In Focus

Colorado PERA Executive Director Greg Smith Passes Away

CII is deeply saddened by the death on December 12 of our long-time board member Gregory W. Smith, the executive director of the Colorado Public Employees’ Retirement Association.  Greg was CII co-chair for public pension funds, and served on the CII board from 2014 to the present, and from 2008 to 2012.
 
Colorado PERA announced the news, noting Greg’s more than 15 years of service on CoPERA staff, including five as PERA’s executive director.  “Colorado PERA and its membership have lost a true leader and dedicated servant to the public workforce,” said Timothy M. O’Brien, Chairman, PERA Board of Trustees. “Those who knew Greg knew he loved his family, was a proud fourth-generation Coloradan, and was fully dedicated to PERA and its members."

Hong Kong Exchange Moves to Permit Dual-Class Listings

The Hong Kong Exchange on December 15 indicated its intention to propose permitting dual-class (or “weighted voting right”) listings, albeit with some limitations and safeguards “to mitigate expropriation and entrenchment risks.” The intent is to attract “more listings by innovative companies,” and compete with other exchanges, particularly in the United States, that already permit dual class. Eligibility would be limited to large "innovative" market cap companies, and safeguards would include election of independent directors on a one-share, one-vote basis; a requirement that only company directors hold shares with extra voting rights, with limits on transferability; and clear warning labels for investors including unique stock code markers.

New SEC Agenda Keeps Corporate Governance Items on Back Burner

The SEC on December 14 posted its new “Reg Flex Agenda,” the first under new Chairman Jay Clayton. The three-part list indicates the priorities of the commission and its chairman. The SEC’s active items are fewer than those prepared earlier this year by then Acting Chairman Michael Piwowar. The long-term (or back-burner) items include various proposals advocated by CII, including those on universal proxy, clawbacks, and hedging. The latter two proposals were mandated by Congress in Dodd-Frank and were first proposed by the SEC in 2015. One new item on Long-Term Actions is to amend the “proxy rules,” with no further definition. This could refer to the shareholder proposal rule or proxy plumbing, among other possibilities.   

CII and Investors Oppose Proxy Advisor Bills

CII and 45 CII members, other investors and investor organizations sent a letter November 9 to members of the House Financial Services Committee strongly opposing legislation that would set stringent regulations on proxy advisory firms. The legislation would "weaken corporate governance, undercut proxy advisory firms' ability to uphold their fiduciary obligation to their investor clients and reorient any surviving firms to serve companies rather than investors," the letter states. A bill to regulate proxy advisors is expected to be voted on by the House of Representatives before Christmas. CII underlined objections to the legislation in a Decmeber 12 letter to House leadership. 

CII Report Underlines Risks with Convoluted Chinese Corporate Structure

A new CII report highlights the risks posed to investors by a common structure called a variable interest entity (VIE), which is employed by many Chinese companies listed on U.S. stock exchanges. Firms using this structure include internet giants like Alibaba, which in 2014 conducted the largest IPO in history. U.S. exchanges are seeing a resurgence of these Chinese VIE IPOs, with 20 filings this year including 15 since September 1, compared to six in 2016 and seven in 2015. 
 

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CII Priorities

Fair Financial RulesSensible, effective rules safeguard investors and strengthen markets.

Dual-Class StockEach share of a public company's common stock should have one vote.

Majority Voting for DirectorsIn uncontested elections, directors should be elected by majority vote.

Universal ProxyIn contests, investors should be free to vote for the nominees they prefer.

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