The Shadow Chancellor's Notebook by Orlando Plumbe

WSJ.com - Stock Activism's Latest Weapon

Link: WSJ.com - Stock Activism's Latest Weapon.

For years, shareholder activists have tried to change American corporations by proposing resolutions at annual meetings. Although many have passed, they typically have taken the form of nonbinding advisory resolutions, and directors often ignore them. Now a few corporate-governance advocates are pushing a more radical approach: amending companies' bylaws, the rules governing a corporation's internal affairs.

Hedge Funds for the Masses

Frpom the NYT, Hedge Funds are getting a nincreasing amount of their money from John Q. Public, in the form of pension fund investment in them.  Pension Officers Putting Billions Into Hedge Funds - New York Times.

Faced with growing numbers of retirees, pension plans are pouring billions into hedge funds, the secretive and lightly regulated investment partnerships that once managed money only for wealthy individuals and elite institutions.

The plans and other large institutions are expected to invest as much as $300 billion in hedge funds by 2008, up from just $5 billion a decade ago, according to a study by the Bank of New York and Casey Quirk & Associates, a consulting firm. Pension funds account for roughly 40 percent of all institutional money. This month, the investment council that oversees the New Jersey state employees pension fund said that the fund would invest $600 million in hedge funds, less than 1 percent of its assets, over the next several months.

Once a Lone Wolf, Carl Icahn Goes Hedge-Fund Route

But i bet still a wolf. Link: WSJ.com - Once a Lone Wolf, Carl Icahn Goes Hedge-Fund Route.

In forming a hedge fund, Mr. Icahn, a man sometimes reviled in boardrooms as an interloper, was able to take advantage of investors' desire for better management. "Hedge funds are a huge force for corporate governance," he says. "To go after big companies you need capital," he notes, because "you can't get management worried about you unless they know you aren't bluffing."

WSJ.com - Bristol-Myers Expected to Pay $300 Million to Settle Probe

Penlaties  and governance changes for BMS. From Link: WSJ.com - Bristol-Myers Expected to Pay $300 Million to Settle Probe.

Bristol-Myers Squibb Co. is expected to pay about $300 million to settle a criminal investigation by the Justice Department into its alleged accounting manipulations from several years ago, people familiar with the situation said. As part of the settlement, longtime board member James D. Robinson III is expected to become chairchairman, according to a person familiar with the situation. Current Chairman and Chief Executive Peter R. Dolan would retain the CEO title.

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The New York pharmaceutical company also will continue to use retired federal judge Frederick B. Lacey as an independent monitor of the company's accounting practices, internal controls and financial reporting, according to this person.

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In March 2003, the company admitted its accounting for several years was "inappropriate." Sales were inflated by $2.5 billion and $900 million in profit was improperly booked from 1999 to 2001, the company said at the time. Bristol-Myers also disclosed that at the end of fiscal quarters it offered incentives to wholesalers to buy more products than needed, a practice known as "channel stuffing."

The company has already paid more than $500 million to settle lawsuits and investigations stemming from the accounting matter, and agreed to some governance improvements. But by far the most serious legal challenge facing the company has been the criminal investigation by Christopher J. Christie, the U.S. attorney in Newark, N.J. He was said to be looking at both the company and several individuals,

ProfessorBainbridge.com

ProfessorBainbridge.com. on the limited prospects for hedge funds acting as coprorate governance activists, drawing on his "director preimacy" arguments set out in several of his scholarly works..

The prospects for hedge fund activism are thus circumscribed in two ways. First, hedge funds in fact are subject to many of the constraints on shareholder activism that have helped prevent institutional investor activism from becoming much more than a thorn in management's side. Second, the SEC and Congress have already been flirting with efforts to regulate hedge funds. If hedge funds succeed at becoming something more than annoyance, one can expect the business lobby (such as the Business Roundtable, NAM, and the Chamber of Commerce) to provide critical support for such efforts. Should we mourn the likely failure of hedge funds as activists? No.

As fundamentally, the primary goal of hedge funds is to provide returns to their investors, not to be crusaders.

A New Take on Shareholder's Rights

Link: ThisisLondon.

Coldplay lead singer Chris Martin today launched an attack on his record label EMI and the company's shareholders.

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But as Coldplay prepared for a concert in New York to promote their new album, called X&Y, Martin said: "I don't really care about EMI. I'm not really concerned about that.

"I think shareholders are the great evil of this modern world."

He criticised what he called "the slavery that we are all under to shareholders". However, having sold 20 million albums worldwide to date, their album release on 7 June and subsequent two-month tour of America in August and September will play a large role in determining EMI's profits.

The Problem With Pension Fund Activism

Link: WSJ.com - Gadfly Activism at Calpers Leads To Possible Ouster of President.

Sean Harrigan, the president of the California Public Employees' Retirement System, is expected to be ousted today. The development, reported by the Los Angeles Times, comes amid mounting criticism not only from the corporations targeted by the huge public pension fund's boardroom-governance crusades but also from allies increasingly uncomfortable with its meddling in affairs not directly related to its mission of pushing for optimum investment returns

Update: was outsted today