1. Equus Total Return
The incumbents won. Dissidents claim moral victory. Why am I reminded of Calvin & Hobbes? Calvin would claim a moral victory even when Susie turned the tables on him, and of course he could count on the support of one tiger pal.
As I've noted here Equus Total Return is a business development company (BDC) HQ-ed in Houston that trades as a closed-end fund on the New York Stock Exchange.
The Committee to Enhance Equus says: "We also believe that the Company conducted the meeting in a manner intended to discourage personal attendance and voting by shareholders....Despite these concerns about the integrity of the process, we have concluded that further contest of the 2010 board election is not in the best interests of the Company or its shareholders."
2. Greg Meyer
Greg Meyer, a shareholder of Blockbuster (NYSE: BBI), seeks to have himself elected to that company's board.
The meeting is scheduled for June 24, in Dallas, Texas.
Control of the board is not at issue. So far as I can tell, Meyer represents only himself and would occupy just one seat out of seven. The one currently held by Gary Fernandes.
3. Seattle pension fund demand rejected.
Meanwhile, a court has told pension fund managers in Seattle that they should act like big boys and wipe those tears, despite losses in connection with Epsilon Global Active Value Fund II.
The Seattle City Employees' Retirement System had requested a preliminary injunction to force Epsilon executives to provide audited financial statements etc.
The judge, Richard Jones of the U.S. District Court, observed that "SCERS did not contract for transparency" when it made the investment.
Showing posts with label pension plans. Show all posts
Showing posts with label pension plans. Show all posts
Sunday, May 30, 2010
Tuesday, December 15, 2009
Two bankruptcy cases: what SCOTUS Won't Decide
The Supreme Court of the United States yesterday announced that it will not grant cert to bankrupt flatware maker Oneida, which sought to use its chapter 11 filing in 2006 to relieve itself of the obligation to make its payments to the Pension Benefit Guaranty Corp.
The ERISA says simply: "[T]here shall be payable to the corporation [PBGC], with respect to each applicable 12-month period, a premium at a rate equal to $1,250 multiplied by the number of individuals who were participants in the plan immediately before the termination date.” But the bankruptcy court agreed with Oneida that this was a pre-petition claim under chapter 11, subject to relief. This is a matter of enormous concern to many companies who find, as the population of the US (like that of much of the rest of the industrialized world) ages, that pension obligations are a significant burden.
It is a burden they have largely brought upon themselves. I don't know anything of Oneida's specific situation, but many US companies have used the prospect of juicy pensions as a way of easing otherwise difficult labor negotiations. The unions representing their workers were also complicit in this game, because they could present higher pension promises as a negotiating victory to their rank-and-file, without worrying much about whether those promises were funded or just hot air. So the bill comes due, and the restaurant's diners keep passing it around the table.
The 2d Circuit has since overturned the bankruptcy court's discharge, though, preserving the ERISA obligation. And it was the 2d Circuit decision whence the company sought a writ of certiorari. Now SCOTUS has let that ruling stand, leaving the other circuits free to go their own ways without guidance. Of course, if those other circuits follow the 2d Circuit's precedent, there will never be a need for SCOTUS to weigh in. This is one of a class of cases in which SCOTUS prefers to wait until a split among the circuits develops.
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Another decision-not-to-decide: the Chrysler bankruptcy. Yesterday the Justices dismissed an appeal brought by Indiana pension funds who objected to the ham-handed way in which the Obama administration pushed the old Chrysler through bankruptcy at their expense. The 2d Circuit in June had approved of the shotgun sale of most of Chrysler's assets to Fiat, but Justice Ginsberg stayed the sale soon thereafter. Now the Justices have sent the case back to the 2d Circuit with an order that the circuit dismiss the challenge to that sale as moot.
The state treasurer in Indiana says that he is happy with the high court's decision not to decide on mootness grounds. The manner in which it is done effectively erases the Second Court's decision as a precedent, and this means there is no precedent upholding the kind of emergency proceeding employed here. Its critics survive to fight another day.
The ERISA says simply: "[T]here shall be payable to the corporation [PBGC], with respect to each applicable 12-month period, a premium at a rate equal to $1,250 multiplied by the number of individuals who were participants in the plan immediately before the termination date.” But the bankruptcy court agreed with Oneida that this was a pre-petition claim under chapter 11, subject to relief. This is a matter of enormous concern to many companies who find, as the population of the US (like that of much of the rest of the industrialized world) ages, that pension obligations are a significant burden.
It is a burden they have largely brought upon themselves. I don't know anything of Oneida's specific situation, but many US companies have used the prospect of juicy pensions as a way of easing otherwise difficult labor negotiations. The unions representing their workers were also complicit in this game, because they could present higher pension promises as a negotiating victory to their rank-and-file, without worrying much about whether those promises were funded or just hot air. So the bill comes due, and the restaurant's diners keep passing it around the table.
