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Georgeson Monthly Roundup - June 2020
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Latest Georgeson publications

Webinar: Corporate Governance: Activism and M&A

Georgeson's Cas Sydorowitz joined the Directors Club and the Center for Corporate Governance to discuss the impacts that the Covid-19 crisis has on the world of corporate governance is the increased interest of funds and activist investors in listed companies due to the stock markets prices adjustments during the current situation.

Watch the webinar here.

Corporate Secretary Interview

Corporate Secretary has published an interview with Georgeson’s Hannah Orowitz, entitled More proposals reaching AGM votes this proxy season.

"Hannah Orowitz, managing director with Georgeson, tells Corporate Secretary that these figures suggest there is less negotiation taking place between investors and companies and agrees that, if so, it would mark a change from the pattern seen in previous years." 

Read the full article here.

Shareholder Activism
  • Bloomberg reports that Cerberus Demands Commerzbank Board Seats After Attack on Leaders: https://www.bloomberg.com/news/articles/2020-06-10/cerberus-blasts-commerzbank-over-performance-seeks-board-seats. “Cerberus Capital Management LP slammed Commerzbank AG’s leadership and demanded two seats on its board, taking an activist stance that could herald more radical change at the German lender. In letter seen by Bloomberg News, Commerzbank’s No. 2 investor said top management led by Chief Executive Officer Martin Zielke is focused on unprofitable revenue growth and lacks the resolve to slash costs. The five-page document, dated June 9 and sent to the supervisory board, also raised the possibility of a shareholder revolt should the bank refuse to appoint its representatives.”

  • The Financial Times reports that NN Group vows to improve returns after Elliott intervention: https://www.ft.com/content/e7358072-ad54-4fc9-b4a4-d0bb64c4323b. “Dutch insurer says it will buy back shares regularly but intends to keep Japanese business.”

  • The Deal reports that Activists Face Virtual Meeting Woes: https://pipeline.thedeal.com/31/20006156/26523686.t. “Hedge funds, institutional investors and gadfly individual shareholders have reported a wide range of issues associated with online annual meetings.”  

  • The Financial Times reports that Jeff Ubben quits ValueAct for social investing: https://www.ft.com/content/eaa28471-e295-44a9-a138-dda047db6d1c. “‘Elizabeth Warren is right,’ veteran activist investor tells FT.”

  • The Financial News reports that UK’s largest pension fund to sell out of coal, tobacco and weapons: https://www.fnlondon.com/articles/uks-largest-pension-fund-to-sell-out-of-coal-tobacco-and-weapons-20200601. “The UK’s biggest pension fund is to sell out of tobacco, coal stocks and investments in controversial armaments, joining an increasingly widespread movement among the world’s top investors to abandon industries judged to be unsustainable in the long term.”

  • The Financial Times reports that Activist investor Cevian takes stake in Pearson: https://www.ft.com/content/e379cfb7-a12a-419c-be50-1a1f9376d4b2. “Swedish group bets on potential for new management to turn round struggling education group.”

  • Reuters reports that Japan’s Monex to launch retail activist fund to pressure companies for better returns: https://www.reuters.com/article/monex-group-retail-fund/japans-monex-to-launch-retail-activist-fund-to-pressure-companies-for-better-returns-idUSL3N2AP2AE. “Japanese online brokerage Monex Group Inc will launch a retail investor fund aimed at pressuring companies to boost returns following calls from foreign activists. Monex Group, set up in 1999 by a former Goldman Sachs Group banker, will start a retail engagement fund with a longer term investment perspective than existing activist funds, said Oki Matsumoto, founder and chief executive of Monex. By tapping retail investors, Monex is looking to leverage a immense pool of capital. Japanese households hold about 1,830 trillion yen ($16.4 trillion), of which half is in cash or in bank savings that pay almost zero interest. Oki said that the fund would need to support the sustainable growth of companies and share prices.”

