Archive for the ‘Director Elections’ Category

Controlled Companies and Independent Directors

Lucien Bebchuk and Assaf Hamdani have recently published an article, (1) in which they present an alternative to current director elections so that true independence is assured, in particular at controlled companies, where beyond the fact that Nomination Committees are responsible for the selection, controller shareholders usually de facto fully control the procedures so that independence does no actually happen, (as it may be thought to be the case at widely held companies).

Enhanced Independence (as they call it) may emerge if directors are held accountable by public investors; Bebchuk and Hamdani think that not only controller shareholders are to be dispossessed of their complete influence in the nomination process, but that some influence must be granted to public investors, at least regarding some of the independent directors. Their influence can be executed in appointment, reelection and termination decisions.

Bebchuk and Hamdani state that even with director nomination restricted to Nomination Committees populated only with independent directors, controller shareholders have a big say in the process. Independent directors cannot be elected or reelected without their decisive voting rights as shareholders, and also find it difficult to remain when controlling shareholders leave the company. Apart from the social gratitude stemming from having been elected, directors very often suffer the direct or indirect, explicit or not pressure from controller shareholders regarding decisions that affect them and value, particularly related-party transactions. Read more…


How are board directors elected? The Spanish case.

January 17, 2016 Leave a comment

In a previous post, (1) I briefly compared the US/Canada system to elect directors to a board with the Spanish case. Not being an expert in the North American system, I only considered the main difference with the Spanish system. In a very recent post (2) I again dealt with the Proxy Access failed legislation and the recent trend in US companies to receive shareholder proposals that aim at introducing it in a company by company case, (modifying the company bylaws).

In this post though, I will try to unveil the Spanish electing system, which in public companies combines proportionality with different majority systems.

First, we will refer to the different qualification of directors according to their origin, as described by the Spanish (CL) Corporate law`s article 529 duodecis (3): Read more…

Proxy Access and Proportional Election systems

January 16, 2016 2 comments

I will herein introduce a topic suggested by Prof. Bainbridge in its recent post “Does proxy access matter?”, (1).

 While the post refers to Proxy Access, which is currently a trendy topic in Corporate Governance discussions in the USA, we will deal with a side issue.

 Proxy access is a “mechanism that gives shareholders the right to nominate directors and have those nominees included in the company’s annual meeting proxy statement.” Read more…