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Georgeson Monthly Roundup - June 2021
north america
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Latest Georgeson publications

Global – Georgeson original research: How well do you understand your investors’ ESG integration?

Our research on the ESG policies and practices of 400 of the largest global institutional asset managers and owners across 29 countries found that out of the hundreds of ESG data products available, large institutional investors tend to focus on only 39 providers. Similarly, with respect to reporting frameworks, our research identified five primary investor-favored organizations, which narrows further still based on geography.

To learn more about top investors’ data usage practices, ESG integration approach and disclosure expectations, and how to streamline your approach to ESG, download our latest white paper here.

US – Georgeson exclusive report: an early look at the 2021 proxy season

You may have seen headlines or heard about some of the results from this proxy season. Are you ready to take a look at the full picture of this record-breaking season? Georgeson is exclusively bringing you an early look at the 2021 proxy season results so far so you are positioned to manage the ESG risks and capitalize on the opportunities that will help protect the future of your company.

Read the full report here

In the media

US – Georgeson's Hannah Orowitz was quoted by Reuters. 

“ESG resolutions have gained more traction lately. A forthcoming analysis from proxy solicitor Georgeson, details of which were given to Reuters, found the pass rate of environmental resolutions at Russell 3000 companies rose to 36% so far this year, up from 21% in 2020, while support for proposals on social topics rose to 18% from 10% in the same period. Many more were withdrawn as companies agreed to make changes like releasing workforce demographic information. 

Georgeson Senior Managing Director Hannah Orowitz, who said the company did not have a position on the regulations, said if left in place the changes would likely cut back on future ESG-related proposals despite their rising popularity. She cited one calling on Dupont to report on plastic pollution that won a record 81% support after it was resubmitted for the company's meeting in May, but which would barely have been allowed to be considered under the new thresholds given the limited support a similar proposal received in 2019."

Read the full article here.

Italy – Georgeson’s Lorenzo Casale was interviewed in Corriere della Sera.

“Future governance? ESG & board lists. An interview with Lorenzo Casale, the man who for Georgeson whispers to CEOs, shareholders and funds. The activity of proxy solicitor to respond to market demand.” (“La governance futura? ESG & liste del board. A colloquio con Lorenzo Casale, l’uomo che sussurra per Georgeson a ceo, soci e fondi. L’attività di proxy solicitor per rispondere al mercato.”). In Italian.

Read the full article here.

Spain – Georgeson’s Carlos Sáez Gallego was interviewed in Cinco Días.

“Carlos Sáez Gallego: ‘To have the best directors you have to offer competitive fees’. He says that support for the companies' remuneration policies has been mostly high.” (“Carlos Sáez Gallego: ‘Para tener a los mejores consejeros hay que ofrecer sueldos competitivos’. Afirma que el respaldo de las políticas de retribución de las compañías ha sido mayoritariamente elevado”) In Spanish.

Read the full article here.

Recent events
US – 2021 Proxy Season Webinar: 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.

Launch the on-demand webinar here.

Italy – EticaNews ESG Business Conference

Georgeson’s Alberto D’Aroma spoke at the EticaNews ESG Business Conference on the topic “Balance at Italian companies. Companies are looking at the new model of stakeholder capitalism amidst contradictions and problems to be overcome. How to relate to shareholders and stakeholders?”.

Watch the presentation here.

Shareholder Activism
  • Reuters reports that Engine No. 1 extends gains with a third seat on Exxon board: https://www.reuters.com/business/energy/engine-no-1-win-third-seat-exxon-
    . “The activist campaign’s success is part of a ‘tidal wave’ of investor concerns on environmental, social and corporate governance (ESG) issues, said Exxon Director Ursula Burns, who spoke Wednesday evening at a Federal Reserve Bank of Dallas virtual event.”

  • The Deal reports SEC’s Gensler Seeks Activist Disclosure Reform: https://pipeline.thedeal.com/article/28p91tk04lpjvxew5jzls/deal-news/activism/
    . “The chairman of the U.S. securities regulator says it should consider faster 13D disclosures, as well as more transparency in short-selling and derivatives investments.”

  • IR Magazine reports As companies disclose more ESG data, activists have an opportunity: https://www.irmagazine.com/regulation/companies-disclose-
    . “The growth of corporate disclosure on ESG issues will offer new opportunities to activist investors as they search for evidence of underperformance, according to a recently released white paper.”