  • The Financial Times reports that Japan’s AGM pile-up is good news for shareholder activists: https://www.ft.com/content/2b28bb58-8fbd-42a6-a16e-cb68989e7077. “Almost one-third of Topix companies will hold their annual meetings this Friday.” Additionally, The Deal reports that New Restrictions Fail to Curb Japanese Activism: https://pipeline.thedeal.com/31/20006315/26558778.t. “Activism in Japan from foreign investors continues to flourish amidst the coronavirus pandemic and the implementation of new rules from the country's regulators initially thought to be restrictive for non-Japanese shareholders.”
  • Reinsurance News reports that Kessler’s age targeted in fresh calls for SCOR succession clarity: https://www.reinsurancene.ws/kesslers-age-targeted-in-fresh-calls-for-scor-succession-clarity/. “Activist investor CIAM has renewed its attacks against SCOR’s management, once again calling on the reinsurer to provide clarity on its succession plans and to separate the roles of Chairman and CEO, both of which are currently held by Denis Kessler. This time, a letter penned by CIAM CEO Catherine Berjal has targeted Kessler’s age, noting that the SCOR leader will be 69 years old when his term of office as Company Director comes to an end at the 2021 AGM.”

  • The Financial News reports that Investors push Facebook, Chevron for climate stats as ESG data drive expands: https://www.fnlondon.com/articles/investors-push-facebook-chevron-for-climate-stats-as-esg-data-drive-expands-20200609. “An expanding group of investors is pressing a larger number of companies – over 1,000 in 2020 – for environmental stats, CDP says, as ESG investing takes off.”

  • The Financial Times reports that Elliott closes in on victory in Bank of East Asia control battle: https://www.ft.com/content/6536e865-3e9c-490d-be2f-bd83a82e6ff3. “Hong Kong’s last big family-run lender starts talks on selling its banking businesses.” 
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  • The Economist reports that Green investing is red hot but its impact is underwhelming: https://www.economist.com/graphic-detail/2020/06/22/green-investing-is-red-hot-but-its-impact-is-underwhelming. “Publicly traded firms are directly responsible for only a modest share of greenhouse-gas emissions.”

  • The OECD has published a report entitled National corporate governance related initiatives during the Covid-19 crisis: A survey of 37 jurisdictions: http://www.oecd.org/daf/ca/national-corporate-governance-related-initiatives-during-the-covid-19-crisis.htm. “The COVID-19 outbreak and related emergency measures implemented to tackle the health crisis have made it difficult for many companies to meet some of their legal and regulatory requirements, such as the organisation of shareholders meetings and the filing of audited financial reports. As a result of the decline in business activity, many otherwise sound companies are also facing acute liquidity problems that might eventually become solvency problems. In light of these constraints, many jurisdictions have taken steps to adjust certain regulatory requirements. This note provides an overview of some corporate governance and capital markets-related measures that 37 jurisdictions have taken in response to the economic crisis caused by the COVID-19 outbreak.”. See the full document here: http://www.oecd.org/corporate/National-corporate-governance-related-initiatives-during-the-covid-19-crisis.pdf.

  • Reuters reports that Vanguard names names and backs some calls for climate steps: https://www.reuters.com/article/us-climatechange-vanguard-exclusive/exclusive-vanguard-names-names-and-backs-some-calls-for-climate-steps-idUSKBN23P1T1. “Vanguard Group, the world’s largest mutual fund manager, backed shareholder resolutions for shippers United Parcel Service Inc and J.B. Hunt Transport Services Inc and oil driller Ovintiv Inc to limit their climate-warming emissions, according to a top Vanguard executive and a company report being released on Thursday.  The details marked the first time the Pennsylvania-based firm has named names in describing such proxy votes at recent shareholder meetings.  In an interview with Reuters, Vanguard principal Glenn Booraem said the firm’s views on climate and its proxy votes reflect a growing consensus among investors and companies that businesses should account for the risks of operating on a warmer planet.”

