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Georgeson Monthly Roundup - July 2020
north america
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Latest Georgeson publications

UK - Georgeson memo on FTSE 350 Contested Remuneration Report Votes: April - June 2020

The FTSE 350 Contested Remuneration Report Memo provides an overview of proxy advisor recommendations on FTSE 100 and FTSE 250 companies that received more than 20% opposition on their remuneration report resolutions in the period from April 2020 to June 2020 as well as the details of each of these proposals.

If you would like to receive a copy of the memo, please email: nicolo.dallantonia@georgeson.com

US - Georgeson analyzes Independent Chair Proposal Support Through the Lens of Covid-19

Georgeson reports on key observations and trends related to investors' support of proposals seeking to separate the roles of board chair and chief executive officer ("independent chair proposals") during the 2020 U.S. proxy season. Likely reflecting the impact of the COVID-19 crisis on investors' analyses of these proposals, independent chair proposals received average support of approximately 35%, the highest level seen during the 2006 – 2020 period reviewed. While only one independent chair proposal passed in the previous five years, two proposals received majority support this proxy season and 15 received support in excess of 40%.

You can read the full report here

Spain - Listed Companies: The Impact of Covid-19 on the 2020 Meeting Season and the Challenges for the Compensation Committee

Georgeson, in collaboration with Computershare, Cuatrecasas and Willis Tower Watson, has issued a report (in Spanish) titled Sociedades Cotizadas: El Impacto del Covid-19 en la Temporada de Juntas 2020 y los retos para la Comision de Retribuciones.
Listed companies are facing a situation of great uncertainty as a result of the crisis caused by covid-19. In this context, it has been particularly important to keep abreast of legislative measures and decisions taken by governments to deal with the pandemic, and of the impact of the crisis on the functioning and practices of the market. For this reason, at Computershare, Cuatrecasas, Georgeson and Willis Tower Watson we have made an effort to maintain and adapt the events that we had scheduled and, in addition, to provide specific training on issues related to Covid-19. In this document we offer a summary of the main conclusions of the three webinars that we have organized since the declaration of the state of alert.

You can read the full report here.

US - Georgeson report on Investors Pushing Environmental and Social Proposals in "Today's General Counsel"

Historically, many of the largest asset managers declined to vote in support of such proposals, preferring instead to attempt to influence corporations’ actions by engaging shareholders and the board through ongoing dialogue. Now, an increasing number of institutional investors have begun to include E&S considerations within their established risk-return analysis framework.

You can read the full report here.

Georgeson has been named #1 Proxy Solicitor Advisor Europe & Asia Pacific for activist campaigns

The ranking has been compiled within Bloomberg's Global Activism Market Review Adviser Rankings H1 2020.

The full ranking tables can be accessed here.

Shareholder Activism
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Pan-European developments
  • The Financial Times reports that German corporations — and regulation — are in the dock: https://www.ft.com/content/e68d4353-60c5-44e9-b7a6-de01b38179ab “The country’s consensual model of capitalism needs an overhaul in the wake of Wirecard’s implosion.”

  • Bloomberg reports that Germany Targets Gender Gap With Quotas for Business and Politics: https://www.bloomberg.com/news/articles/2020-07-08/germany-targets-
    . “Germany is pushing to narrow the gender gap with new targets aimed at increasing the role of women in board rooms and in the country’s largest political party. Chancellor Angela Merkel’s cabinet on Wednesday approved a proposal that would increase the number of companies required to have at least 30% women on their supervisory boards to 600 from 105. Other goals include a reduction in the women’s pension and pay gaps, and an increase in career opportunities. The move is a breakthrough because it obliges the federal government to adhere to specific goals and to monitor progress, said Monika Schulz-Strelow, head of FidAR, a group that promotes female participation in corporate management. To be effective, the plan needs to be backed by legislation that allows authorities to levy fines on companies that fail to comply, she added. […] The situation is similarly unbalanced in the corporate world. As of September, women only made up 9.3% of positions on the executive boards of Germany’s publicly traded companies. By contrast, women in Sweden made up 24% of those positions, and the rate is even higher in the US. A 2016 law requiring 30% of non-executive board members of German-headquartered companies to be women has helped, but gains have stagnated recently.”

  • Reuters reports that German watchdog under EU scrutiny as it widens Wirecard investigation: https://www.reuters.com/article/us-wirecard-accounts-esma/
    “The European Union’s markets watchdog said on Wednesday that it was reviewing Germany’s financial reporting set-up in the wake of Wirecard’s collapse as Germany widened its own investigation into the failed company. The assessment by the European Securities and Markets Authority (ESMA) will focus on Germany’s financial supervisor BaFin and the accounting watchdog - the privately-owned Financial Reporting Enforcement Panel (FREP).  BaFin and FREP have come under scrutiny for their oversight of Wirecard, which filed for insolvency last month owing creditors 4 billion euros ($4.58 billion) after disclosing a 1.9 billion euro hole in its accounts that its auditor EY said was the result of a sophisticated global fraud.” See the ESMA announcement here: https://www.esma.europa.eu/press-news/esma-news/

  • The Financial Times reports on From payments to armaments: the double life of Wirecard’s Jan Marsalek: https://www.ft.com/content/511ecf86-ab40-486c-8f76-b8ebda4cc669 “A suspect in one of Germany’s biggest financial frauds talked of assembling a Libyan militia and bragged of adventures with Russian troops.”
  • CapLaw reports about A new proxy adviser regulation in Switzerland?: https://www.caplaw.ch/2020/a-new-proxy-adviser-regulation-in-switzerland/ “The Swiss Parliament has adopted a motion requiring the Swiss government to propose a new regulation addressing the conflicts of proxy advisers. The primary focus seems to be on ISS and to a lesser extent on Glass Lewis for their potential dual role in advising institutional investors on voting recommendations and listed companies on corporate governance and compensation. In the absence of a physical presence of these proxy advisers in Switzerland, it remains unclear how the required legislation could be effectively enacted.”

