December 14, 2016

Shareholder Activism: Will Dividend Investors Change the Game?

This blog from Covington & Burling’s Len Chazen argues that the migration of fixed income investors to dividend-paying common stocks during 2016 could result in these investors becoming an independent force to be reckoned with in shareholder activism.  Here’s an excerpt:

 Dividend-minded shareholders are a potential third force in the contest for influence between institutional investors who want the corporation to be managed to enhance long-term profitability, and shareholder activists who want the board to maximize the current price of the stock. As supporters of higher dividends these new shareholders are natural allies of the activists, but unlike the typical shareholder activist, they have a long term stake in the corporation and an interest in limiting stock buy backs and dividends to a level that does not impair the ability of the corporation to continue paying dividends in the future.

Governance Survey: Silicon Valley v. S&P 100

This Fenwick & West study surveys the landscape of Silicon Valley’s governance practices and compares them with those found at S&P 100 companies. Not surprisingly, the study found significant differences between Silicon Valley and Corporate America. Here are some highlights:

– Silicon Valley directors & executives owned larger average equity stakes in their companies than did their peers at S&P 100 (10.3% v. 2.8%).

– The total voting power of Silicon Valley directors & executives also skews higher than the S&P 100 (14.2% v. 4.8%)

– Silicon Valley companies have smaller boards (8.2 directors v. 12.4) & less frequent meetings (8.1 v. 8.9) than S&P 100 companies

– More insiders serve on Silicon Valley boards, but 52% of Silicon Valley boards have an independent chair as compared to only 18% of the S&P 100.

Consistent with other surveys, this study also found Silicon Valley boards to be significantly less gender diverse than their S&P 100 counterparts – 26% did not have a single woman director, while all S&P 100 companies had at least one. As in other surveys, however, this one indicates that there appear to be signs of improvement on the diversity front.

The study also addresses other governance metrics and tracks changes over time.

More on “The Mentor Blog”

We continue to post new items daily on our blog – “The Mentor Blog” – for members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

– Issuing Shares Via Blockchain: Delaware Poised to Act
– Describing an Officer’s Duties 101
– Data Privacy: More Federal Agencies Join Enforcement Bandwagon
– Stats: Controlled Companies
– How Law Firms Should Strengthen Their Cybersecurity

John Jenkins