  • The Daily Telegraph reports that World’s biggest investor votes to boot out bosses over climate change: https://www.telegraph.co.uk/business/2020/06/18/worlds-biggest-investor-votes-boot-bosses-climate-change/. “The world’s biggest asset manager has fired a warning shot at boardrooms failing to tackle climate change after voting to kick out bosses at Volvo and London-listed miner Evraz. BlackRock voted against the re-election of the Swedish manufacturing giant’s chairman Carl-Henric Svanberg and Evraz director Karl Gruber in its most high-profile rebellion over climate change in Europe, the Daily Telegraph can reveal. The $7 trillion (£5.6 trillion) investment mammoth railed against bosses at the two companies’ annual general meetings after they failed to make progress on climate risk reporting, documents justifying its votes said.”

  • The Financial Times reports about The twisted logic of backing both George Floyd and Xi Jinping: https://www.ft.com/content/397d562d-82ff-4edc-84c8-2c542a8ecfb7. “Double standards abound but bosses have recognised they must look like they care.”

  • The ICGN has published a viewpoint entitled COVID-19 and Executive Remuneration: https://www.icgn.org/covid-19-and-executive-remuneration. “The global COVID-19 pandemic has underscored the need for a holistic view of governance responsibilities, encompassing not just financial metrics but a wide range of corporate impacts.  As expressed in the OECD Guidelines on Responsible Business Conduct, company boards must understand the social and environmental consequences of business operations, set their own priorities to address these and account for associated outcomes. In these unprecedented times, there is an opportunity for boards to demonstrate their understanding of long-term value creation that balances the needs of investors, employees, suppliers and preserves the safety of customers and reputation of the business alike.” See the full document here: https://www.icgn.org/sites/default/files/ICGN%20Viewpoint%20COVID-19%20and%20Executive%20Remuneration.pdf
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Pan-European developments
  • The Financial Times reports that All-male boards return to FTSE in setback to diversity efforts: https://www.ft.com/content/cec8ad91-2b52-4bf7-8b61-b1ae6ed48843. “Many UK companies still missing targets as Hampton-Alexander review deadline looms.”

  • Sky News reports about Terry Smith: Companies trampling on the rights of shareholders during virus pandemic: https://news.sky.com/story/terry-smith-companies-trampling-on-the-rights-of-shareholders-during-virus-pandemic-11999951. “The manager of Britain’s biggest fund has criticised the way some companies have trampled on the rights of shareholders during the COVID-19 crisis. Terry Smith, whose Fundsmith Equity Fund has surged in value to more than £20bn, told Sky News he was unhappy that so-called ‘pre-emption rights’ – which give existing shareholders first refusal in buying new shares issued by a company – had been ignored in some cases. Companies around the world have been raising billions of pounds by selling new shares to investors to tide them over the crisis. In the UK alone, some £3bn was raised between mid-March and mid-May. However, in some cases, companies raising money have ignored the principle that existing shareholders must be given the right to invest first.”  

  • The Financial Times reports that Boohoo plans £150m executive bonus scheme: https://www.ft.com/content/97d53c4d-01bf-4ade-8e38-8518402a9c38. “Move comes without shareholder vote despite significant rebellion over remuneration report.”

  • Reuters reports that Tesco rebuked as shareholders vote down directors’ pay report: https://www.reuters.com/article/us-tesco-pay-agm/tesco-rebuked-as-shareholders-vote-down-directors-pay-report-idUSKBN23X1RP. “Shareholders decisively voted down Tesco’s remuneration report on Friday, as Britain’s largest retailer joined a growing list of big companies to be rebuked over executive pay. Supermarket group Tesco said 67.3% of votes cast at its annual general meeting (AGM) were against the resolution to approve the pay report, with only 32.7% in favour. Several investor advisory groups had recommended shareholders vote against the report ahead of the meeting. They focused on the exclusion of online grocer Ocado from peer benchmarking, which they said had inflated one of the bonuses paid to departing chief executive Dave Lewis by 1.6 million pounds ($1.98 million) to 2.4 million pounds. Lewis received a total pay package of 6.4 million pounds for 2019-20 and Tesco has argued that Ocado is now more of a technology company than a retailer and therefore no longer a direct competitor to be benchmarked against.”