The 2d Circuit has since overturned the bankruptcy court's discharge, though, preserving the ERISA obligation. And it was the 2d Circuit decision whence the company sought a writ of certiorari. Now SCOTUS has let that ruling stand, leaving the other circuits free to go their own ways without guidance. Of course, if those other circuits follow the 2d Circuit's precedent, there will never be a need for SCOTUS to weigh in. This is one of a class of cases in which SCOTUS prefers to wait until a split among the circuits develops.
-------------
Another decision-not-to-decide: the Chrysler bankruptcy. Yesterday the Justices dismissed an appeal brought by Indiana pension funds who objected to the ham-handed way in which the Obama administration pushed the old Chrysler through bankruptcy at their expense. The 2d Circuit in June had approved of the shotgun sale of most of Chrysler's assets to Fiat, but Justice Ginsberg stayed the sale soon thereafter. Now the Justices have sent the case back to the 2d Circuit with an order that the circuit dismiss the challenge to that sale as moot.
The state treasurer in Indiana says that he is happy with the high court's decision not to decide on mootness grounds. The manner in which it is done effectively erases the Second Court's decision as a precedent, and this means there is no precedent upholding the kind of emergency proceeding employed here. Its critics survive to fight another day.
Monday, March 30, 2009
Marks & Spencer
Marks & Spencer, the big Brit retailer, (clothing, food, furniture, etc.) holds its annual shareholders meeting in July.
The key thing to know about M&S in the run-up to that meeting is that its chief executive, Stuart Ross, is also the chairman of the board.
The idea of one person holding both of those titles is customary enough in the United States, but unusual in the Mother Country, and that is what one of the institutional shareholders of M&S is challenging.
In fact, at last year's meeting, 22% of investors voted against Ross as chairman, an extraordinary degree of shareholder rebellion.
The Local Authority Pension Fund Forum, which claims to control more than 1% of M&S equity, said today that it is offering a resolution at this year's meeting to appoint an independent chairman by July 2010. Such a resolution would need the support of 75% of M&S shares to pass.
This sounds a bit quixotic but .... hey, who am I to deny the appeal of the knight of doleful countenance.
“The separation of powers at the head of a company is a fundamental governance principle, and one that is accepted by the rest of the market,” said the LAPFF Chairman in a statement.
The key thing to know about M&S in the run-up to that meeting is that its chief executive, Stuart Ross, is also the chairman of the board.
The idea of one person holding both of those titles is customary enough in the United States, but unusual in the Mother Country, and that is what one of the institutional shareholders of M&S is challenging.
In fact, at last year's meeting, 22% of investors voted against Ross as chairman, an extraordinary degree of shareholder rebellion.
The Local Authority Pension Fund Forum, which claims to control more than 1% of M&S equity, said today that it is offering a resolution at this year's meeting to appoint an independent chairman by July 2010. Such a resolution would need the support of 75% of M&S shares to pass.
This sounds a bit quixotic but .... hey, who am I to deny the appeal of the knight of doleful countenance.
“The separation of powers at the head of a company is a fundamental governance principle, and one that is accepted by the rest of the market,” said the LAPFF Chairman in a statement.
Wednesday, December 17, 2008
Three brief items
1. Microchip Technology says that it has plans to wage a proxy battle for control of Atmel, and has announced seven nominees for the board of directors.
Atmel, a company headquartered in San Jose, Calif., manufactures microcontrollers, advanced logic, mixed-signal, nonvolatile memory and radio frequency (RF) components.
Microchip made an unsolicited bid to acquire Atmel in late October and was rebuffed. This week's announcement is in response.
2. RA Capital Healthcare Fund, a hedge fund with a biotech focus, is urging the board of Northstar Neuroscience Inc. to make a cash distribution to its shareholders or to implement a share buy-back program.
Northstar, based in Seattle, Wash., makes medical devices, especially a system that delivers targeted electrical impulses, "cortical stimulation," to the brain for what the company's website describes as "investigatory purposes."
RA Capital's letter is mostly limited to "urging" a course of action. There is no real "or else" clause because RA seems to be aware that it isn't in much of a position to forcefully re-direct corporate policy.
3. Whatever you might want to say about Marc Dreier, the lawyer who was caught impersonating a pension plan official last week, you can't argue with his timing. If one is going to be caught in stupid high-level criminality, one should make sure that it is squeezed between Gov. Blago's arrest on the one side and the follies d'Madoff on the other.
For those who have forgotten Dreier and thus aren't sure what I'm talking about ... well, that's the point. And here's a reminder.
Atmel, a company headquartered in San Jose, Calif., manufactures microcontrollers, advanced logic, mixed-signal, nonvolatile memory and radio frequency (RF) components.
Microchip made an unsolicited bid to acquire Atmel in late October and was rebuffed. This week's announcement is in response.
