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Georgeson
Georgeson Monthly Roundup - May 2021
Activism
global
europe
north america
asia
australia
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Latest Georgeson publications

Georgeson memo on Say on Climate in 2021 – US & Europe

Georgeson gives an overview of this new phenomenon across Europe and United States. This client memo covers both board-sponsored and shareholder resolutions, along with the views of proxy advisors and institutional investors such as BlackRock and CalPERS.

If you would like to receive a copy of this client memo please contact your usual Georgeson account manager.

Georgeson memo on Vanguard’s 2021 Voting Policy Updates

Vanguard recently announced updates to its proxy voting guidelines. The updated policy guidelines became effective as of April 1, 2021. The most significant policy updates relate to the issues of board diversity, board oversight failings and environmental/social disclosure. Key policy updates summarized.

Read the full memo here.

In the media
Spain - Georgeson’s Carlos Saez was interviewed in Expansión about tender offer regulations in Spain.

Read the full article here.
Italy - Georgeson’s Francesco Surace was interviewed by Linklaters about the perspective of investors and proxy advisors on the latest developments in sustainability and corporate governance.

Read the full article here.

Spain - Georgeson’s Carlos Saez published an article in Revista Consejeros entitled "Review of the 2021 AGM Season in Spain".

Many changes at meetings were marked by new legal requirements and those of large institutional investors: 'Say on Climate', non-financial reporting, compensation, etc.

Read the full article here.


Recent events

Europe - Georgeson and IR Society webinar: "Translating ESG Acronyms – what you need to know and prioritise"

Georgeson's Daniele Vitale was joined by Maria Ortino (‎Global ESG Manager - Legal & General Investment Management) and James Upton (Head of ESG EMEA - BHP Billiton) to discuss the alphabet soup of ESG acronyms and what companies need to know and prioritise.

Watch the presentation here.

US - Georgeson and Latham & Watkins webinar: "2021 Proxy Season: Lessons Learned and Coming Attractions"

With a particular focus on ESG and climate developments for future proxy seasons, Latham & Watkins and Georgeson join together again in the final program of the 2021 Proxy Season webcast series to review the 2021 proxy season, and the prospects for the balance of the year.

Watch the presentation here.

Shareholder Activism
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Global
  • The Financial Times reports that Virtual AGMs allow directors to avoid a smackdown: https://www.ft.com/content/d891b0ff-a618-4c5c-a09c-99e211286dfa. "But executives will get a reprieve this year. This proxy season, companies have stuck with the virtual format they implemented in the early weeks of the pandemic. The technology lets more investors participate, but it also lets boards filter questions in advance, allowing them to boil down long lists of hostile questions into something more insipid — or skip tricky questions altogether."

  • The Wall Street Journal reports that BlackRock Starts to Use Voting Power More Aggressively: https://www.wsj.com/articles/blackrock-takes-aggressive-
    posture-on-esg-proxy-votes-11619775002.
    “Asset manager signals it is boosting its support of shareholder-led environmental, social and governance proposals.”

  • The Economist wonders Will shareholders halt the inexorable rise of CEO pay?: https://www.economist.com/business/2021/05/15/will-shareholders-halt-
    the-inexorable-rise-of-ceo-pay.
    "During the pandemic, bosses found new ways to feather their nests. [...] They did so thanks to a nifty conjuring trick performed in boardrooms across America last year. In effect, many boards airbrushed away the impact of covid-19 on performance-based pay either by removing a quarter or two of bad numbers in order to meet bonus targets, changing the metrics mid-course, or - as with Messrs Culp, Nassetta and Del Rio - by issuing new share grants after the pandemic gutted the previous ones."

  • The Wall Street Journal reports that Investors Need to Get the Measure of Carbon: https://www.wsj.com/articles/investors-need-to-get-the-measure-of-
    carbon-11621336572
    . “Reporting on emissions can’t wait for an agreement on how to quantify wider environmental, social and governance risks.”