  • The Financial Times reports that Coronavirus drives overhaul of British boardrooms: https://www.ft.com/content/62082290-d9bd-4da4-a636-f8497fd92bb4. “Higher number of director changes in April to help ‘respond to new challenges’.”  

  • The Daily Telegraph reports about Why doesn’t Britain have more black bosses?: https://www.telegraph.co.uk/business/2020/06/09/doesnt-britain-have-black-bosses/. “Hardly any big British company has a black chief executive, while more than a third of FTSE 100 firms have no board members of colour. […] Black people represent less than 1pc of business leaders running the UK’s largest companies, according to research by recruitment consultancy Green Park. Overall, ethnic minority groups accounted for just over 7pc of boardrooms in 2019, down from nearly 9pc the prior year. The FTSE 100 did not gain its first black chief executive until Tidjane Thiam was appointed to run Prudential in 2009 and the situation has not much improved since then. Beyond Arnold Donald, chief executive the London-listed US cruise operator Carnival, and Sharon White, chair of the John Lewis Partnership, examples of black people at the top of the largest British companies are few and far between.”

  • The Financial Times reports that FTSE bosses back on full pay after pandemic wage cuts: https://www.ft.com/content/7c96970c-cd52-4b81-942e-b158ac67d827. “Foxtons, Severn Trent, Persimmon and others reinstate chiefs’ salaries as wave of job cuts hits Britain.”
  • The Wall Street Journal reports that France Moves to Embrace Fight Against Corporate Corruption: https://www.wsj.com/articles/france-moves-to-embrace-fight-against-corporate-corruption-11592003246. “The country has long criticized the prosecution of French companies by U.S. prosecutors. Now, it’s adopting the tools used by them.”

  • Le Figaro reports that Danone, ‘a company with a mission’: the recognition of Emmanuel Faber: https://www.lefigaro.fr/decideurs/portraits/danone-entreprise-a-mission-la-consecration-d-emmanuel-faber-20200629 (in French). “This is the first time that a global listed group has made a legal commitment to do so. With Danone, the ‘future’ is already here. It is a near unanimous vote received Friday by its CEO, Emmanuel Faber, at the annual general meeting of his group, during which shareholders approved by 99.4% the proposal to adopt the status of a company with a mission. This had been introduced by the Pact law in 2019 in the wake of the report ‘The company, object of collective interest’, submitted to the ministers by Jean-Dominique Senard and Nicole Notat. With this status, the company has a ‘raison d'être’, with social, societal and environmental objectives to be achieved.”

  • Responsible Investor reports that French investors start campaign on tax responsibility with French corporates: https://www.responsible-investor.com/articles/french-investors-start-campaign-on-tax-responsibility-with-french-corporates. “Effort is lead by FrenchSIF’s Dialogue and Engagement Commission.”

  • L’Argus de l’assurance reports about Those (few) insurance bosses who lower their remuneration: https://www.argusdelassurance.com/les-assureurs/ces-rares-patrons-de-l-assurance-qui-baissent-leur-remuneration.165986 (in French). “Some executives announced a reduction in their compensation as part of the efforts required to deal with the Covid-19 crisis. In the French market, only two insurance bosses have so far announced that they will do so. This is an effort that deserves to be highlighted in the (re)insurance sector. While the ACPR has called on industry leaders to ‘show moderation’ regarding their variable compensation in the context of the crisis triggered by Covid-19, a major insurance boss is jumping on the bandwagon. Scor CEO Denis Kessler has announced a 30% reduction in his annual variable compensation for fiscal 2019. In accordance with the recommendations of the ACPR, Scor will also not distribute dividends to shareholders this year. Denis Kessler’s move follows that of the head of the Italian insurance group Generali. The latter decided last April to reduce by 20% the fixed remuneration of the members of the Group Committee, including the CEO of Generali France, Jean-Laurent Granier, until the end of 2020.”
  • Reuters reports that Unilever picks Britain as best option as it ends Anglo-Dutch era: https://uk.reuters.com/article/uk-unilever-restructure/unilever-picks-britain-as-best-option-as-it-ends-anglo-dutch-era-idUKKBN23I0RM. “Unilever proposed on Thursday to ditch its dual Anglo-Dutch legal structure and create a single company in Britain to give it more flexibility for mergers and acquisitions as the coronavirus pandemic overwhelms businesses worldwide. The maker of Dove soap and Hellmann’s mayonnaise announced the plan almost two years after shareholders torpedoed its proposal to end the dual structure in place since 1930 by shifting its headquarters to the Netherlands from London.”