  • The Financial Times reports that UBS chief hits out at share buyback critics: https://www.ft.com/content/7813bdaa-1d03-4703-94e1-a47143807906 “Swiss lender considers returning more capital to shareholders in the coming months after a challenging first half.”
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North America
United States
  • SEC Passes Proxy Advice Rules, Guidance for Investment Advisors: The Securities and Exchange Commission is adopting amendments to its rules governing proxy solicitations so that investors who use proxy voting advice receive more transparent, accurate, and complete information on which to make their voting decisions, without imposing undue costs or delays that could adversely affect the timely provision of proxy voting advice. You can access the final rule from SEC here.

  • The Harvard Law School Forum on Corporate Governance hosts a piece on NYC Comptroller’s Boardroom Accountability 3.0 Results: https://corpgov.law.harvard.edu/2020/06/24/nyc-comptrollers-boardroom-
    The Comptroller’s Office successfully negotiated Board and CEO diversity search policies with 14 companies, including 13 in response to shareholder proposals submitted to 17 companies for the spring 2020 proxy season, and a fourteenth more recently in response to a subsequent filing for a fall 2020 annual shareholder meeting. While many companies already have similar policies governing director searches, the Comptroller’s Office believes that these are the first public companies to extend the policy to external CEO searches.”

  • The Financial Times reports that SEC disclosure change would allow activists to ‘go dark’, lawyers warn: https://www.ft.com/content/1968c32d-5ac0-4502-8af8-7d45ec39791a “Only largest hedge funds would have to detail equity stakes under proposed rules.”

  • The Economist reports on How CEO pay in America got out of whack: https://www.economist.com/business/2020/07/11/how-ceo-pay-in-america-got-out-
    “Bosses claim that their firms’ superior returns justify their own hefty pay cheques. Really?”

  • The Financial Times reports that ISS urges companies to disclose ethnicity of directors: https://www.ft.com/content/b45f6a13-c8e6-484b-a75f-bb578178e87f “Action by proxy adviser comes as pressure builds to diversify US boardrooms.”

  • Pension & Investments reports that Investor groups not happy with proxy advisory revamp: https://www.pionline.com/regulation/investor-groups-not-happy-proxy-advisory-revamp “SEC changes called unnecessary, though business groups cheer.”  
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Hong Kong
  • CNN reports that Following controversial national security law, TikTok is leaving Hong Kong: https://edition.cnn.com/2020/07/07/tech/tiktok-leaving-hong-kong-intl-hnk/
    “TikTok says it will exit Hong Kong, joining other big tech firms in expressing concern about operating in the Asian financial hub after China imposed a controversial national security law there.”

  • SCMP reports that HKMA, SFC team up with government agencies as Hong Kong sets sights on becoming green financing hub: https://www.scmp.com/business/companies/article/3082999/hkma-sfc-team-
    “Seven regulatory bodies and government agencies will work together to promote the city as a green financial hub to capture a slice of the US$350 billion market. A working group comprising officials from these seven agencies will work together to develop regulations and promote the city’s green credentials.”

  • The Standard reports on Index tracking 30 largest HK listed tech firms to launch on July 27: https://www.thestandard.com.hk/breaking-news/section/2/151334/Index-
     “Hang Seng Indexes Company will launch the Hang Seng TECH Index on July 27, tracking the 30 largest technology companies listed in Hong Kong that pass the three layers screening criteria. Meanwhile, Tencent (0700), Alibaba (9988), Meituan Dianping(3690) and Xiaomi (1810), as the largest 10 stocks in terms of market capitalization will be selected as index constituents. […] According to back-testing data, the Hang Seng TECH Index would have achieved significant returns of 36.2 percent and 35.3 percent for the full year of 2019 and the first half of 2020 respectively.
  • The Financial Times reports that US investors try to buy TikTok from Chinese ownerhttps://www.ft.com/content/2b79b921-0b8c-4230-8699-190a949f6418 “A group of US tech investors has launched an ambitious plan to buy TikTok from its Chinese owner.”

  • The Wall Street Journal reports that Jack Ma’s Ant Group Plans Dual IPOs in Shanghai, Hong Kong, Bypassing New York: https://www.wsj.com/articles/jack-mas-ant-group-
    plans-dual-ipos-in-shanghai-hong-kong-11595240151 “The Chinese technology and financial-services giant’s combined offering could be one of the largest in history. Ant Group Co., the Chinese technology and financial-services giant that owns popular mobile-payments network Alipay, said it is planning initial public offerings in Hong Kong and Shanghai, bypassing New York as it seeks to accelerate its growth in China and abroad.”
    • The NSE has publised a report entitled ESG Analysis On 50 Listed Companies In India: https://globalprimenews.com/2020/07/10/28687/ “The study is an independent and systematic analysis and evaluation of ESG policies, disclosure and performance of selected companies of India Inc.”
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    Daniele Vitale
    Chief Editor
    Head of Governance UK & Europe > Corporate Advisory
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