  • The Financial Times reports that ESG outperformance narrative ‘is flawed’, new research shows: https://www.ft.com/content/be140b1b-2249-4dd9-859c-3f8f12ce6036. "Metrics for ‘quality’ such as profitability and conservative investment explain most of sector’s ‘alpha’, academics say."

  • The Financial Times reports that Companies grapple with Scope 3 emissions climate challenge: https://www.ft.com/content/0c6aa679-7061-4ddd-b9d8-a6b01c0c979a. "Calculating climate impact becomes tricky when supply chains and product use are factored in."
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Europe
Pan-European developments
UK
France
Germany
  • Handelsblatt reports that Commerzbank shareholders criticise leadership chaos - and credit to Wirecard ("Commerzbank-Aktionäre kritisieren Führungschaos – und Kredit an Wirecard"): https://www.handelsblatt.com/finanzen/banken-versicherungen/banken/hauptversammlung-commerzbank-aktionaere-kritisieren-fuehrungschaos-und-kredit-an-wirecard/27198728.html (in German). "Many shareholders are angry about the personnel squabbles at the Frankfurt-based bank - and question the bank's role in the Wirecard scandal."

  • Frankfurter Allgemeine reports that VW Chairman Pötsch earns the most (“VW-Chefkontrolleur Pötsch verdient am meisten”): https://www.faz.net/aktuell/wirtschaft/aufsichtsraete-vw-chefkontrolleur-
    poetsch-verdient-am-meisten-17327159.html
    (in German). "While executive salaries in the Dax rose to a new record high in the past Corona year, the remuneration of Dax supervisory board chairmen fell in 2020 for the first time in five years. At the top of the ranking of the best-paid Dax supervisory board members for the first time is Volkswagen's top supervisor Hans Dieter Pötsch. He received a salary of 900,000 euros for his work at Volkswagen last year, replacing long-time leader Paul Achleitner; the head of Deutsche Bank's supervisory board now follows Pötsch in second place with a salary of around 800,000 euros. Industrial gases manufacturer Linde still pays its chief supervisor Wolfgang Reitzle just under 680,000 euros in third place. As Reitzle is also chairman of the supervisory board of automotive supplier Continental, he receives a total of 1.2 million euros for his supervisory activities in the Dax. At the bottom of the ranking, the supervisory board chairmen of Delivery Hero, Infineon and Beiersdorf were paid 200,000 euros."

  • Reuters reports that German parliament to clear way for women quota on some company boards: https://www.reuters.com/business/sustainable-business/german-parliament-clear-way-women-quota-some-company-boards-2021-05-28/. "Germany's parliament is expected to pass a law requiring some listed companies to have a minimum number of women on their board of directors in an attempt to increase gender equality in the workplace. After facing some foot-dragging in parliament, the legislation, which the cabinet approved in January, could be passed this summer after the two biggest parties reached an agreement."

  • Fonds Professionell reports on Sustainability: Can an asset manager really make a difference? (“Nachhaltigkeit: Kann ein Asset Manager wirklich etwas bewirken? ”) : https://www.fondsprofessionell.de/news/uebersicht/headline/
    nachhaltigkeit-kann-ein-asset-manager-wirklich-etwas-bewirken-206794/ref/2/
    (in German). "When Hans-Christoph Hirt discusses climate protection or diversity with supervisory boards or CEOs, he knows that major investors with 1.5 trillion US dollars are behind him. An interview with the head of the EOS team at Federated Hermes."
Switzerland
  • The Financial Times reports that Swiss private banks at odds with clients over ESG: https://www.ft.com/content/736b815a-0743-4752-b724-62f3d888bd69 “Many wealthy individuals remain sceptical when it comes to changing the world with their money.”