  • The Financial Times reports that Shell faces spending scrutiny after dividend cut: https://www.ft.com/content/a9c48b2a-8d63-4a6f-9020-3412a60e4de3. “Shareholders push for clarity on strategy following slashed payout.”

  • Het Financieele Dagblad reports that Flow Traders ruziet met aandeelhouders over bonusbeleid (“Flow Traders argues with shareholders about bonus policy”): https://fd.nl/beurs/1349036/flow-traders-ruziet-met-aandeelhouders-over-bonusbeleid (in Dutch). “Shareholders of high frequency trader Flow Traders have rejected the proposal to halve the variable payout for management. The plan did not go far enough for investors. The top of Flow Traders will introduce halved variable payout - from 5.25% to 2.6% of the operating profit anyway.” The proposal received 58.7% support but failed to obtain the required 75% approval.
  • Lavoce.info reports about La scalata a Mediobanca che però punta alle Generali (“The creeping takeover of Mediobanca which, however, points to Generali”): https://www.lavoce.info/archives/67658/la-scalata-a-mediobanca-che-pero-punta-alle-generali/ (in Italian). “As 10% shareholder, Leonardo del Vecchio wants to double his share in Mediobanca. Which is no longer the ‘salon of finance’ but holds 13 per cent of Generali. The market, however, does not understand the strategy of the operation.”

  • Reuters reports that Italy’s market watchdog calls for perpetual govt bonds for retail investors: https://www.reuters.com/article/health-coronavirus-italy/italys-market-watchdog-calls-for-perpetual-govt-bonds-for-retail-investors-idUSL8N2DT2KM. “Italy must attract private savings towards perpetual government bonds to help support the country’s increasing financial needs amid the COVID-19 crisis, the head of national market regulator CONSOB said on Tuesday. […] Speaking at CONSOB’s annual meeting, its chief Paolo Savona urged the government to issue perpetual bonds to ordinary Italians so that they ‘can prevent costs and constraints from being imposed on the country if debt/GDP ratios are not achieved to the extent agreed at European level’. Perpetual bonds, or perps, have no maturity date and pay interest forever.”

  • The Financial Times reports that Generali rescues rival Italian insurer Cattolica: https://www.ft.com/content/63e394cd-7641-4a0e-b167-1682183da788. “Acquisition of 24% of group to dilute previous top shareholder Berkshire Hathaway.”
  • FINMA says that it addresses climate risks in the financial sector: https://www.finma.ch/en/news/2020/06/20200626-mm-sustainable-finance/. “The Swiss Financial Market Supervisory Authority FINMA is addressing the subject of climate-related financial risks as part of its supervisory remit. It is also reviewing regulatory approaches for improved transparency regarding climate-related financial risks by major financial institutions. FINMA welcomes the Federal Council’s initiative to examine the subject of sustainability and climate risks for the financial sector in further depth. FINMA is involved in work being carried out by the federal authorities on sustainability in the financial economy and is supporting the analysis being conducted by the working group on sustainable finance headed by the State Secretariat for International Financial Matters (SIF) with its technical expertise. FINMA has also been a member of the Network for Greening the Financial System (NGFS) since 2019. This network of international central banks and supervisors is committed to better understanding and managing the financial risks of climate change.”