  • The Financial Times reports that Daniel Loeb faces taste of his own medicine in UK investment trust tussle: https://www.ft.com/content/4fdf1805-7305-4aeb-
    . “Asset Value Investors complains about performance of well-known activist’s fund.”

  • The Wall Street Journal reports that GlaxoSmithKline Talks Up Growth Prospects as Activist Investor Elliott Looms: https://www.wsj.com/articles/glaxosmithkline-
    . “Pharmaceutical giant GlaxoSmithKline PLC pledged to accelerate growth and gave further details of the long-planned separation of its consumer-healthcare business, as it seeks to ward off a potential clash with activist investor Elliott Management Corp. [...] With Wednesday’s update, which had been planned before Elliott’s investment, GlaxoSmithKline Chief Executive Emma Walmsley aimed to convince investors that her yearslong shake-up to revive the company’s fortunes will soon pay off. She said recently approved products and the company’s late-stage pipeline would drive growth.”

  • Bloomberg reports that Shareholder Activism Campaigns Rebound Out of Pandemic: https://www.bloomberg.com/news/articles/2021-06-21/shareholder-activism-
    . “Shareholder activists, fresh from stepping up their campaigns by a third in the first half of the year, are expected to be emboldened by an economic rebound for the rest of 2021. The total number of activist campaigns launched through June 21 at companies with a market value of more than $1 billion reached 116, up from 87 over the same period in 2020 and 115 in 2019, according to data compiled by Bloomberg. The first six months of the year marked a rebound in activism generally as the economy started to recover from the pandemic. Advisers expect that momentum to continue into the second half of the year and into 2022 and beyond. This year’s proxy season will largely be remembered for the unexpected victory of first-time activist Engine No. 1 over Exxon Mobil Corp. and the lift it gave to activist investors focused on environmental, social and governance issues. The little-known fund managed to win three seats on the board of the oil and gas giant despite owning only a 0.02% stake. It’s something other companies will need to take heed of heading into next proxy season, said David Rosewater, Morgan Stanley’s global head of shareholder activism and corporate defense. ESG issues are now at the forefront of a lot of campaigns, and front of mind for a lot of investors, he said.”

  • The Wall Street Journal reports that Toshiba Scandal Emboldens Foreign Investors Pushing Change in Japan: https://www.wsj.com/articles/toshiba-scandal-
    . “When Toshiba Corp.’s shareholders ousted the company’s chairman last week, it was a symbolic instance of foreign activist investors wielding influence in the Tokyo market. But it wasn’t the only one. Activists say they have found companies more receptive to their demands recently, and they expect the Toshiba example to empower them further by showing what can happen to corporate leaders who brush back foreign investors. […] Activists held stakes in just over half of the companies in the 225-issue Nikkei Stock Average as of December, according to IR Japan Holdings, which advises companies on investor relations. […] There were 44 activist funds working in Japan as of last year, quadruple the figure five years earlier, according to CLSA strategist Nicholas Smith.”

  • Deal Street Asia reports that GIC joins programme aimed at transitioning Asian electric utilities to net zero emissions: https://www.dealstreetasia.com/stories/gic-net-
    . “Singapore’s sovereign wealth fund GIC has joined a new investor-led engagement programme. The programme is backed by 13 istitutional investors and stewardship service providers, responsible for $8.8 trillion in assets under management.”

  • The Times reports that Activist Cevian Capital hints at Aviva board move: https://www.thetimes.co.uk/article/activist-cevian-capital-hints-at-aviva-
    . “The activist investor that has bought a big stake in Aviva has defended its approach to overhauling companies days after calling on the FTSE 100 insurer to hand billions to shareholders. Cevian Capital said it tried to work constructively with the bosses of businesses where it was pushing for change. Writing in The Times today, Harlan Zimmerman, senior partner, said it ‘aims to create value that is shared with all shareholders and stakeholders’. In comments that are likely to fuel speculation that it will seek to appoint a director at Aviva, he notes that at companies outside the UK it is common for activists to take board seats.”

  • Inside Asia Gaming reports about Leadership of China’s Ourgame International Holdings Ltd struggles over World Poker Tour sale: https://www.asgam.com/index.php/2021/05/23/leadership-struggle-at-
    . “China’s Ourgame International Holdings Ltd has been forced to call an Extraordinary General Meeting after a shareholder linked to a recently exiled director called for the removal of seven current directors from the board. Two Ourgame shareholders – Yu Meng and Glassy Mind Holdings Limited – have delivered a requisition calling for the company to convene an EGM to vote on the removal of the seven directors.”