  • Reuters reports that Credit Suisse scandals prompt Switzerland to think unthinkable: punish bankers: https://www.reuters.com/business/finance/credit-suisse-scandals-prompt-switzerland-think-unthinkable-punish-bankers-2021-05-28/. "Exasperation with Credit Suisse following a string of scandals is prompting Switzerland to rethink a system in which top bankers have been largely untouchable. Credit Suisse's heavy losses from the collapse of family office Archegos and the decimation of billions of client investments backed by insolvent British financier Greensill have angered regulators and triggered a rare discussion among lawmakers about fining bankers. The debate, the biggest public discussion about banking reform since the financial crash, centres on ending the current laissez-faire regime, where fines on bankers are not possible, to copy Britain's stricter rule book."
The Netherlands
  • Bloomberg reports that Shell Loses Climate Case That May Set Precedent for Big Oil: https://www.bloomberg.com/news/articles/2021-05-26/shell-loses-climate-case-that-may-set-precedent-for-oil-industry. "Royal Dutch Shell Plc was ordered by a Dutch court to slash its emissions harder and faster than planned, a ruling that could have far-reaching consequences for the rest of the global fossil fuel industry. Shell, which said it expects to appeal the ruling, has pledged to reduce its greenhouse gas emissions by 20% within a decade, and to net-zero before 2050. That’s not enough, a court in The Hague ruled Wednesday, ordering the oil producer to slash emissions 45% by 2030 compared to 2019 levels. The court said the ruling applies to the entire Shell group, which is headquartered in the Dutch city and incorporated in the U.K. That raises the prospect of the company having to radically speed up its current climate and divestment policies in order to hit the new target. The ruling will be scrutinized globally amid a new era of litigation related to climate change."
Italy
Spain
  • Cinco Días reports that Six out of ten Ibex companies opt for 100% virtual shareholders' meetings ("Seis de cada diez empresas del Ibex optan por juntas de accionistas 100% virtuales"): https://cincodias.elpais.com/cincodias/2021/05/03/companias/1620057128_356088.html (in Spanish). "And 60% of the companies that have called or held these meetings in 2021 have done so 100% telematically, as they have revealed to the CNMV (see graph). This is a way of avoiding risks and saving money. The measure is exceptional, approved by the government on 12 March for the current financial year, but it has the capacity to become perpetual if the firms change their articles of association. This is permitted by the amendment to the capital law that came into force yesterday."

  • Expansión reports that Dual voting shares come to Spain ("Las acciones con doble voto llegan a España"): https://www.expansion.com/blogs/peon-de-dama/2021/05/02/las-acciones-con-doble-voto-llegan-a.html (in Spanish). "The 'one share, one vote' rule, which governs listed companies in order to safeguard the equality of shareholders' political rights, will undergo a substantial change as of 3 May. On that day, the reform of the Capital Companies Act comes into force and gives the green light to the so-called loyalty shares or shares with double voting rights."
  • Cinco Días reports that Few women executives in the Ibex, and with little relevance ("Pocas mujeres directivas en el Ibex, y con escasa relevancia"): https://cincodias.elpais.com/cincodias/2021/05/07/fortunas/1620416867_566904.html (in Spanish). "Few and in positions with little impact on business strategy. The focus is on boards of directors, where women already represent 31% of the seats in Ibex 35 companies. However, the unfinished business is in senior management positions. Only 17% of senior management positions in Ibex companies are held by women, that is, 73 professionals, according to data compiled by CincoDías, and extracted from the 2020 Corporate Governance reports sent to the National Securities Market Commission (CNMV), in which for the first time companies have to report the percentage of women on the management committee."

  • ISS reports about New Regulations in Spain: SRDII, Loyalty Shares, Virtual-only Meetings, Quarterly Reporting & More: https://insights.issgovernance.com/posts/new-regulations-in-spain-srdii-loyalty-shares-virtual-only-meetings-quarterly-reporting-more/. "On April 12, 2021 Spain approved Law 5/2021 that transposes EU Directive 2017/828 (SRD II) into its corporate law. The Spanish lawmaker also took this opportunity to introduce loyalty shares and to regulate virtual-only general meetings, among other changes."
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North America
United States
  • The New York Times reports about A Glimpse of a Future With True Shareholder Democracyhttps://www.nytimes.com/2021/05/21/business/stock-funds-shareholder-democracy.html. "Big stock funds own increasingly large chunks of publicly traded companies, leaving fund shareholders without a vote on corporate governance. But there’s a better way."

