I read two interesting articles in the March 11, 2004 issue of InvestmentNews. Unfortunately they are not available on line so I will attempt to summarize:
Happy Day$ Here Again for Mogul$: Compensation uptick seen for financial services honchoes
Despite all the hoopla surrounding executive compensation, the paychecks to many top executives in asset management business increased an average of 10% to 15% in 2003. The article states that the rise in compensation is a result of the improved market and also a “clear indication of the industry’s apathy toward embracing new standards of good corporate government.” And while compensation packages are impressive, “they are nothing compared with increases seen among big Wall Street companies, particularly those that wheel and deal in investment banking.”
Lawsuit May Dampen Shareholder Activism: ‘Sweatshop comments imperil social investor’
A defamation lawsuit has been filed by Cintas Corp. against the parent company of Walden Asset Management (Boston Trust and Investment Management Co) and Timothy Smith, a Walden VP. Walden manages several social funds. In the suit, Cintas accuses Walden and Smith of falsely accusing the uniform supplier at its October annual shareholders meeting of supporting sweatshops. At the meeting, Smith introduced “a resolution asking Cintas to asses the effectiveness of its vendor code of conduct, and the compliance of offshore factories and suppliers. Accoding to the suit, Smith identified a Haitian apparel company he called ‘a poster child for sweatshops as a major supplier to Cintas.” Until now companies have refrained from using the courts to go after shareholders who bring up issues with which management may disagree. Some fear that the suit may lead to other shareholders less willing to challenge company management, others think it a frivolous suit that won’t change anything.
Jayson Funke
