May 2 2008

With the US’s first “Say on Pay” vote coming up this Monday May 5 (at Aflac’s AGM), a RiskMetrics study actually shows less support in 2008 for “Say on Pay” resolutions:  “‘There’s a mixed view…’ argues Prof. Charles M. Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. ‘I think there are some concerns about its efficacy and impact. It’s a half-step.’ Elson asserts that other mechanisms, such as corporate reimbursement for proxy solicitation expenses, are ultimately more effective tools for shareholders to curb pay and other governance abuses.” Along those lines, on increasing demand for independent compensation consultation.

Lots of coverage on the death of UK Corporate Governance expert Derek Higgs. From The Telegraph: “In the wake of American corporate scandals such as Enron and Worldcom, Higgs was charged by the government in 2002 with examining the British corporate landscape and spotting weaknesses that could make executive abuse more likely. More specifically, he was asked to make recommendations on how to make non-executive directors more effective. His report, published in January the following year, began with a pointedly ironic quote from Walter Bagehot on the monarchy – “We must not let in daylight upon the magic” – and insisted that corporate Britain should do just that.”

Jeremy Warner notes that Higgs’ Code of Conduct on Corporate Goverance has never been more relevant than in our current economic situation. “Ah, but it didn’t prevent the avarice-driven madness of bankers or the collapse of Northern Rock, some will say. Maybe not, but think of how much worse it might have been with no constraints on the chief executive at all. ”

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