  • The Financial Times reports that Swiss debate on corporate liability comes to a head: https://www.ft.com/content/ce25644f-20ed-4595-9785-96f8eea97d4e. “Parliament considers new ethical regulations for some of the world’s biggest companies.”
  • Expansión reports that La CNMV aprueba la reforma del Código de Buen Gobierno de las sociedades cotizadas (“The CNMV approves the reform of the Good Governance Code for listed companies”): https://www.expansion.com/mercados/2020/06/26/5ef5d1f5468aeb301a8b45d1.html (in Spanish). “The National Securities Market Commission (CNMV) has approved the partial revision of the Good Governance Code for listed companies. It has granted a period until 2022 to comply with the recommendation of 40% of women on the boards of directors and has avoided using the term ‘corruption’ in the recommendation regarding the actions to be taken when a director is affected by a circumstance that may affect the credit and reputation of the company. After receiving more than 40 letters from entities and stakeholders in the public consultation phase, the final text has amended the wording of 20 of the 64 recommendations that make up the Code, in order to update them and adapt them to various legal amendments approved since its publication five years ago and to clarify the scope of others that had raised certain doubts.” See the official announcement and documents here: https://www.cnmv.es/portal/verDoc.axd?t=%7b1ddb9adc-3d75-454d-b492-40a83070f71f%7d and here: https://www.cnmv.es/DocPortal/Publicaciones/CodigoGov/CBG_2020.pdf.   

  • CincoDías reports that Los sueldos de los consejos, cada vez más cuestionados (“Board pay increasingly challenged”): https://cincodias.elpais.com/cincodias/2020/06/05/fortunas/1591376733_970586.html (in Spanish). “The fashion for lowering salaries is not only out of solidarity due to the crisis generated by the coronavirus, but also because of growing pressure from shareholders. According to the data analyzed by CincoDías, at the 2019 meetings the average rejection of the Ibex 35 board compensation report grew by one percentage point to 9.61%. This is a rising trend, which began in the United States and the United Kingdom and has been spreading to other European countries, including Spain, which received the first warning in the financial crisis of 2008. That was when ‘public opinion condemned the behavior of certain top executives with excessively generous compensation packages when their companies had failed not only the stakeholders, but also the shareholders who were looking for a sustainable return in the long term,’ recalls Carlos Sáez, director of Georgeson in Spain, a consulting firm that puts companies in touch with their shareholders, known in the jargon as proxy solicitors.”
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North America
United States
  • The Harvard Law School Forum on Corporate Governance has published a memo by Georgeson’s Hannah Orowitz and Brigid Rosati entitled An Early Look at the 2020 Proxy Season: https://corpgov.law.harvard.edu/2020/06/10/an-early-look-at-the-2020-proxy-season/. “With only one month remaining in the 2020 proxy season, an examination of early voting statistics among Russell 3000 companies reveals that climate-related investor concerns are having a meaningful impact on the 2020 season. This is not surprising given the focus paid to this topic by both BlackRock and State Street in their respective CEO letters published in January of this year. We saw this impact not only through increased support for climate-focused shareholder proposals, but also as a notable factor influencing the degree of support for director elections. The impact of climate concern is affecting other ‘traditional’ governance-focused shareholder proposals as well, such as those seeking to separate the roles of board chair and CEO.”

  • The Wall Street Journal reports that Coronavirus Crisis Dents Salaries, Not Stock Awards, for Many CEOs: https://www.wsj.com/articles/coronavirus-crisis-dents-salaries-not-stock-awards-for-many-ceos-11591197218. “Companies cut cash for top executives, but few boards are making big pay changes as survival becomes a focus; 2019 was another record year.” Additionally, the Financial Times reports that Bumper CEO stock awards dwarf salary sacrifice: https://www.ft.com/content/f6f61677-745a-4afc-b3de-3c68fd45a50e. “For dozens of company bosses, extra equity grants more than made up for temporary pay cuts.”

