Quieting the Sharholders\u27 Voice: Empirical Evidence of Pervasive Bundling in Proxy Solicitations

The integrity of shareholder voting is critical to the legitimacy of corporate law. One threat to this process is proxy “bundling,” or the joinder of more than one separate item into a single proxy proposal. Bundling deprives shareholders of the right to convey their views on each separate matter being put to a vote and forces them to either reject the entire proposal or approve items they might not otherwise want implemented. In this Paper, we provide the first comprehensive evaluation of the anti-bundling rules adopted by the Securities and Exchange Commission (“SEC”) in 1992. While we find that the courts have carefully developed a framework for the proper scope and application of the rules, the SEC and proxy advisory firms have been less vigilant in defending this instrumental shareholder right. In particular, we note that the most recent SEC interpretive guidance has undercut the effectiveness of the existing rules, and that, surprisingly, proxy advisory firms do not have well-defined heuristics to discourage bundling. Building on the theoretical framework, this Article provides the first large-scale empirical study of bundling of management proposals. We develop four possible definitions of impermissible bundling and, utilizing a data set of over 1,300 management proposals, show that the frequency of bundling in our sample ranges from 6.2 percent to 28.8 percent (depending on which of the four bundling definitions is used). It is apparent that bundling occurs far more frequently than indicated by prior studies. We further examine our data to report the items that are most frequently bundled and to analyze the proxy advisors’ recommendations and the voting patterns associated with bundled proposals. This Article concludes with important implications for the SEC, proxy advisors, and institutional investors as to how each party can more effectively deter impermissible bundling and thus better protect the shareholder franchise

Application of Price Bundling Strategies in Retail Banking in Europe

Application of price bundling strategies in retail banking in Europe is a report based on an empirical study of price bundling practices in Southern, Central and Northern Europe. The current report defines three core price bundling models that are in one form or another applied by the interviewed banks. The models are cost efficiency bundling, cross-selling bundling and loyalty bundling. Price bundling has been started to apply in retail banking in Europe in the 1980’s. Price bundling is regarded as an important strategy in the intensified competitive market and it is also supposed to satisfy increasingly sophisticated customers in the future. The price bundles that the interviewed banks apply can be explained by the competitive conditions in the retail banking markets concerning both what the banks aim at, their competitive advantages, and the market factors. Banks in different parts of Europe have different competitive advantages that they find important when pursuing their price bundling strategies. Common to all the markets is the threat of customers to switch banks, which was identified as the main driving force in competition.Price bundling; strategy; competition; competitive advantage; retail banking

Output Commitment through Product Bundling: Experimental Evidence

We analyze the impact of product bundling in experimental markets. A firm has monopoly power in one market but faces competition by a second firm in another market. We compare treatments where the monopolist can bundle its two products to treatments where it cannot, and we contrast simultaneous and sequential order of moves. Our data indicate support for the theory of product bundling, even though substantial payoff differences between players exist. With bundling and simultaneous moves, the monopolist offers the predicted number of units. When the monopolist is the Stackelberg leader, the predicted equilibrium is better attained with bundling although in theory bundling should not make a difference here. In sum: bundling works as a commitment device that enables the transfer of market power from one market to another.

An Efficiency Rationale for Bundling of Public Goods

This paper studies the role of bundling in the efficient provision of excludable public goods. We show that bundling in the provision of unrelated public goods can enhance social welfare. With a large number of goods and agents, first best can be approximated with pure bundling. For a parametric class of problems with binary valuations, we characterize the optimal mechanism, and show that bundling alleviates the free riding problem in large economies and decreases the extent of use exclusions. Both results are related to the idea that bundling makes it possible to reduce the incidence of exclusions because the variance in the relevant valuations decreases.Public goods provision, Bundling, Exclusion

Is Bundling Anticompetitive?

I analyze the implications of bundling on price competition in a market with complementary products. Using a model of imperfect competition with product differentiation, I identify the incentives to bundle for two types of demand functions and study how they change with the size of the bundle. With an inelastic demand, bundling creates an advantage over uncoordinated rivals who cannot improve by bundling. I show that this no longer holds with an elastic demand. The incentives to bundle are stronger and the market outcome is symmetric bundling, the most competitive one. Profits are lowest and consumer surplus is maximized.Bundling, complementary goods, product differentiation

On Bundling in Insurance Markets

This paper analyzes the welfare consequences of bundling different risks in one insurance contract in markets where adverse selection is important. This question is addressed in the context of a competitive insurance model a la Rothschild and Stiglitz (1976) with two sources of risk. Accordingly, there are four possible types of individuals and many incentive compatibility constraints to be considered. We show that the effect of bundling on these incentive compatibility constraints is such that bundling always yields a welfare improvement, and this result only holds when all four types have strictly positive shares in the population. Due to the competition between insurance companies, these benefits accrue to consumers who potentially have fewer contracts to choose from, but benefit from the better sorting possibilities due to bundling.

Peacock Bundles: Bundle Coloring for Graphs with Globality-Locality Trade-off

Bundling of graph edges (node-to-node connections) is a common technique to enhance visibility of overall trends in the edge structure of a large graph layout, and a large variety of bundling algorithms have been proposed. However, with strong bundling, it becomes hard to identify origins and destinations of individual edges. We propose a solution: we optimize edge coloring to differentiate bundled edges. We quantify strength of bundling in a flexible pairwise fashion between edges, and among bundled edges, we quantify how dissimilar their colors should be by dissimilarity of their origins and destinations. We solve the resulting nonlinear optimization, which is also interpretable as a novel dimensionality reduction task. In large graphs the necessary compromise is whether to differentiate colors sharply between locally occurring strongly bundled edges ("local bundles"), or also between the weakly bundled edges occurring globally over the graph ("global bundles"); we allow a user-set global-local tradeoff. We call the technique "peacock bundles". Experiments show the coloring clearly enhances comprehensibility of graph layouts with edge bundling.Comment: Appears in the Proceedings of the 24th International Symposium on Graph Drawing and Network Visualization (GD 2016

Does Service Bundling Reduce Churn?

We examine whether bundling in telecommunications services reduces churn using a series of large, independent cross sections of household decisions. To identify the effect of bundling, we construct a pseudo-panel dataset and utilize a linear, dynamic panel-data model, supplemented by nearest-neighbor matching. We find bundling does reduce churn for all three "triple-play" services. However, the effect is only "visible" during times of turbulent demand. We also find evidence that broadband was substituting for pay television in 2009. This analysis highlights that bundling helps with customer retention in service industries, and may play an important role in preserving contracting markets.Bundle, Service, Churn, Triple Play, Telecommunications, Cable, Broadband, Telephone, Screen

Cooperativity and Frustration in Protein-Mediated Parallel Actin Bundles

We examine the mechanism of bundling of cytoskeletal actin filaments by two representative bundling proteins, fascin and espin. Small-angle X-ray studies show that increased binding from linkers drives a systematic \textit{overtwist} of actin filaments from their native state, which occurs in a linker-dependent fashion. Fascin bundles actin into a continuous spectrum of intermediate twist states, while espin only allows for untwisted actin filaments and fully-overtwisted bundles. Based on a coarse-grained, statistical model of protein binding, we show that the interplay between binding geometry and the intrinsic \textit{flexibility} of linkers mediates cooperative binding in the bundle. We attribute the respective continuous/discontinous bundling mechanisms of fascin/espin to differences in the stiffness of linker bonds themselves.Comment: 5 pages, 3 figures, figure file has been corrected in v