA[mlamnini]]></dc:creator>
				<category><![CDATA[IGOPP in the Medias]]></category>
		<category><![CDATA[IGOPP in the medias]]></category>
		<category><![CDATA[American governance]]></category>
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		<category><![CDATA[Hostile takeovers]]></category>

		<guid isPermaLink="false">http://aimta712.org/quebecs-tough-anti-takeover-talk-is-all-to-protect-eight-companies-2/</guid>
		<description><![CDATA[[&#8230;] «That may be true. As Yvan Allaire of Montreal’s Institute for Governance wrote in an opinion piece this week: “The legislative measures the working group is proposing are draconian.” Among them: Allowing Quebec companies to adopt variable voting rights that could increase the longer shares are held (the aim being to keep the influence [&#8230;]]]></description>
		<content><![CDATA[[...] «That may be true. As Yvan Allaire of Montreal’s Institute for Governance wrote in an opinion piece this week: “The legislative measures the working group is proposing are draconian.”

Among them: Allowing Quebec companies to adopt variable voting rights that could increase the longer shares are held (the aim being to keep the influence of what Caisse de dépôt boss Michael Sabia calls “investor tourists” lower than longer-term shareholders). The panel also proposes enshrining into Quebec law a number of provisions found in many U.S. states making a hostile deal less appealing to a potential acquirer. These include prohibiting the removal of directors before their term is up and prohibiting a hostile bidder from merging or selling assets representing 15% or more of the company for five years (the intention being to stop a bidder from financing a deal with the target’s assets).

The measures stretch past the power-enhancing steps for boards enacted in places such as Delaware, Mr. Allaire says, inching closer to the dissuasive regime in states like Pennsylvania, which aims to quash all the potential benefits from a non-friendly deal" ... Read more [1]

[1] http://business.financialpost.com/2014/02/25/quebecs-tough-anti-takeover-talk-is-all-to-protect-eight-companies/]]></content>
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