December 1, 2009

RiskMetrics Releases 2010 Updated Policies

As I blogged in passing two weeks ago, RiskMetrics has released its policy updates for 2010. I did take in Pat McGurn’s discussion during the ABA Fall meeting and he did predict a record number of shareholder proposals. I just love his colorful commentary. On how to draft CD&As, Pat said:

– Draft with a style that is the “opposite of speed dating. You don’t want investors to linger for hours over your proxy statement (and CD&A). You should strive to convince them within minutes of picking up your proxy statement that there are zero problems – with the board, executive pay or other issues – and that they should move on to the next meeting.

– Don’t bury the lead under a pile of legalese. You must grab the readers’ attention. Use executive summaries like Movie Trailers (aka Coming Attractions). Highlight the best scenes, the most memorable lines and the score. If you don’t grab their attention, they’re likely to give more weight to the movie reviews (aka the proxy analyses).

Catch Pat during his annual webcast next month: “Pat McGurn’s Forecast for 2010 Proxy Season: Wild and Woolly.” We are posting memos regarding the 2010 policies in our “Proxy Advisors” Practice Area.

UK Leads Again: An Investor “Best Practices” Code

Perhaps because of a smaller market – and thus a smaller number of market participants to come together and agree on something – the United Kingdom seems to regularly beat the US to the punch when it comes to new governance ideas. The latest is the UK’s Institutional Shareholders’ Committee releasing a code of responsibilities of institutional investors. The code offers best practices, including dealing with the important topics of how to monitor companies, engage with boards and vote at shareholder meetings.

The ISC consists of the four leading UK investor bodies. The code is voluntary and will operate on a comply-or-explain basis. As noted in this press release, the code also calls on institutions to “state publicly how they apply its principles and disclose what steps they have taken, or intend to take, to verify their compliance.”

Our December Eminders is Posted!

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– Broc Romanek