The Corporate Monitoring Newsletter
Issue #1 - January 1999
Written by Mark Latham
IN THIS ISSUE:
1. The Corporate Monitoring Project
2. Status and Strategy of the Project
- Target: Year 2000 Proxy Season
3. Publications on Corporate Monitoring
4. What You Can Do
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1. THE CORPORATE MONITORING PROJECT:
Is there a way for all shareholders, not just activist investors, to improve stock returns by making managers more accountable to owners? Few investors have the time to determine whether lack of independence is keeping a board of directors from asking the CEO some tough questions. Thus managers can continue serving their own interests at the owners' expense, by overpaying themselves, by empire-building, and so on.
I recently proposed a new idea for solving this problem: shareholders should vote to choose an outside agency to nominate director candidates for company boards. My reasoning is presented in several recent articles, including "Corporate Monitoring: New Shareholder Power Tool" in the September/October 1998 issue of the Financial Analysts Journal. The Corporate Monitoring Project is developing and promoting this idea.
Robert Monks, President of corporate governance activist fund LENS (http://www.lens-inc.com), writes:
"It seems to me that you have proposed a solution to two core problems - free riding and genuinely independent nomination of directors - that are rarely addressed effectively.... In my view, what you are proposing is straightforward and constructive."
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2. STATUS AND STRATEGY OF THE PROJECT:
1998 was a great year for publications. Articles proposing a Corporate Monitoring Firm system were published in five countries and four languages. They are now being circulated, read and discussed. The next stage is public presentations and debate, especially to the institutional investor community. I am available to speak at corporate governance conferences and for meetings at investment firms.
Our goal for 1999 is to build enough shareholder support to put forward corporate monitoring resolutions at several large firms in time for the year 2000 proxy season.
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3. PUBLICATIONS:
- "The Corporate Monitoring Firm" in Corporate Governance - An International Review (UK, January 1999); http://www.corpmon.com/CorpMonFirm.htm
- "Corporate Monitoring: New Shareholder Power Tool" in Financial Analysts Journal (USA, Sep/Oct 1998). For a free copy, e-mail your postal address -- MailTo:paper@corpmon.com
- "Proposed: A Governance 'Monitor'" in The Corporate Board (USA, Sep/Oct 1997).
- "The Corporate Monitoring Firm" in Security Analysts Journal (Japan, August 1998); in Japanese.
- "Proposed: A Governance 'Monitor'" in Shanghai University of Finance and Economics: Foreign Economies and Management (China, Sept/Oct 1998); in Chinese.
- "The Corporate Monitoring Firm" in Seoul National University: Journal of Finance and Banking (Korea, Oct/Nov 1998); in Korean. [Later correction: it was the December 1998 issue.]
- Excerpts from "The Corporate Monitoring Firm" in Institutional Shareholder Services: ISSue Alert (USA, February 1998).
- A brief description of corporate monitoring in Davis Global Advisors: Global Proxy Watch (USA, Dec 26, 1997).
Several of these are available in electronic form at http://www.corpmon.com/publications.htm . To request free paper copies, e-mail your postal address -- MailTo:paper@corpmon.com
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4. WHAT YOU CAN DO:
(a) Forward this newsletter to those interested in corporate governance, especially institutional investors.
(b) Read one of the articles listed above.
(c) Send us your comments, questions, and advice -- [email address out of date]
(d) Vote your shares "YES" when a corporate monitoring resolution is proposed!
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