October 21, 2006
SEC Does Not Act
SEC did nothing to change the shareholder resolution rule recently interpreted by the Second Circuit to allow shareholder challenges to firm voting procedures. The refusal to act was a big, big deal. Now shareholders, for the spring meetings, can put shareholder bylaw proposals in firm proxy materials to allow for shareholder nominations to the board of directors. For more see Gretchen Morgenson, Fresh Air for Board Elections? NY Times Oct 15, 2006 at Sec 3, p. 1
UnitedHealth Continues to Stumble
The UnitedHealth CEO, fired for backdating options, will leave with over $1.1 billion in severance payments consisting of, you guessed it, stock options and other benefits. When will this madness stop?
World's Largest IPO Market? Hong Kong
Hong Kong and London are mounting serious challenges to New York as the world leader in IPOs. The costs of IPOs in the United States is too high and our foreign competitors are taking advantage of it. This has severe long term implications for the health of United States financial markets.
Merc and CBOT Merge
The new $25 billion derivative market created by the merger of the Chicago Merc and The Chicago Board of Trade is great news for Chicago. Once again the regulatory authorities will be sorely tested. Do we have anti-trust problems with the merger or not? Its a tough call.
Income Inequality Cont.
Professor Shane's comment to my earlier post on income inequality cites a favor study of the left -- the value of college degrees is failing. The claim in only partially correct. The value of PH.D's, MBA's, JD's and MD's is up over 10%. It is the value of undergraduate degrees that is failing (by 3%). I suspect that undergraduate degrees divided by majors would find the same division. Undergraduate business degrees are worth more while political science degrees are worth less (and communication degrees are worth little). The fact of the the matters is that some education is valued and some is not and our economy. Those who chose correctly are rewarded; lose who waste their time are not.
Grasso Loses Again
The state court judge has, in preliminary motions, held that Grasso owes the NYSE close to $100 million in compensation that he should not have had. Grasso is livid and will appeal. Grasso may be the victim of too much lawyering. He has very fine lawyers and is sparing no expense in his defense. His lawyers, who file whatever has a chance, have induced substantial complexity into the litigation. The action consists of five cases and a flurry of motions and countermotions. The Wall Street Journal got involved in its campaign against Spitzer. But the motions and the internal self-convincing that goes with such a defense (we will win) sometimes obscure the basic issue: Did Grasso tell the board about his compensation package? Grasso wins or loses on his credibility on this straightforward question. This was always a risk and why Grasso should have investigated settlement; the fancy lawyering may have led to a false sense of confidence. In any event, Judge Ramos cut to the basic issue and said no. Sometimes lawyers can be too clever and too good.