  • The Financial Times reports that Investor protests at US executive pay hit record high: https://www.ft.com/content/24a22bb6-bba9-4946-b1d7-7f54042d5f1d. "Remuneration packages were rewritten during pandemic to make it easier for chief executives to earn millions."

  • Reuters reports that Buffett's ESG snub risks alienating Wall Street: https://www.reuters.com/business/sustainable-business/buffetts-esg-snub-
    risks-alienating-wall-street-2021-05-04/
    . “Berkshire Hathaway Inc shareholders can accept Chairman Warren Buffett’s hostility to bitcoin, blank-check acquisition firms and wild bets on trading app Robinhood. But when it comes to environmental, social and corporate governance (ESG) standards, many are drawing a line.”

  • Equilar has published the Q1 2021 Equilar Gender Diversity Index: Boards Are Nearly Halfway Down the Path to Gender Parity: https://www.equilar.com/reports/81-q1-2021-equilar-gender-diversity-index. "The path toward equal representation of men and women in public company boardrooms seemed to go nowhere for decades, but there has been a significant clearing in recent years. The Equilar Gender Diversity Index (GDI) now shows that Russell 3000 boards are nearly halfway to gender parity. At the end of Q1 2021, 24.3% of all board seats in the Russell 3000 were occupied by women, representing an increase in the GDI to 0.49, up from 0.47 in Q4 2020, where 1.0 represents gender parity on Russell 3000 boards. The percentage of women in board seats rose 3.4% from Q4 2020 and 10.5% from one year ago."

  • Reuters reports that GE shareholders reject CEO Culp's $230 mln pay in rare rebuke: https://www.reuters.com/business/general-electric-shareholders-reject-ceo-larry-culps-pay-2021-05-04/. “General Electric Co  shareholders rejected top executives' compensation packages, including a payout of as much as $230 million to CEO Larry Culp, at the industrial conglomerate's annual shareholder meeting on Tuesday.”

  • Bloomberg Law reports that Biden Presses for Climate Disclosures: Executive Order Explained: https://news.bloomberglaw.com/banking-law/biden-presses-for-climate-disclosures-executive-order-explained. "President Joe Biden last week issued an executive order laying out steps the government will take to better identify the financial risks that climate change poses to both government and private assets, and the broader economy. It marshals the government’s regulatory muscle and buying power to bring climate change to the forefront of companies’ attention and reduce greenhouse gas emissions. The four-page executive order includes a directive for the Financial Stability Oversight Council, which includes the Securities and Exchange Commission, to come up with a plan to improve climate disclosures. Though the order doesn’t mention the SEC by name, it underscores efforts already underway at the agency to improve how companies publicly report climate risks and other environmental, social, and governance issues."

  • Reuters reports that U.S. companies appoint more Black directors after social justice protests - report: https://www.reuters.com/business/us-companies-appoint-more-black-directors-after-social-justice-protests-report-2021-05-25/. "S&P 500 companies appointed 165 directors who are Black, out of a total of 513 new corporate board members, from July 1, 2020 to May 19, 2021, according to ISS Corporate Solutions, or about 32%. In the same period a year earlier, S&P 500 companies appointed just 55 Black board members out of 485 total new directors, according to the analysis, or about 11%. [...] Investors have called for more transparency on race, with proposals on corporate ballots requiring boards commission racial equity audits garnering support from shareholders. The audits analyze a company's impact on civil rights, equity and diversity."