2. RA Capital Healthcare Fund, a hedge fund with a biotech focus, is urging the board of Northstar Neuroscience Inc. to make a cash distribution to its shareholders or to implement a share buy-back program.
Northstar, based in Seattle, Wash., makes medical devices, especially a system that delivers targeted electrical impulses, "cortical stimulation," to the brain for what the company's website describes as "investigatory purposes."
RA Capital's letter is mostly limited to "urging" a course of action. There is no real "or else" clause because RA seems to be aware that it isn't in much of a position to forcefully re-direct corporate policy.
3. Whatever you might want to say about Marc Dreier, the lawyer who was caught impersonating a pension plan official last week, you can't argue with his timing. If one is going to be caught in stupid high-level criminality, one should make sure that it is squeezed between Gov. Blago's arrest on the one side and the follies d'Madoff on the other.
For those who have forgotten Dreier and thus aren't sure what I'm talking about ... well, that's the point. And here's a reminder.
Monday, October 27, 2008
More BCE Excitement
Common shareholders of BCE Inc., the holding company of telecomm giant Bell Canada, have filed a class action lawsuit demanding the payment of a dividend they had expected this summer.
Black-letter law is that no one can claim a right to a dividend. If an investor wants regular payments as a matter of right, the instrument he wants isn't a stock, it's a bond. Dividend policy is a matter within the business judgment, i.e. the nearly-unlimited discretion, of the board of directors.
The real point of the lawsuit, it would seem, is to derail the underlying deal. What the owners of equity do get, instead of a guarantee of payments, is a right to have a say in the major corporate decisions. That right is the basis for the existence of this blog, after all. I'm not entirely clear on how, in the plaintiffs' view, they've been deprived of that right here, but it seems that "pay us the dividends" is more a measure of damages in their eyes than the alleged legal injury.
The privatization of BCE will be (if the teachers'-pension folk behind it manage to pull it off) the largest leveraged buy-out ever. The deal was signed more than a year ago, though the closing has had to be delayed because the prevailing buisness climate has hardly been conducive to such wheeling-dealing.
A bond rating agency has estimated that if the deal does go through this December as now scheduled, BCE's consolidated debt will be C$42 billion, which is more than twice last year's revenue.
The deal has already generated some fascinating litigation. If you follow that link, you'll get to my earlier discussion of a challenge to this same transaction by bondholders.
So it may yet generate more.
Black-letter law is that no one can claim a right to a dividend. If an investor wants regular payments as a matter of right, the instrument he wants isn't a stock, it's a bond. Dividend policy is a matter within the business judgment, i.e. the nearly-unlimited discretion, of the board of directors.
The real point of the lawsuit, it would seem, is to derail the underlying deal. What the owners of equity do get, instead of a guarantee of payments, is a right to have a say in the major corporate decisions. That right is the basis for the existence of this blog, after all. I'm not entirely clear on how, in the plaintiffs' view, they've been deprived of that right here, but it seems that "pay us the dividends" is more a measure of damages in their eyes than the alleged legal injury.
The privatization of BCE will be (if the teachers'-pension folk behind it manage to pull it off) the largest leveraged buy-out ever. The deal was signed more than a year ago, though the closing has had to be delayed because the prevailing buisness climate has hardly been conducive to such wheeling-dealing.
A bond rating agency has estimated that if the deal does go through this December as now scheduled, BCE's consolidated debt will be C$42 billion, which is more than twice last year's revenue.
The deal has already generated some fascinating litigation. If you follow that link, you'll get to my earlier discussion of a challenge to this same transaction by bondholders.
So it may yet generate more.
Tuesday, September 2, 2008
Institutional Investing
Some heavy wonkish numbers today.
The Conference Board, the non-profit organization best known for putting out the consumer confidence index, has put out a report on institutional investment in US corporations.
It says that over the last two decades institutions have consistently increased their holdings in the largest 1,000 US corporations. Twenty years ago, those corporations were 46.6% institutionally owned. By 2000, the figure was 61.4%. Now, it is up to 76.4%.
Institutional investors include pension funds, hedge or mutual funds, insurance companies, banks and foundations.
Of those variants, that with the most weight to throw around in the US capital markets and corporate suites is: the pension fund. Within that category, state and local pension funds have grown more rapidly than others.
This is important because the state and local funds are more inclined to activism -- and, for that matter, to litigation.
Further, it isn't just the growth of such funds that gives them more weight to throw around. Their internal allocation decisions are moving in the direction of equity. They've increased their share of equity markets from 2.9 percent in 1980 to 10 percent in 2006.
Carolyn Brancato, one of the authors of the report, said in a release: "As the more activist state and local pension funds not only grow in assets but also increase their equity base, they have more stock to vote at annual meetings and in proxy contests."
