England should drop Stuart Broad for second Test, says former captain Michael Vaughan

Former England captain Michael Vaughan says he would drop fast bowler Stuart Broad for England’s second Test match against Pakistan at Headingley.

Lessons learned from Crescent Energy’s board battle

Less than a month ago, Calgary-based Crescent Point Energy survived an official proxy battle. Its 10 nominees were elected with all beating the support received by the four nominees put forward by the dissident shareholder, Cation Inc., an entity formed by former investment banker Sandy Edmonstone.

But winning comes with some costs. Crescent Point now knows there is a reasonable-sized group of shareholders who were upset enough to cast their support with the dissident. For instance, the withhold-vote as a percentage of the total vote for four of its nominees averaged about 30 per cent, with the range of about 24 per cent to about 40 per cent. (In 2017 the highest withhold percentage was 9.14 per cent.) And that group was not swayed by Crescent Point’s message, which was to vote “for a refreshed board that is delivering on a detailed and financially disciplined five-year strategic plan.”

Crescent Point also knows a majority of its shareholders are opposed to its compensation program, with less than 40 per cent supporting its non-binding say-on-pay. The 38.52 per cent support was almost 50 percentage points below the 2017 vote.

Now that a reasonable amount of time has passed since the vote, what are the two parties saying? In response to a series of questions, Crescent Point said it “learned a lot through this process. We understand, accept and value their (shareholder) feedback and expectations. We have a strong plan for change currently in place, which is showing positive results, and will continue to execute and make further changes to improve.”

Edmonstone termed the proxy fight “a success” when measured against the objectives, while acknowledging that none of Cation’s four nominees was elected. “Part of the objective was to unlock value. And we started that process.”

One way of measuring the dissident effect is to compare the change in stock price over the period from April 2 (the day Cation announced it was launching a proxy battle) to May 2 (the voting cut-off for the May 4 annual meeting) with the industry average. In that month, CPG’s stock price was up 31.89 per cent, more than three times the gain for the S&P/STENR index. Since then, CPG has declined 10.75 per cent (to May 25), far worse than the 0.38 per cent gain for the index. The shares closed Monday at $9.98, the levels of late January.

Let’s hope that management hasn’t lost its enthusiasm to make changes and engage shareholders.

Edmonstone said “there is so much value at Crescent Point that management has not been able to realize. So it’s compelling for an outsider (in this case activist) to help the board realize that,” he said.

That argument was endorsed by ISS, a proxy advisory firm, which said Cation “has made a compelling case for some change to the incumbent board to facilitate improvements to capital allocation decisions, to enhance profitability and to ensure appropriate alignment of executive compensation.” It told its clients to support two of Cation’s nominees, two more than Glass Lewis, another proxy advisory firm, had recommended.

But there were some disappointments. Among them: groups of shareholders who refused to meet and hear what Cation had to say; a possible breach of their fiduciary duty to their investees; the lack of time; and given the need for a fair process, shareholder concerns of not being able to piggyback onto Crescent’s proxy voting form.

Edmonstone got a taste for activism when he took up the cause for a group of Twin Butte convertible debentureholders: the group is set to receive almost six times their original offer.

Financial Post


Lava threatens more wells at Hawaii geothermal plant

HONOLULU (Reuters) – Lava from Hawaii’s erupting Kilauea volcano threatened to cover more wells at a geothermal power station on Monday as a fresh blast from the crater sent an ash plume almost 15,000 feet (4,600 m) into the sky, officials said.

Liverpool goalkeeper Loris Karius could move abroad after Champions League final mistakes says Robert Green

Liverpool goalkeeper Loris Karius could move abroad to help him get over his Champions League final mistakes, according to former England number one Robert Green.

To truly protect citizens, lawmakers need to restructure their regulatory oversight of big tech

If members of the European Parliament thought they could bring Mark Zuckerberg to heel with his recent appearance, they underestimated the enormous gulf between 21st century companies and their last-century regulators.

Zuckerberg himself reiterated that regulation is necessary, provided it is the “right regulation.”

But anyone who thinks that our existing regulatory tools can reign in our digital behemoths is engaging in magical thinking. Getting to “right regulation” will require us to think very differently.

The challenge goes far beyond Facebook and other social media: the use and abuse of data is going to be the defining feature of just about every company on the planet as we enter the age of machine learning and autonomous systems.

So far, Europe has taken a much more aggressive regulatory approach than anything the US was contemplating before or since Zuckerberg’s testimony.

The European Parliament’s Global Data Protection Regulation (GDPR) is now in force, which extends data privacy rights to all European citizens regardless of whether their data is processed by companies within the EU or beyond.

But I’m not holding my breath that the GDPR will get us very far on the massive regulatory challenge we face. It is just more of the same when it comes to regulation in the modern economy: a lot of ambiguous costly-to-interpret words and procedures on paper that are outmatched by rapidly evolving digital global technologies.

Crucially, the GDPR still relies heavily on the outmoded technology of user choice and consent, the main result of which has seen almost everyone in Europe (and beyond) inundated with emails asking them to reconfirm permission to keep their data. But this is an illusion of choice, just as it is when we are ostensibly given the option to decide whether to agree to terms set by large corporations in standardized take-it-or-leave-it click-to-agree documents.  

There’s also the problem of actually tracking whether companies are complying. It is likely that the regulation of online activity requires yet more technology, such as blockchain and AI-powered monitoring systems, to track data usage and implement smart contract terms.

As the EU has already discovered with the right to be forgotten, however, governments lack the technological resources needed to enforce these rights. Search engines are required to serve as their own judge and jury in the first instance; Google at last count was doing 500 a day.  

The fundamental challenge we face, here and throughout the modern economy, is not: “what should the rules for Facebook be?” but rather, “how can we can innovate new ways to regulate effectively in the global digital age?”

The answer is that we need to find ways to harness the same ingenuity and drive that built Facebook to build the regulatory systems of the digital age. One way to do this is with what I call “super-regulation” which involves developing a market for licensed private regulators that serve two masters: achieving regulatory targets set by governments but also facing the market incentive to compete for business by innovating more cost-effective ways to do that.  

Imagine, for example, if instead of drafting a detailed 261-page law like the EU did, a government instead settled on the principles of data protection, based on core values, such as privacy and user control.

Private entities, profit and non-profit, could apply to a government oversight agency for a license to provide data regulatory services to companies like Facebook, showing that their regulatory approach is effective in achieving these legislative principles.  

These private regulators might use technology, big-data analysis, and machine learning to do that. They might also figure out how to communicate simple options to people, in the same way that the developers of our smartphone figured that out. They might develop effective schemes to audit and test whether their systems are working—on pain of losing their license to regulate.

There could be many such regulators among which both consumers and Facebook could choose: some could even specialize in offering packages of data management attributes that would appeal to certain demographics – from the people who want to be invisible online, to those who want their every move documented on social media.

The key here is competition: for-profit and non-profit private regulators compete to attract money and brains the problem of how to regulate complex systems like data creation and processing.

Zuckerberg thinks there’s some kind of “right” regulation possible for the digital world. I believe him; I just don’t think governments alone can invent it. Ideally, some next generation college kid would be staying up late trying to invent it in his or her dorm room.

The challenge we face is not how to get governments to write better laws; it’s how to get them to create the right conditions for the continued innovation necessary for new and effective regulatory systems.