  • Seeking Alpha reports that U.S. House debates whether SPACs are good for investors or just ‘Vegas weddings’: https://seekingalpha.com/news/3699675-us-house-debates-whether-spacs-are-just-vegas-weddings. "U.S. lawmakers weighed in Monday on “SPAC mania," with one congressman saying markets must ease barriers to going public while a securities-law professor countered that SPAC deals have essentially become quickie “Vegas weddings” between companies and prospective investors."
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    Asia
    Japan
    Hong Kong
    • Hong Kong Stock Exchange has published a consultation paper on review of Corporate Governance Code and related listing rules: https://www.hkex.com.hk/News/
      Regulatory-Announcements/2021/2104162news?sc_lang=en.
      "The proposals include new measures aimed at further enhancing corporate governance standards among listed issuers in Hong Kong, specifically in the areas of corporate culture, director independence, diversity, and in Environmental, Social and Governance (ESG) disclosures and standards."

    • The South China Morning Post reports that Hong Kong still lags behind in some areas of corporate governance, report finds: https://www.scmp.com/business/banking-finance/article/3134208/hong-kong-
      still-lags-behind-some-areas-corporate
      . "Hong Kong needs to make further corporate governance improvements as the city and other financial centres in Asia continue to lag behind on some governance best practices, according to a new report by the Asian Corporate Governance Association (ACGA).  The city ranked second, alongside Singapore, in the long-running CG Watch 2020 study by the ACGA and securities firm CLSA on 12 markets in Asia, but continues to lag behind on whistle-blowing and anti-corruption enforcement. Australia ranked No 1 in the report, while mainland China was 10th in this year’s ranking."

    • FinanceAsia reports that Hong Kong targets green bonds to drive sustainability: https://www.financeasia.com/article/hong-kong-targets-green-bonds-to-
      drive-sustainability/469688
      . "A record number of green bonds were launched from local issuers in Hong Kong in 2020, with 15 internationally aligned green bonds and one green loan totaling $2.1 billion, according to the Climate Bonds Initiative at its recent Hong Kong Green Bond Market Briefing."
    China
    • Reuters reports that BlackRock expands China footprint with wealth management licence: https://www.reuters.com/business/finance/blackrock-gets-licence-china-
      wealth-management-jv-with-ccb-temasek-2021-05-12/
      . "BlackRock Inc has received a licence in China for a majority-owned wealth management venture, expanding its footprint in the country's fast-growing asset management market. The U.S. fund giant said its wealth management venture with a unit of China Construction Bank Corp, and Singapore state investor Temasek Holdings can now start business."

    • AsianInvestor reports about How asset owners are directly engaging firms over ESG: https://www.asianinvestor.net/article/how-asset-owners-are-directly-engaging-firms-over-esg/469250. "As more Asia Pacific asset owners declare their commitment to environmental, social and governance principles and zero carbon emission targets, they need to decide how best to persuade portfolio companies to also commit to these goals. Increasingly, large regional institutional investors seem to believe in engagement over exclusion, using their influence as major investors to drive change in companies in need of ESG improvement rather than avoid them."
    India
    • Regulation Asia reports that SEBI Enhances Sustainability Reporting Rules for Listed Entities: https://www.regulationasia.com/sebi-enhances-sustainability-
      reporting-requirements-for-listed-entities/
      . “The new Business Responsibility and Sustainability Reports will contain disclosures relating to ESG risks, sustainability performance, environmental metrics, and social factors. SEBI (Securities and Exchange Board of India) has published the format which the top 1,000 listed entities by market cap will be required to use for sustainability disclosures, along with guidance on the new reporting requirements.  The regulator had announced at a board meeting in March that it would be introducing new sustainability reporting requirements for listed entities, where a new report called the BRSR (Business Responsibility and Sustainability Report) would replace the existing BRR (Business Responsibility Report).”
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    Australia
    Australia
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    Contact
    Daniele Vitale
    Georgeson
    Head of Governance UK & Europe > Corporate Advisory
    daniele.vitale@georgeson.com
    T +44 (0)20 7019 7034 M +44 (0)7747 697 136 F +44 (0)870 702 0158
    Moor House, 120 London Wall, London EC2Y 5ET, United Kingdom
    www.georgeson.com

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