  • Reuters reports that MUFG board beats back climate resolution as activists falter in Japan: https://www.reuters.com/world/asia-pacific/mufj-board-beats-
    . “Mitsubishi UFJ Financial Group shareholders on Tuesday defeated a proposal for the bank to align its business with global targets on climate change, dealing a win for the board over investors pushing for more action on the environment. […] Mitsubishi UFJ is Japan's biggest lender and backs numerous coal and fossil fuel projects. A Mitsubishi UFJ spokesperson confirmed via email that the resolution failed during its annual general meeting, garnering about 23% of the shareholder vote. Mitsubishi UFJ’s board opposed the resolution saying the ‘essential content’ of the proposal ‘has already been incorporated into the company's management strategies,’ with a recent carbon neutrality pledge and other policy changes.”
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  • The Economist argues that Europe is now a corporate also-ran. Can it recover its footing?: https://www.economist.com/briefing/2021/06/05/once-a-corporate-heavyweight-
    . “In 1984 a besuited 20-something American executive on a visit to France offered Europeans a few tips for corporate success. Entrepreneurs needed to be given a second chance if they failed and government bureaucrats made for lousy investors, he told a television interviewer. His advice was sage. But European companies ruled the global corporate roost alongside those of America and, occasionally, Japan. Why should they take advice from this uppity Californian newcomer? Nearly four decades later the company founded by that young upstart, Steve Jobs, is worth more than the 30 firms in the German blue-chip dax index combined. Its value is not far off that of all 40 companies in France’s Cac index. Apple’s success has been notable, but it is the decline of corporate Europe that is truly striking. At the start of the 21st century 41 of the world’s 100 most valuable companies were based in Europe (including Britain and Switzerland but excluding Russia and Turkey). Today only 15 are.”
  • The Financial Times reports that Heavyweight investors demand more disclosure of environmental risks: https://www.ft.com/content/7d23ef7f-33ba-4466-b2f1-
    . “Institutional shareholders join campaign for better reporting on climate and green issues.”

  • Reuters reports that New global sustainability disclosures board draws heavyweight backing: https://www.reuters.com/business/sustainable-business/former-ecb-
    . “Former European Central Bank President Jean-Claude Trichet will head an advisory group on setting up a global board for sustainability-related company disclosures, the IFRS Foundation said on Monday.  The new International Sustainability Standards Board (ISSB), due to be unveiled ahead of the COP26 U.N. climate change conference in Glasgow in November, aims to replace a patchwork of voluntary guidance with a single set of global norms for firms reporting the impact of climate change on their business.  The IFRS Foundation already oversees the International Accounting Standards Board, which writes accounting rules used in over 140 countries, and the SSB would be a parallel board.”

  • The Financial Times reports that FTSE Russell threatens to expel 208 ESG offenders from FTSE4Good: https://www.ft.com/content/5a99f26d-c4bc-4995-b7ee-
    . “The index provider has given the companies 12 months to meet its tighter climate-performance standards.”

  • The Economist argues that Investors in technology need to pay attention to corporate governance: https://www.economist.com/leaders/2021/06/19/investors-in-
    . “Investors in technology firms too often put up with ropy corporate governance. They may come to regret it.”
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Pan-European developments
  • The Financial Times reports that The EU’s new sustainability rules spell trouble for many businesses: https://www.ft.com/content/2e60c66a-fe96-4235-9c5b-
    . “Companies need to enhance their diligence on human rights as well as environmental issues.”