Meanwhile, in international news ... the U.S. pension funds have historically put very little of their assets into equities outside this country's borders. This amount has grown of late, though. The report says that the largest 25 internationally invested U.S. pension funds now (as of 2007, the latest available figures) allocate 15.3% of their assets that way. It was only 13.5% two years before.
The Conference Board, the non-profit organization best known for putting out the consumer confidence index, has put out a report on institutional investment in US corporations.
It says that over the last two decades institutions have consistently increased their holdings in the largest 1,000 US corporations. Twenty years ago, those corporations were 46.6% institutionally owned. By 2000, the figure was 61.4%. Now, it is up to 76.4%.
Institutional investors include pension funds, hedge or mutual funds, insurance companies, banks and foundations.
Of those variants, that with the most weight to throw around in the US capital markets and corporate suites is: the pension fund. Within that category, state and local pension funds have grown more rapidly than others.
This is important because the state and local funds are more inclined to activism -- and, for that matter, to litigation.
Further, it isn't just the growth of such funds that gives them more weight to throw around. Their internal allocation decisions are moving in the direction of equity. They've increased their share of equity markets from 2.9 percent in 1980 to 10 percent in 2006.
Carolyn Brancato, one of the authors of the report, said in a release: "As the more activist state and local pension funds not only grow in assets but also increase their equity base, they have more stock to vote at annual meetings and in proxy contests."
Meanwhile, in international news ... the U.S. pension funds have historically put very little of their assets into equities outside this country's borders. This amount has grown of late, though. The report says that the largest 25 internationally invested U.S. pension funds now (as of 2007, the latest available figures) allocate 15.3% of their assets that way. It was only 13.5% two years before.
Wednesday, March 26, 2008
Springfield and MetroPCS
David Wighton writes "Wall Street Dispatch" for the wonderful peach-colored Financial Times.
His column today carries a fine discussion of the American "addiction" to litigation, as it affects Wall Street right now. In the process, he draws a connection I hadn't thought of before.
"In February," he writes, "Merrill Lynch repaid the City of Springfield, Massachusetts about $13.9 million for collateralized debt obligations it had sold to the municipality with the permission of city officials."
That's true, of course, and I've made a couple of references to that dispute in my other blog, Pragmatism Refreshed.
What I hadn't realized is that the old rule about the need to punish every good deed applies here. Wighton points out that after Merrill Lynch repaid the disputed amount, the Mass secy of state "promptly launched a fraud case against Merrill."
I also wouldn't have thought to make a connection between that fraud case and a civil action brought this week against Merrill Lynch in connection with auction-rate securities. Wighton tells me that cell phone operator MetroPCS has filed a lawsuit claiming that Merrill didn't properly explain the risks, selling auction-rate securities to MetroPCS as "low-risk and highly liquid," in compliance with that company's investment policy.
Why was a cell phone company interested in auction-rate securities at any rate? Wighton doesn't spell it out, but if I understand him accurately this was a way of saving money for its employees' pension plan. I'll have to look into that a bit.
Wighton's over-riding point is that companies (and municipalities) "across the US are considering taking an unusual step to counter disappointing returns from their corporate treasuries: legal action."
We've lost the ability to suck it up and move forward. We always have to sue somebody. We ought to learn the stereotypical stiff-upper lip from Mr. Wighton's fellow countrymen.
He's got a point.
His column today carries a fine discussion of the American "addiction" to litigation, as it affects Wall Street right now. In the process, he draws a connection I hadn't thought of before.
"In February," he writes, "Merrill Lynch repaid the City of Springfield, Massachusetts about $13.9 million for collateralized debt obligations it had sold to the municipality with the permission of city officials."
That's true, of course, and I've made a couple of references to that dispute in my other blog, Pragmatism Refreshed.
What I hadn't realized is that the old rule about the need to punish every good deed applies here. Wighton points out that after Merrill Lynch repaid the disputed amount, the Mass secy of state "promptly launched a fraud case against Merrill."
I also wouldn't have thought to make a connection between that fraud case and a civil action brought this week against Merrill Lynch in connection with auction-rate securities. Wighton tells me that cell phone operator MetroPCS has filed a lawsuit claiming that Merrill didn't properly explain the risks, selling auction-rate securities to MetroPCS as "low-risk and highly liquid," in compliance with that company's investment policy.
Why was a cell phone company interested in auction-rate securities at any rate? Wighton doesn't spell it out, but if I understand him accurately this was a way of saving money for its employees' pension plan. I'll have to look into that a bit.
Wighton's over-riding point is that companies (and municipalities) "across the US are considering taking an unusual step to counter disappointing returns from their corporate treasuries: legal action."
We've lost the ability to suck it up and move forward. We always have to sue somebody. We ought to learn the stereotypical stiff-upper lip from Mr. Wighton's fellow countrymen.
He's got a point.
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