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Steven Towns is the author of 'Investing in Japan: There is no stock market as undervalued and as misunderstood' (2012). 'Investing in Japan' fills the void of information about Japanese stocks, providing a comprehensive overview of the market, challenging conventional wisdom of Japan being on... More
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  • The Day Before GE's Shareowner Meeting 4 comments
    Apr 24, 2012 8:11 AM | about stocks: GE

    General Electric's (GE) annual shareowner meeting is tomorrow (Weds.) in Detroit. I urge those that haven't voted to do so as soon as possible today to ensure votes are counted. To help make readers better informed and to generate discussion, I prepared two write-ups surrounding GE's annual meeting: (1) a review of each item for vote on its proxy, and (2) a look at why GE is undervalued. It's unmistakable to me the market has been efficient in valuing GE shares when considering GE's deficient corporate governance and management. Please continue reading even if you have read the above two linked articles.

    However, shareowners have limited recourse since a majority of shares are owned by institutional investors that often either vote in-line with management or simply aren't putting clients' interests first when voting proxies. Another matter is the inadequate shareowner proposal system, which limits shareowners' rights, is non-binding, and has been hijacked by corporate and private lawyers. Finally, there is almost no accountability of directors (shareowners pay costly indemnity insurance for their own directors) and at GE, to make matters worse, executives do not appear to be held accountable by the board (instead they have been compensated very well throughout while shareowners continue to exercise great patience that is showing signs of wearing thin).

    With that being said, a start is to vote the proxy items. Low vote turnout by individuals fuels companies', lobbyists', and academics' arguments that certain proxy reform measures aren't needed simply because shareowners would essentially not be reading them anyway or would not care. One such critical matter is the disclosure of CEO pay to median worker pay. I will share thoughts on next steps following the vote results.

    Disclosure: I am long GE.

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Comments (4)
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  • wabisabien
    , contributor
    Comment (1) | Send Message
     
    hello,
    GE's meeting tomorrow is fraudulent because i am a shareholder and when I tried to vote, I was not provided the 11 digit control number. By withholding this control number and just sending an email to vote is a bait and trap situation, I am frustrated that GE would resort to this tactic. It is no different than Vlmadir Putin's election in Russia. Shame on GE and Immelt. The company's top 300 people are reaping the benefit of efforts of 300,000 employees through stinking compensation despite providing no shareholder value.
    Shame on GE.
    24 Apr 2012, 06:25 PM Reply Like
  • Steven Towns
    , contributor
    Comments (292) | Send Message
     
    Author’s reply » Thanks for leaving this comment. I will contact you privately to see if we can figure out where your control number went. It's not impossible that it wasn't made easy to figure out how to vote online. I've even received printed proxy materials before that arrived on the day of a meeting and I live only a few hours from the proxy service company (unless of course they print and send from elsewhere). Anything is possible when it comes to proxies/VIFs.
    25 Apr 2012, 05:31 PM Reply Like
  • James McRitchie
    , contributor
    Comments (72) | Send Message
     
    Great write-up Steven. If all companies had a few shareowners as diligent as you, our boards would be much more accountable and our companies would be more profitable.
    24 Apr 2012, 07:19 PM Reply Like
  • Steven Towns
    , contributor
    Comments (292) | Send Message
     
    Author’s reply » Thanks, Jim. It would be great to see more shareowners writing proxy reviews. Your sharing of your votes and reasoning is also helpful. Really need more individuals and institutional investors to step up and become more engaged in their own right and with one another. The latter after all are managing the former's (our!) money.
    25 Apr 2012, 05:39 PM Reply Like
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