  • The Wall Street Journal reports that Big Banks Required to Fill Board Seats With Women Under ECB Proposal: https://www.wsj.com/articles/big-banks-required-
    . “The European Central Bank wants to include gender diversity as a criterion to approve bank board members and executives, a step that would put further pressure on a sector where the vast majority of senior posts are still held by men. The ECB’s banking supervisor, which oversees the eurozone’s largest lenders, said Tuesday that while ‘diversity in leadership has long been recognized as crucial for effective governance,’ figures by the European Banking Authority show that only 8% of chief executive officers of European credit and investment institutions are women.”
  • The Times reports that Investors ready for more revolts over executive pay and diversity: https://www.thetimes.co.uk/article/investors-ready-for-more-revolts-over-
    . “Aston Martin Lagonda and Hochschild Mining are among the companies bracing themselves for shareholder rebellions this week over concerns about boardroom diversity and executive pay. Hochschild, the FTSE 250 gold and silver producer, faces a rebellion after Glass Lewis, the shareholder advisory service, advised its clients to reject the miner’s pay report when the company meets on Thursday. The rebellion relates to a death last year at the Pallancata mine in Peru. Despite the fatality, the portion of the executive annual bonus linked to health and safety made a partial payout to Ignacio Bustamante, 50, Hochschild’s chief executive. He was paid $1.9 million last year, including a $945,000 bonus. Glass Lewis said that the safety element of the bonus should have been cut to zero because it ‘risks sending a mixed message to the executives as to the company’s overarching safety goal’.”

  • The Daily Telegraph has published a column by Tom Stevenson, an investment director at Fidelity International (“the views are his own”), entitled Exuberance over sustainability threatens a new bubble: https://www.telegraph.co.uk/business/2021/06/28/
    . “Today’s hot investment story is sustainability. As with the largely consumer story of the Nifty 50 and the digital revolution of the 1990s, the story underlying today’s ESG narrative is completely plausible. The environmental strand reflects the most important challenge facing the world today: climate change. Neither the social nor governance themes are fads either. They mirror unstoppable changes in what is considered acceptable corporate behaviour. […] But as with the two previous episodes, the underlying narrative is only part of the story from an investor’s perspective. There are plenty of good reasons to consider environmental, social and governance factors when we decide where to invest our money. But unless you place yourself firmly at the philanthropic end of the investment spectrum, none of them are reasons to disregard the fundamental factors that drive returns. The stories that underpinned the Nifty 50 and the tech bubble were not wrong, although they were maybe exaggerated or premature. Today’s enthusiasm for ESG is likewise wholly reasonable. But none of them were enough by themselves to overcome the stock market’s law of gravity.”

  • The Financial Conduct Authority has published new proposals on climate-related disclosure rules for listed companies and certain regulated firms: https://www.fca.org.uk/
    . “The proposals follow the introduction of climate-related disclosure rules for the most prominent listed commercial companies in December 2020 which are aligned with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD).  In the consultations the FCA is proposing: 1) to extend the application of its TCFD-aligned Listing Rule for premium-listed commercial companies to issuers of standard listed equity shares; 2) to introduce TCFD-aligned disclosure requirements for asset managers, life insurers, and FCA-regulated pension providers, with a focus on the information needs of clients and consumers. […] The FCA is inviting feedback to both consultations by 10 September 2021 and intends to confirm its final policy on climate-related disclosures before the end of 2021.”

  • Sky News reports that Morrisons defends pay policy after investors reject bonus for chief executive: https://news.sky.com/story/morrisons-defends-pay-policy-after-
    . “More than 70% of shareholders deliver a rebuke, in a non-binding vote, but the company says it was an exceptional year.”

  • The Department for Business, Energy and Industrial Strategy has published a Research Paper entitled Executive pay and investment in the UK: https://www.gov.uk/government/publications/executive-pay-and-investment-in-the-uk. “This study explores the relationships between CEO performance targets, the pay incentives associated with those targets, and firm investment for companies listed on the FTSE All-Share index (as of April 2020) from 2013 to 2019. The study has 3 aims: 1) explore the prevalence of different performance targets in UK executive pay contracts, with a view to better understanding the use of different target types and whether they are calibrated effectively to incentivise target achievement; 2) examine the evidence for whether CEOs influence firm investment decisions to improve performance against specific targets in their pay contracts; 3) examine the evidence for whether there is a systematic relationship between the presence and size of specific performance targets and firm investment. This report has been prepared by PwC for the Department for Business, Energy & Industrial Strategy.”

