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Governance Insight Alert: American Apparel and 19 other companies

Two kinds of trouble collided last week at the formerly trendy “fast-fashion” retailer and manufacturer American Apparel (APP). Getting headlines was the ouster of APP’s Chairman and CEO Dov Charney, who faces fresh allegations of expense abuse on top of a series of earlier sexual harassment charges. Firing a Chairman/CEO who is also founder and largest shareholder is unusual enough, but even more striking […]

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Governance Insight Alert: OMC and 19 other companies

On January 21, 2014, Omnicom Group Inc. (OMC) filed suit in the U.S. District Court to exclude a confidential-voting shareholder proposal from its 2014 proxy ballot. The target of the suit: John Chevedden, an active filer of governance-related shareholder resolutions for well over a decade. This is the third lawsuit filed by an issuer against […]

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It is time for real bank clawbacks

By Paul Hodgson – Chief Research Analyst An edited version of this op-ed appeared on Bloomberg View on October 3, 2012 and this version appeared today on my blog on Forbes.com It was announced in the FT today that the Financial Services Authority expects banks to reduce or clawback bonuses in British banks and non-U.K. […]

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The Demise of MF Global Holdings Ltd: A Belated Autopsy

By Kap Su Seol – Research Analyst When Hurricane Sandy brought Wall Street to a virtual stop last week, it also cloaked the first anniversary of one of the Street’s more memorable recent events in oblivion – the demise of MF Global Holdings Ltd. On October 31, 2011, MF Global Holdings Ltd. collapsed, stranding thousands […]

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Executive Pay Out of Alignment at Abbott Laboratories

By Jeffrey Gramlich – L.L. Bean/Lee Surace Professor of Accounting, at the University of Southern Maine This is a summary of a presentation given by Jeffrey Gramlich, L.L. Bean/Lee Surace Professor of Accounting, at the University of Southern Maine, made on behalf of GMI Ratings at the recent Leet Symposium at the Case Western Law School […]

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£7MM Pay-off for News Corp’s Rebekah Brooks

By Paul Hodgson – Chief Research Analyst Yesterday the Financial Times wrote that the former CEO of News International, Rupert Murdoch’s U.K. newspapers business, Rebekah Brooks received a golden parachute of more than £7 million on her resignation. The paper describes the payments as comprising cash, pension payments, an allowance for legal fees and the […]

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Spinning the Libor Scandal Already – Commentary by Nell Minow

The old joke is that the definition of chutzpah is the guy who kills his parents and then throws himself on the mercy of the court because he is an orphan.  But I think it takes even more chutzpah to write, as Umair Haque does in the Harvard Business Review’s blog, that it is not the […]

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Barclays’ CEO Bob Diamond Resigns

By Paul Hodgson – CCO and Senior Research Associate Barclays’ CEO Bob Diamond has followed the lead of independent chairman Marcus Agius and announced his resignation today, though according to press reports he has done so under protest and with less altruism than Mr. Agius. Interestingly, Mr. Agius is leading the search for a replacement […]

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Barclays’ Chairman Marcus Agius Resigns

By Paul Hodgson – CCO and Senior Research Associate Barclays’ chairman Marcus Agius announced his resignation today, indicating that he had stepped down because he was the “ultimate guardian of Barclays’ reputation”. Barclays was the recipient of a massive $450 million fine last week because of its involvement in manipulating LIBOR, the interest rate at which […]

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“Dude, I owe you big time”: $450M Fine for Barclays for Doing its Job

By Paul Hodgson – CCO and Senior Research Associate We are facing yet more revelations that banks are out to make money. Barclays Bank, and what sounds like every single other major global bank, has been manipulating LIBOR (the London Interbank Offered Rate) either to give the impression that the bank was stronger than it […]

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GMI Ratings Governance Issue | Abbott Laboratories Inc.

Abbott Laboratories Inc. pleaded guilty and agreed to pay $1.5 billion to resolve allegations that it illegally promoted the drug Depakote. The development highlights the risk of investing in managers who put profit ahead of doing right. The Food and Drug Administration approved Depakote to treat epileptic seizures, bipolar mania and migraines only. In 1999, […]

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Avon’s Global Business Puts It At Risk

Avon Products, Inc.’s ongoing bribery investigation highlights some of the corporate governance risks that companies face in conducting business overseas. Kerry Carr, who had headed the cosmetics company’s internal audit department from 2003 until August 2005, resigned from Avon earlier this month, the Wall Street Journal reported Thursday. Avon’s bribery scandal has been long in the […]

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McKesson Pays Up for Unhealthy Practices

While McKesson Corp. gets sued for allegations such as inflating prices, the pharmaceutical company’s CEO John Hammergren is earning a healthy paycheck. McKesson agreed to pay more than $190 million to settle claims that it allegedly inflated pricing information for a large number of prescription drugs between 2001 and 2005, the U.S. Attorney’s office announced […]

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Netflix’s Weak Board Has Hurt Investors

Reed Hastings, Founder, Chairman and CEO of Netflix, is an example of a powerful executive whose ability to dominate a board of directors can greatly damage shareholder interests. In its latest nosedive, the Los Gatos, Calif. video subscription company’s stock price has plummeted nearly 17% this week to $88.50 per share as of the market’s […]

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PG&E’s Safety Problems

PG&E Corp. continues putting Californians into danger. In a recent example, the San Francisco utility’s live power lines fell over some Caltrain tracks on the state’s Peninsula on Monday evening, the Contra Costa Times reported. That follows news in the San Francisco Chronicle on April 22 that should have been shocking, but wasn’t: PG&E only […]

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Investment Advice from ex-Olympus Chief Michael Woodford

By Kimberly Gladman, Director of Research and Risk Analytics In a riveting speech to the Council of Institutional Investorsyesterday, former Olympus President Michael Woodford described the events leading to his discovery of the massive fraud at the Japanese equipment maker, as well as his subsequent dismissal. The personal details were compelling. Woodford told the audience about the […]

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Health Management Associates, Inc., litigation risk, accounting risk, equity risk

By Paul Hodgson – CCO and Senior Research Associate The AGR for Health Management Associates (HMA) fell well before any outward hint of trouble. During the period from September, 2009 through September, 2011, HMA’s AGR fell from 93 on a scale of 100 (“Conservative”) to 16 (“Aggressive”).  Not only that, but the company’s litigation risk […]

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We did the risk assessment, we did, no, really….

By Naveen Reddy – Senior Research Analyst What happens when a company that sells 80% of its products to a single customer suddenly loses that customer?  What happens to a company whose supply chain is concentrated in a single region that gets devastated by an earthquake?  What happens to a company when its CEO makes […]

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Interview: J.C. Chandor of “Margin Call”

Even the movies seem to be supporting Occupy Wall Street this fall. The dystopian sci-fi film, "In Time" has a pair of heroes who are part Bonnie and Clyde and part Robin Hood and Maid Marian as they rob from the rich to give to the poor.  And writer-director J.C. Chandor, whose father worked at […]

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The “S” in News Corp

By Ric Marshall, Chief Analyst and Co-Founder, GMI Founded in 1979, News Corp is today one of the largest and most powerful and influential media organizations in the world. The company is a truly a study in contrasts, on the one hand an enormous, public corporation with over 50,000 employees worldwide, while on the other […]

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