proposal

Icahn now main player in Microsoft-Yahoo drama

Tue, 20 May 2008 06:59:58 -0400

The key man in the still unfolding Microsoft-Yahoo pas de deux is not Steve Ballmer, not Jerry Yang, or even Eric Schmidt. It's investor activist Carl Icahn. The New York Times notes that while he has proposed an all-new slate of directors, he really does not want to jump onto the board. What he wants is a deal--with Microsoft. As Microsoft-Yahoo Round 1 wound down, we made the point here that the possibility of a deal wasn't dead. We suggested that Microsoft may likely come riding back into the scene if Yahoo stumbled. Well Icahn and his merry band of fellow disgruntled shareholders have pushed the issue. Microsoft has come riding back, with a limited proposal to buy Yahoo's search business. You'd have to think there may be larger possibilities this time around.

For more:
- here's the New York Times article

Did Blankfein earn his $74 million?

Fri, 02 May 2008 06:59:56 -0400

As part of its package on CEO pay in 2007, Forbes offers up a profile of Goldman Sachs CEO Lloyd Blankfein--the $74 million dollar man. The piece notes that after it became known that Goldman Sachs paid him nearly $315,000 each working day in 2007, shareholders decided to put up a fight. A proposal to give shareholders a voice in exec pay decisions won 43 percent of the vote. How quickly people forget about Goldman's stunning performance last year, when Blankfein pocketed 0.64 percent of Goldman's profits. At Lehman Brothers, CEO Richard Fuld was paid 1.7 percent of profits. At Morgan Stanley, CEO John Mack received 0.55 percent of profits. In all, the board likely was justified. The real test for the compensation committee will be this year, especially if Goldman Sachs stumbles, which is a real possibility.

For more:
- here's the Forbes article

Morgan Stanley board supports Mack as chairman

Mon, 24 Mar 2008 07:59:55 -0400

It's in vogue these days for boards to split the CEO and chairman jobs in the name of good corporate governance. You would think it would be an easy sell at Morgan Stanley, where John Mack holds both titles. Well, we're going to find out. As you know, CtW Investment Group, an organization representing several unions, has Morgan Stanley in its sights. MarketWatch reports the board has just sent a letter to shareholders asking them to reject a proposal that would require a split. We'll get an idea of just how angry shareholders are at execs for allowing the credit crunch to get so out of hand.

For more:
- here's the MarketWatch article

Related Articles:
John Mack on the hot seat. Article
John Mack fared well in 2007. Article
Morgan Stanley, Merrill Lynch diverge on strategy. Article

How to fix the bond insurers

Wed, 20 Feb 2008 06:59:54 -0500

Do you remember when Eliot Spitzer, governor of New York and no stranger to the financial industry, gave the bond insurance industry five days to get its act together, even as he lobbies for a government bailout of these companies? Well, time's almost up. There are signs that some companies are responding. Privately held Financial Guaranty Insurance Company, for example, has asked regulators to approve a plan that would split the company in two, the Financial Times notes. That would seem to dovetail with the state's threatened break up, to separate the core muni business from the risky structured finance stuff. At the same time, Ambac reportedly has plans to issue $2 billion rights. As for the industry, the clock is really ticking.

For more:
- here's an article on Financial Guaranty from the Financial Times
- here's more on Spitzer's bailout proposal from Financial News Online

California to take on hedge funds?

Wed, 21 Nov 2007 06:59:57 -0500

Investment Dealers' Digest reports that California has proposed a rule requiring hedge funds with $25 million or more in assets and fewer than 15 clients to register with the state. Comments are being accepted on the proposal until Nov. 26. This is the kind of move that will not go over well with the industry. Many states already require hedge funds to register as investment advisors, but there are two huge exceptions: New York and Connecticut. So you have to wonder if this will make California a lot less attractive for funds. Many think funds will simply close shop and move elsewhere. But then again the state has a need to monitor some funds. We'll see.

For more:
- here's the Investment Dealers' Digest article

A private equity code of conduct in the U.S?

Wed, 21 Nov 2007 06:59:54 -0500

The Financial Times notes that a 'code of conduct' for private equity firms in the U.K. has kicked up some controversy. The code was drafted by a former regulator to push the industry to voluntarily publish more information on their accounts, ownership and prospects, including an annual review. But many think the proposal will do little to quell criticism from unions and other critics. The code has been influenced as of late by private equity firms, and critics are none too pleased. Could a similar idea work in the U.S? Well, this is a common ploy by industries that fear additional regulation. In the U.S., the main fear now is additional taxes. I doubt we'll see a 'code of conduct' calling for firms to voluntarily pay more taxes. Talk about a Jerry McGuire move. A career ender.

For more:
- here's the FT article

Move to hike taxes on private equity continues

Mon, 19 Nov 2007 06:59:54 -0500

After the news hit that Congress would not seek a bill to hike taxes on the carried interest of private equity funds, many people, including me, thought the issue was dead. Turns out that judgment may be premature. There is a move underway to at least keep the issue alive, though I still doubt we'll see it emerge as a Presidential campaign issue. The House of Representatives' proposal to increase taxes will not get through the Senate this year. Still, it has succeeded in keeping the issue hot. The flames were fanned by Warren Buffett, who has thrown his weight behind the idea as a way to return fairness to the tax code. The lobbying will be intense. And the battle will be intense. A decisive battle is coming next year.

For more:
- here's an update

Saga of ACS gets nasty

Fri, 02 Nov 2007 07:59:58 -0400

When the buyer of a company happens to be the founder, the process can get muddy fast. The New York Times takes a look at the troubled Affiliated Computer Services almost-deal. Five directors have resigned in the face of what they say is founder Darwin Deason's efforts "to subvert the process in order to prevent superior alternatives to your proposal from being consummated." Deason in fact had previously written them to demand their resignations for a host of breaches of board duties. Rarely are such scathing letters made public. Recall ACS had a deal with Cerberus Capital, which was recently withdrawn. Some shareholders of course blame the board.

For more:
- here's the New York Times article

Bailout fund questions emerge

Fri, 19 Oct 2007 06:59:55 -0400

Citigroup, Bank of America and JP Morgan met at Citigroup's headquarters to continue hashing out the big bailout fund for structured investment vehicles. But the New York Times reports that there are many questions that the banks must answer before the larger financial world will buy in. A detailed proposal is expected in about two weeks. One issue is what exactly the fund will be able to buy. I was under the impression that it would buy mainly asset-backed commercial paper. It appears the list of possible investments may be larger and might include CDOs. It's also unclear how much each bank will put in. I wonder who will make the buying decisions. Citigroup obviously has the most on the line. But will it be able to influence which of its SIVs will be bailed out?

For more:
- here's the New York Times article

Related article:
- Big banks banding together to save SIVs

Private equity tax hike proposal fizzles

Tue, 09 Oct 2007 06:59:58 -0400

I had been predicting that the much-feared hike on private equity gains would never really materialize. And I was right, not to sound too cocky. According to the Washington Post, private-equity firms have been informed that a tax-hike proposal will not get through the Senate this year. So the tax battle for the year is over, with the private equity firms winning. The issue remains whether it will re-ignite as an issue next year. My sense is that it will not. The major candidates do not want to make it an issue, and there is a whole lot of lobby power being directed toward preserving the low-tax treatment. But let it be said, the mere whiff off a tax change scared the bejeezus out of the industry. We may see the likes of Henry Kravis on Capitol Hill again, as a preventative measure.

For more:
- here's the Post article

Related articles:
- Private equity turns taxes into civil rights issue
- A clarification on the private equity tax debacle
- Another tax-hike bill is launched; class warfare?