  • The Financial Times reports about How did Patrick Drahi’s Altice build a 12.1 per cent stake in BT almost overnight?: https://www.ft.com/content/35d76eb7-
    . “The suspicion, therefore, is that Altice has used borrowed stock to lever an underlying position that cost substantially less than the stake’s £2.2bn book value. It’s a suspicion backed up by stock lending data, which show the number of BT shares on loan surging since the start of the month from less than 250m to nearly 1.25bn.”
  • Radio France Internationale reports that French MPs approve quotas for more women in corporate management: https://www.rfi.fr/en/france/20210513-french-mps-
    . “France’s lower house has voted in favour of a bill that would require companies with more than 1,000 employees to ensure women hold 40 percent of top management posts by 2030. […] Under the proposed law, companies employing more than 1,000 staff would be obliged to have at least 30 percent women among ‘senior managers and members of management bodies’ by 2027, and 40 percent by 2030. The companies will initially have to publish yearly data on ‘the possible gaps in representation’ between women and men at senior management level. Failure to reach the goals could lead to fines. […] The draft law comes a décade after the Copé-Zimmermann law which required companies to have at least 40 percent of women on their boards by 2020. The quotas worked, and currently, 44 percent of seats on company boards are now held by women. But women’s representation in executive management remains low, at just 22 percent.”

  • The Financial Times reports that Scor and Covéa agree peace deal after bitter takeover fight: https://www.ft.com/content/a5b4c096-8f9d-485f-bd5a-ff317dcd5f7f. “French insurers seek to bury hatchet with end to legal battles and agreement on cutting stakes.”
  • Handelsblatt reports that The ECB demands timely succession plan for Paul Achleitner from Deutsche Bank (“Die EZB fordert von der Deutschen Bank rechtzeitigen Nachfolgeplan für Paul Achleitner”): https://www.handelsblatt.com/
    (in German). “One year before the end of the term of office of Supervisory Board Chairman Paul Achleitner, it is still unclear who will take the helm of Deutsche Bank's supervisory body from next May. The deadlock is not only bothering investors, but increasingly also the banking supervisors of the European Central Bank (ECB). The regulator does not want Deutsche Bank to take too much time with succession planning, two people familiar with the matter told the Handelsblatt. They thus confirmed a report by the Reuters news agency. Deutsche Bank and the ECB did not want to comment.”

  • The Financial Times reports that Volkswagen nears €10m settlement from former chief Martin Winterkorn: https://www.ft.com/content/01ae3565-c4ce-438f-90cf-
    . “Carmaker will recommend shareholders accept deal after it sought damages from Dieselgate-era boss.”

  • Gibson Dunn reports about Consequences of Wirecard Scandal: New Requirements for Corporate Governance and Audit of German Listed Companies: https://www.gibsondunn.com/consequences-
    . “As a reaction to the spectacular collapse of Wirecard, a then-DAX-listed financial service provider, in June 2020, an Act on Strengthening the Financial Market Integrity (Finanzmarktintegritätsstärkungsgesetz – FISG) has now been adopted following several months of intense discussions. It enters into effect on 1 July 2021 with a transitional period for certain provisions. The Act establishes new requirements for the corporate governance and the audit of listed companies as well as other public-interest entities.”
The Netherlands
  • Norton Rose Fulbright has published a summary about Dutch court orders Shell to reduce CO2 emissions: https://www.nortonrosefulbright.com/en/knowledge/publications/
    . “On May 26 2021, the district court of The Hague rendered a ground-breaking judgment in collective action proceedings initiated by several non-governmental organizations (including Friends of the Earth) against Royal Dutch Shell plc. The NGOs claimed, in short, that Shell had to reduce its overall CO2 emissions by at least 45% from 2019 levels, by the end of 2030. The court ruled in favour of the NGOs and ordered Shell to reach the Target Reduction. This is stated to be the first time that a court ordered a company to reduce its CO2 emissions in line with the climate goals included in the Paris Agreement.”
  • Il Sole 24 Ore reports that Listed companies only go one way: only 1.8% of the stock market in the hands of a female CEO (“Quotate a senso unico: solo l’1,8% della Borsa nelle mani di una Ceo”): https://24plus.ilsole24ore.com/art/quotate-senso-
    (in Italian). “Only 1.8% of the capitalisation of the Italian stock exchange is entrusted to the care of women CEOs. Looking at the percentage of top positions held, the situation is not much better: there are 14 female CEOs out of 239 companies on the main list of the Italian Stock Exchange, i.e. just under 6%. They are few in number and do not lead medium or large-sized companies.” 

