|New Threads Only:|
|New Threads & Replies:|
Forum List » Value Ideas and Strategies|
Share and discuss value investing ideas and investing strategies.
CME Group (CME): A Bloated Board with Absurd Consequences
Posted by: Frank Voisin (IP Logged)
Date: March 23, 2012 06:32AM
CME Group Inc (CME) operates a derivatives clearinghouse as well as futures exchanges and other trading platforms covering all major asset classes. The company is the result of a 2007 merger between the Chicago Mercantile Exchange and the Chicago Board of Trade. One byproduct of this merger is that CME now operates the world’s largest futures exchange. Another consequence is that the company has an extremely bloated board of directors with more than 30 members! From the New York Times:
Quote:Normally boards comprise between seven and twelve members, with most companies at nine. This ensures reasonable coverage of needed skills and allows for consistent director engagement. The smaller the board, the less coverage you get, and the larger the board, the less engaged it becomes (e.g. it is unlikely that CME’s board meetings are three times as long as the average board, giving every director a chance to participate to the same extent!). There are other problems too:
Quote:The practicality of having so many directors even leads to some absurdities:
Quote:So despite having more representatives than perhaps any other company in America, shareholders of CME have less insight into who their representatives are and what skills they possess. Is that an advanced degree in accounting, or pipefitting? According to the proxy statement, never you mind.
Ok, perhaps this is too touchy-feely for MBA types, so let’s get down to brass tacks: money. As you would expect, having more than three times the regular number of directors does not mean each director is only paid a third of what a director at a regular company would earn:
Quote:Yikes! Fortunately, CME is slimming down, aiming to reduce its board from 32 to 30 this year. As the New York Times states with, I am sure, tongue firmly in cheek:
Author Disclosure: None
Stocks Discussed: CME,
Re CME Group CME A Bloated Board with Absurd Consequences
Posted by: Cornelius Chan (IP Logged)
Date: March 25, 2012 03:29AM
An out-of-the-way insight into the workings of early 21st Century American finance. Just that many more foxes watching out for the hen house.
Stocks Discussed: CME,
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.