April 5, 2004

U.S. Court of Appeals Overturns

On Friday, the U.S. Court of Appeals for the Second Circuit unanimously ruled in favor of MONY and directed entry of a preliminary injunction preventing a dissident shareholder, Highfields Capital, from violating the SEC’s proxy rules by mailing proxy material that included reproductions of MONY’s proxy card to stockholders in connection with MONY’s proposed merger with AXA Financial (without complying with the disclosure requirements of the proxy rules). The Court held that “MONY will suffer irreparable harm if [the dissidents] are allowed to enclose duplicates of management’s proxy cards in their solicitations to MONY shareholders without complying with the disclosure requirements” of the federal proxy rules.

As previously blogged about on February 16th, the judicial pendulum has swung back to reversing what had been the SEC staff’s position (the SEC’s now invalid position was that the applicability and scope of Rule 14a-2(b)(1) – the proxy rule that provides an exemption from the filing and disclosure requirements of Rules 14a-3 through 14a-6 – allowed dissidents to include management proxy cards in their mailings without preparing full blown proxy materials of their own).

IASB Issues New Accounting Standards

Last Wednesday, the International Accounting Standards Board (IASB) issued a number of new standards (and amended other standards). As I blogged a few weeks ago, these standards take effect in 2005 for more than 90 countries. Controversial standards regarding derivatives are still subject to change from what is included in these standards.

U.S. companies are still following U.S. rules, but IASB and FASB are working to create a single set of rules that both can use.

Correlation between Corporate Governance and Corporate Performance?

The latest GMI Governance and Performance Analysis study finds a statistically significant correlation between governance and performance when measured across a number of variables over a multi-year period.

Results of the new analysis are consistent with those of GMI’s 2003 report as well as other studies in the field, including “Corporate Governance and Equity Prices” by Paul Gompers, Joy Ishii and Andrew Metrick (Quarterly Journal of Economics, February 2003) and Chapter 5 of The Recurrent Crisis in Corporate Governance by Paul MacAvoy and Ira Millstein (Palgrave MacMillan, 2003).