  • Consob has published a report entitled Report on non-financial reporting of Italian listed companies: https://www.consob.it/web/area-pubblica/abs-
    (both in Italian and English). “The Report analyses the evidence on the implementation of the Directive 2014/95/EU, transposed in Italy by the Legislative Decree no. 254/2016, also with the aim of highlighting the progressive cultural change triggered by the integration of sustainability into the corporate decision-making process.” The full document is available here: https://www.consob.it/documents/46180/46181/rnf2020.pdf/f1370058-
  • The Financial Times reports that Italy appoints seasoned executives to lead state-backed businesses: https://www.ft.com/content/3481cfd7-46c4-491b-9e19-74f28819e523. “Draghi overhauls management of companies set to receive EU recovery funds.”

  • Milano Finanza reports about Nexi, shareholders’ meeting approves merger with Sia (“Nexi, dall’assemblea ok alla fusione con Sia”): https://www.milanofinanza.it
    (in Italian). “Everything is confirmed, as planned, for the path that will lead to the merger between Nexi and Sia. The shareholders’ meeting of the digital payments company listed on the Ftse Mib, convened in extraordinary session under the chairmanship of Michaela Castelli, approved the merger deal with the group controlled by Cpd Equity with 99.852% of votes in favour, translating into 477.3 million shares out of a total of 478. After Nexi’s vote, Sia’s shareholders’ meeting also gave its approval.”
  • The CNMV has opened a consultation on the Draft Circular amending the templates used for the annual corporate governance report to be completed by listed public limited companies and the  template used for the annual report on the remuneration of board members: https://www.cnmv.es/portal/verDoc.axd
    . “The main purpose of the Draft Circular is to adapt the content of such templates and to include certain additional information required under Spanish Law 5/2021, of 12 April, amending the Recast Text of the Spanish Corporate Enterprises Act, approved by Spanish Royal Legislative Decree 1/2010, of 2 July, and other financial regulations, with regard to fostering the long-term involvement of listed company shareholders.” The consultation closes on 5 August 2021. See the content of the Draft Circular here:

  • Cinco Dias reports that These are the directors who sit on the most Ibex-35 boards (“Estos son los consejeros que ocupan más sillones en el Ibex”): https://cincodias.elpais.com/cincodias/2021/06/18/companias/1624032206_609562.html (in Spanish). “They are not the top executives of the companies, but they are the ones who occupy the most seats in the Ibex companies. Donald Johnston, Ignacio Martín San Vicente, Javier Echenique Landiríbar and Santos Martínez-Conde stand out among the more than 400 directors of the Spanish selective index as they occupy three seats on boards of directors at the same time. They are four executives with extensive careers in the management bodies of the main Spanish companies.”

  • The CNMV has published its 2020 Annual Report: https://www.cnmv.es/portal/
    . “In 2020, despite the pandemic, supervision remained within normal parameters. Twenty-eight thematic boxes are included, which provide an in-depth look at matters of interest developed during the year. Fines totalling 9.03 million euros were imposed, compared with 3.93 million euros the previous year.” 
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North America
United States
  • The Financial Times reports SEC to avoid enforcement of Trump-era proxy adviser rules: https://www.ft.com/content/dd962367-b92c-4f37-9355-47f35aaf573d. “In a statement, commission chair Gary Gensler said he has asked the agency’s staff to revisit restrictions for proxy advisers that the commission adopted in July 2020. The staff should also reconsider guidance aimed at defanging proxy advisers that the agency published in 2019, he said.”

    • Reuters reports Ackman reinvents SPAC in Universal Music deal talks: https://www.reuters.com/business/ackmans-spac-nearing-deal-with-universal-
      . “Pershing Square said it would invest $4 billion to buy the Universal stake. Investors in the SPAC will get Universal shares when they are listed, but will not be able to exercise their current warrants. Investors will also get rights to buy shares in a Special Purpose Acquisition Rights Company (SPARC) launched by Pershing Square, to do yet another deal down the line.”

    • The SEC issues a press release entitled SEC Announces Annual Regulatory Agenda: https://www.sec.gov/news/press-release/2021-99. “The Office of Information and Regulatory Affairs today released the Spring 2021 Unified Agenda of Regulatory and Deregulatory Actions. The report, which includes contributions related to the Securities and Exchange Commission, lists short- and long-term regulatory actions that administrative agencies plan to take.”

    • Corporate Secretary reports Professionals see evolving ESG links to executive compensation: https://www.corporatesecretary.com/articles/boardroom/
      . “Amid growing investor pressure for companies to link executive compensation – at least to some degree – to ESG factors, there remains widespread uncertainty about how boards should approach the issue. But the outline of best practice is beginning to emerge, according to professionals.”