  • Barron’s reports that New Labor Department Guidance Takes Aim at ESG Investing: https://www.barrons.com/articles/new-labor-department-guidance-takes-aim-at-esg-investing-51593018560. “A new proposal by the Labor Department will require retirement-plan fiduciaries to choose investments ‘based solely on financial considerations’ and is aimed to slow the interest in environmental, social, and governance (ESG) investing, analysts say.”

  • The Wall Street Journal reports that Supreme Court Upholds SEC’s Ability to Recover Ill-Gotten Gains From Financial Fraud, With Limits: https://www.wsj.com/articles/supreme-court-upholds-secs-ability-to-recover-ill-gotten-gains-from-financial-fraud-with-limits-11592839451. “High court says penalties can’t exceed wrongdoers’ profits, should benefit victims.”

  • Reuters reports that Glass Lewis joins ISS in opposing Tesla chairwoman’s re-election to board: https://www.reuters.com/article/us-tesla-glass-lewis/glass-lewis-joins-iss-in-opposing-tesla-chairwomans-re-election-to-board-idUSKBN23P03J. “Glass Lewis said on Thursday that it urged Tesla Inc investors to vote against re-electing Chairwoman Robyn Denholm to the company’s board, making it the second proxy advisory firm to oppose her appointment. The recommendation was based on corporate governance concerns due to an insurance arrangement with Chief Executive Officer Elon Musk after Tesla’s decision to not renew its directors and officers’ liability policy due to high premiums quoted by insurers, Glass Lewis said. Musk had agreed to personally provide coverage to such a policy for a year, Tesla disclosed in a regulatory filing in April.”

  • The Financial Times reports that US boardrooms fail to reflect country’s demographics: https://www.ft.com/content/c47c9b63-26c0-4487-94a9-4db7da585fbd. “Businesses that have championed inclusion are under pressure to make good on diversity pledges.”

  • Bloomberg reports that Twitter Names Patrick Pichette as Independent Chairman: https://www.bloomberg.com/news/articles/2020-06-02/twitter-names-inovia-s-patrick-pichette-as-board-chairman. “Twitter Inc. named Patrick Pichette as chairman, replacing Omid Kordestani, who stepped down from the role on Monday. Pichette, former chief financial officer of Google, is a partner at venture firm Inovia Capital and has served as Twitter’s lead independent director since December 2018. Kordestani will remain as a non-employee director, the company said Tuesday. […] Twitter’s corporate governance came under scrutiny earlier this year when activist investor Elliott Management Corp. took a stake in the company with plans to challenge Chief Executive Officer Jack Dorsey, and potentially replace him. Having an independent chairman was one of the first things Elliott raised with Twitter in their initial meetings as one of the ways the company could improve its governance, according to people familiar with the matter. Pichette will be the first independent chairman for the social-media company.”

  • The Financial Times reports that ‘Atrocious’ governance in oil and gas allows huge rewards for failure: https://www.ft.com/content/1c2512bb-ceb9-401f-a4ac-4777317caf62. “Top executives are taking big bonuses even as companies stagger into bankruptcy.”
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  • Responsible Investor reports that Japan’s first climate resolution receives substantial support at Mizuho: https://www.responsible-investor.com/articles/japan-s-first-climate-resolution-receives-substantial-support-at-mizuho. “The first climate proposal to be put to a Japanese company has been supported by a healthy 34% of shareholders today at Mizuho Financial Group’s annual meeting in Tokyo. Filed by Japanese non-profit Kiko Network (‘climate network’), it called on the financial group, which is known to be one of the world’s biggest coal financiers, to disclose its climate risks and publish a plan to align its financial activities with the Paris climate accord.”