    • Chief Investment Officer reports IIRC, SASB Complete Merger to Form Value Reporting Foundation: https://www.ai-cio.com/news/iirc-sasb-complete-merger-to-form-
      . “The new firm says it will develop a more thorough corporate reporting system in partnership with the International Financial Reporting Standards (IFRS) Foundation, as well as other global standard setters. The Value Reporting Foundation, which has employees across four continents, will also continue to provide a combination of tools for investors.”

    • The Wall Street Joural reports that Median CEO Pay Sets Fifth Straight Record: https://www.wsj.com/articles/from-tesla-to-ge-see-how-much-ceos-made-in-
      . “Median pay reached $13.4 million for chief executives of the biggest U.S. companies in 2020, setting a fifth straight annual record in a year when businesses and their leaders battled a global pandemic. Most S&P 500 CEOs got raises of about 5% or more as their companies recorded annual shareholder returns of about 8%, according to a Wall Street Journal analysis of data from MyLogIQ.”

    • Reuters reports that Investors ask U.S. SEC for more ESG disclosures as companies resist: https://www.reuters.com/business/sustainable-business/investors-
      “Investor groups have asked the U.S. Securities and Exchange Commission for more corporate disclosures on climate change and other environmental, social and governance (ESG) issues while business interests have pushed back, a Reuters review of correspondence published by the regulator shows. […] The SEC said last week it may propose new rules on ESG disclosures in October.”

    • The Wall Street Journal reports that Big Companies Boost Share of Black and Latino Directors: https://www.wsj.com/articles/this-years-influx-of-directors-starts-
      . “S&P 500 companies took substantial steps to diversify boards this year. Still, majority of directors remain white men.”

    • The Financial Times reports about US CEO pay: shareholders have woken up to excess: https://www.ft.com/content/7093b27d-73dd-4a21-9475-bf238af87894. “Steep remuneration has started to prompt regular investor censures already common in Europe.”
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    • The Japan Times reports that Beware of 'ESG bubble', says ex-chair of world's biggest pension fund: https://www.japantimes.co.jp/news/2021/06/29/business/economy-
      “The former head of the board of governors at the world’s largest pension fund said he sees signs of a ‘bubble’ in environmental, social and governance investing, and said the Japanese fund needs to consider how much ESG assets contribute to returns.”

    • Reuters reports that Toshiba board chairman lost re-election bid with 56% of votes opposed: https://www.reuters.com/business/former-toshiba-board-
      . “Toshiba Corp’s former board chairman lost his bid for re-election last week with 56% of votes cast against him, according to a breakdown of the results that marked a watershed moment for corporate governance in Japan. The ouster of Osamu Nagayama follows an explosive independent investigation released this month that found Toshiba colluded with the trade ministry to block foreign shareholders from gaining influence at last year’s annual general meeting. Voting participation at this year’s AGM was particularly high, exceeding 80% for the first time since 2010 when new disclosure rules were introduced. There were few abstentions, with votes in favour at 43.7%.”

    • The Japan Times reports about Eye-popping retuns lure hedge funds to neglected Japanese startups: https://www.japantimes.co.jp/news/2021/06/29/
      . “The moves are being driven by surging share prices of startups that went public in recent years, along with renewed government efforts to promote digitalization and entrepreneurship.”

    • The Financial Times reports that Corporate change in Japan will need more than pregnant pandas: https://www.ft.com/content/0890c016-a3d0-4f39-88fa-20cdbc902d4a. “As AGM season nears, investors eager to clear away logjams have often seen their hopes of progress dashed.”
    Hong Kong
    • South China Morning Post reports Hong Kong-listed companies added women to boards in 2020 at highest rate in four years, report says: https://www.scmp.com/
      . “Hong Kong’s biggest listed companies added women to their boards in 2020 at their highest level in four years, global recruitment firm Heidrick & Struggles said. The top 50 companies on the Hang Seng Index filled 24 per cent of their 42 open director seats with women last year, according to the latest Heidrick & Struggles board monitor report. That compared with just 6 per cent in 2019, 5 per cent in 2018, and 20 per cent in 2017.”

    • FinanceAsia reports Hong Kong steps up efforts to combat IPO-related misconduct: https://www.financeasia.com/article/hong-kong-steps-up-efforts-to-combat-
      . “Hong Kong’s securities watchdog has highlighted several problematic issues in recent initial public offerings IPOs that suggest the lack of genuine investor interest and cast doubt over the existence of an open, orderly and fair market in the shares. The Securities and Futures Commission SFC, in collaboration with the Stock Exchange of Hong Kong Limited SEHK, made the joint statement to raise several red flags.”

    • Ashley Alder, CEO of the Securities and Futures Commission of Hong Kong, delivered a speech at City Week 2021 entitled The emerging global framework for climate change regulation:
      . “For some time, regulators have drawn attention to problems with the consistency, availability and reliability of the information needed for investors to incorporate climate into their decisions. This goes hand-in-hand with concerns about greenwashing. More recently, there has been a substantial increase in the amount of publicly-available climate-related corporate information, standards and ratings. This has made it even harder to make sense of what has become another form of information overload.”
    • AsianInvestor reports Chinese insurers record 20% growth in green investment: https://www.asianinvestor.net/article/chinese-insurers-record-20-growth-
      . “The country's largest insurer Ping An set up a $62 billion green investment target by 2025. Several more players are also joining the hunt for sustainable assets. Chinese life insurers have entered the country's green investment industry and should accelerate its expansion from an already impressive growth rate of nearly 20% in 2020, according to a latest industry report on insurers’ green investment trend published by Insurance Association of China on June 16.”

    • South China Morning Post reports that In windfall for Xinjiang, huge US mutual funds invest millions in its companies: https://www.scmp.com/news/china/article/
      . “Vanguard’s investments in Xinjiang have tripled since 2018, records show, despite a US crackdown on trade in the region and warnings to businesses to stay away. American mutual funds have used shareholder status to endorse company ‘poverty alleviation’ activities targeting region’s Uygurs and other minorities.”

    • Pensions & Investments reports that Second Rubio bill aims to halt TSP fund flow to Chinese firms: https://www.pionline.com/legislation/second-rubio-bill-aims-
      . “Sen. Marco Rubio introduced another bill aimed at preventing the Federal Retirement Thrift Board from investing assets in Chinese companies.”

    • Bloomberg reports that Legal and General will divest holdings in four companies including Industrial & Commercial Bank of China Ltd and China Mengniu Dairy Co after deeming they’re making insufficient progress on addressing climate change risks:
      . “The companies either provided ‘unsatisfactory responses’ to LGIM’s climate questions or breached “‘red lines’ around coal involvement, carbon disclosures or deforestation,’’ the U.K. asset manager said.”

    • Pensions & Investments reports that Sweden’s AP7 excludes Chinese firms from investment universe: https://www.pionline.com/esg/swedens-ap7-excludes-
      . “It excluded Beijing-based Chinese electricity company Huaneng Power International for acting against the goals of the 2015 Paris Agreement on climate change by expanding its coal operations. Beijing-based Power Construction Corp. of China was excluded for involvement in the violation of environmental norms at the Selous Game Reserve in Tanzania – a World Heritage site, the release said.”
    • The Financial Express reports that Chairman emeritus appointments can lead to potential conflicts, says IiAS: https://www.financialexpress.com/industry/chairman-
      . “There is a growing trend among Indian companies to appoint a chairperson emeritus. With the regulation requiring separation of chairperson and managing director coming into force from April 1, 2022, companies may seek to appoint their long-standing directors/promoters as chairperson emeritus, given their experience and value addition. This could create two power centres, leading to potential conflicts, Institutional Investor Advisory Services (IiAS) has said in its latest report, which has data till December 2020.  The title of chairman emeritus usually goes to the company’s founders or an individual who has been in the company for a longish period and contributed significantly to its growth. The chairperson emeritus title is not recognised in the Companies Act, but some are permanent invitees to the company’s board meeting without having the authority to vote at them.”
    • Taiwan News reports that TDCC, Glass Lewis partner to bring greater transparency to proxy process in Taiwan: https://www.taiwannews.com.tw/en/news/4206167. “TDCC, a central securities depository and leading environmental, social, and corporate governance (ESG) promoter in Taiwan, will provide corporate issuers listed on Taiwan Stock Exchange (TWSE) and Taipei Stock Exchange (TPEX) with a complimentary copy of their Proxy Paper research report as soon as it has been published by Glass Lewis.”
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    Daniele Vitale
    Head of Governance UK & Europe > Corporate Advisory
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