  • The Financial Times reports that Japan’s all-male boards face gender reckoning: https://www.ft.com/content/a091602f-c15d-4229-893c-0caa1ba0bc89. “Hundreds of companies without a female director set for mass AGM-season shaming.”  
Hong Kong
  • Bloomberg reports that SoftBank’s Arm Fired its China CEO — But That Doesn't Mean He’s Leaving: https://www.bloomberg.com/news/articles/2020-06-20/softbank-s-arm-fired-china-ceo-wu-for-starting-competing-fund. “Arm Ltd., the chip designer owned by SoftBank Group Corp., ousted the head of its Chinese venture after discovering the executive had set up an investing firm that would compete with its own business in China, according to people with direct knowledge of the decision. […] What followed was a public, acrimonious clash between Arm Ltd. and Wu, who refused to budge and used the Chinese venture’s WeChat account to amplify his defiance. That Arm and Hopu have been unable to assert their will reflects the intricacies of Chinese rules that confer an advantage to Wu as the holder of key registration documents. As the legal representative of Arm China, Wu holds the company’s registration documents and the company seal, or stamp. Changing the legal representative requires taking possession of the company stamp -- something Wu has refused to give up. Arm Ltd. and Hopu could go through the courts, but the process could take years.  Arm Ltd. and Hopu plan to use the document to lobby government officials in Beijing in what will be a test of China’s interest in reassuring overseas investors.”
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  • The Sydney Morning Herald reports that Nation’s top polluter AGL vows to tie executive pay to climate targets: https://www.smh.com.au/business/companies/nation-s-top-polluter-agl-vows-to-tie-executive-pay-to-climate-targets-20200630-p557jr.html. “The nation's heaviest polluter, AGL, will link executive pay to climate goals such as investing in more renewable energy and selling more ‘carbon-neutral’ power plans, but has no intention of bringing forward the closures of coal-fired power stations. The energy supplier said on Tuesday it would expand carbon-neutral offerings to all its products by the end of 2021, meaning it would purchase ‘carbon offsets’ such as tree-planting programs on behalf of gas, electricity and telco customers who wanted to help mitigate their emissions footprint.”

  • Reuters reports that Rio Tinto launches internal review after sacred caves blast: https://uk.reuters.com/article/australia-mining-indigenous/rio-tinto-launches-internal-review-after-sacred-caves-blast-idUKL4N2DV560. “Rio Tinto said on Friday it will look at ways to improve its internal processes and governance after drawing the ire of indigenous groups and the Australian government for blasting two ancient sacred Aboriginal caves. The world’s biggest iron ore miner last month destroyed two caves at Juukan Gorge that had previously contained evidence of continual human habitation stretching back 46,000 years as part of a mine expansion. Chief Executive Jean-Sebastien Jacques has since apologised for the incident, which occurred as the Black Lives Matter protests once again bring into focus the treatment of ethnic and cultural minorities around the world.”

  • The Governance Institute of Australia reports about Executive salaries under the microscope: https://www.governanceinstitute.com.au/news-media/news/2020/jun/executive-salaries-under-the-microscope/. “Several organisations, including some large ASX listed businesses, have already announced executive pay cuts to manage the impact of the pandemic, a research project by global professional services firm Aon has revealed. Executive salaries in the travel and tourism, entertainment and hospitality, and mining and resources industries have been severely hit with other industries impacted to varying degrees.  Aon’s research into 226 ASX listed companies at the end of May shows 87% have announced to reduce board, chair and NED fees, by an average of 51%. And 72% have announced to reduce CEO remuneration, by an average of 37%.”

  • The Australian reports that Miners bows to lobby groups’ climate change pressure: https://www.theaustralian.com.au/commentary/opinion/miners-bows-to-lobby-groups-climate-change-pressure/news-story/04b3e67cd002f429c74c1d9419a28109. “Australia’s peak mining industry body has joined the fight on climate. The Minerals Council of Australia won’t ditch coal but it has yielded to pressure from lobby groups that have stormed the world’s boardrooms and fin­ancial markets pushing for a shareholder revolt on fossil fuels. They have forced the MCA to be outspoken in its support for cutting carbon dioxide emissions. At the height of a campaign against it by climate groups, the MCA risked losing some of its biggest members, including miners like Rio Tinto and BHP. In the end, it was council chief executive Brendan Pearson who had to go.”
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Daniele Vitale
Head of Governance UK & Europe > Corporate Advisory
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