Director's Domain June 6, 2022
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Targeted action. Issue-focused shareholder activism has grown in recent years, but how far can it reach? This week’s spotlight article explores the history of shareholder support for gun control and the influence shareholders can have, given the board’s duty to listen. Meanwhile, board of the National Rifle Association re-appointed Wayne LaPierre as executive VP, even as the organization fights a lawsuit alleging financial misconduct at the organization under his leadership. Meta COO Sheryl Sandberg steps down from Meta after 14 years, marking the end of an era for the social media giant. Long-time activist investor Nelson Peltz’s new seat on the Unilever board will allow him to influence what comes next for the consumer goods giant. And Elon Musk calls for Tesla employees to return to the office, a stark contrast to Twitter’s “work from home forever” policy. Is it time to rethink the role of the CEO?
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In the Spotlight
Will Shareholder Activism Influence Gun Makers?
“On June 1, when the shareholders of the Connecticut-based gun maker Sturm Ruger log in to the company’s virtual annual meeting, they can vote on a shareholder proposal that states because of ‘the inherent lethality of firearms,’ Ruger must hire an outside firm to study its impact on human rights, ‘above and beyond legal and regulatory matters.’ The human rights study is an unlikely crusade at Ruger, similar to an effort at Smith & Wesson, another rare publicly traded gun company in a largely privately owned and opaque industry. The nonbinding proposals pit a nun, who is leading one activist group, and a hospital executive, leading another, against gun makers who have so far been unwilling to compromise. They may not be typical Ruger investors, but they are representative of a certain kind of activist investing: buying shares in a public company in order to have a say in how it is run…. Boards have a duty to listen and respond.”?NEW YORK TIMES
NRA Board Re-Elects LaPierre Despite Pending Lawsuit On Financial Misconduct
“The National Rifle Association board reappointed Wayne LaPierre as executive vice president… Conservative activist Allen West, a retired military officer and former U.S. congressman from Florida, challenged LaPierre, who is also fighting off a lawsuit from New York Attorney General Letitia James that seeks to remove LaPierre from office…. James filed the lawsuit in 2020, alleging NRA leaders paid for family trips to the Bahamas, private jets and expensive meals and clothes that contributed to a $64 million reduction in the NRA's balance sheet in three years, turning a surplus into a deficit.”?REUTERS
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Across the Board
Activist Nelson Peltz Gets Seat on Unilever Board
“Billionaire activist investor Nelson Peltz didn't have to wage an all-out proxy war this time - Unilever welcomed him onto its board with little apparent fuss. Peltz will become a non-executive director in July after his Trian investment vehicle built up a 1.5% stake, Unilever said Tuesday, four months after reports originally surfaced that he was buying into the group. When he takes up the role, Peltz will have had a hand in running three out of the world's four biggest consumer goods companies, including Procter & Gamble and Pepsico.”?US NEWS
Do We Need to Rethink the CEO’s Role?
“[I]s the most effective governance model really still the one with the CEO sitting at the top, at the center of the company’s decision-making intersection?... The disruptive combination of the pandemic and technological acceleration has triggered a general rethink, with people requiring their workplaces to satisfy needs that are different from those of just 24 months ago. It is impossible for this rethink not to call the company’s top manager into question. … Are we certain that the 'board and CEO' configuration does not need a radical overhaul, in order to build future skill sets and organizations that are more evolved, more in tune with the times, and perhaps even fairer than in the past?”?FORBES
3 ESG Legal Trends To Look Out for In 2022
“There are three ESG-related developments and trends that will likely impact the world of energy in 2022. 1. Supply chains: tracking new legal proposals… This regulatory shift, is … encouraging [companies] to consider technological solutions to perform diligence on their supply chains…. 2. ESG litigation… the board and senior management at energy companies should continue to mitigate the risk of, and manage any ongoing, ESG litigation…. 3. SEC: when and what to expect… One possible SEC focus point is combatting perceived greenwashing…”?HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE?
Meta COO Sheryl Sandberg Steps Down?
"Sheryl Sandberg is stepping down from her role as Chief Operating Officer at Meta... Sandberg joined Facebook in early 2008 as the No. 2 to Facebook CEO and co-founder Mark Zuckerberg, and helped turn Facebook into an advertising juggernaut and one of the most powerful companies in the tech industry..."?CNBC?
Musk Demands Tesla Employees Come Back To Work
“Elon Musk is demanding that Tesla office workers return to in-person work or leave the company…. The policy is completely at odds with that of the other tech company Musk is attempting to buy, Twitter, which has previously announced employees can continue to work from home ‘forever’ if they prefer…. Twitter have announced increased flexibility for employees who want to work remotely, partly as a way to retain or attract talent in a particularly tight labor market. But the world’s richest person doesn’t seem concerned about that dynamic.”?CNN
领英推荐
Changes to Governance Code Prompt More Japanese Firms To Have Outside Directors
“Listed companies in Japan are increasingly adding outside directors to their boards, prompted by the country's stricter corporate governance code and stronger pressure from investors. Under the revised corporate governance code, announced in June last year, companies listed on the Tokyo Stock Exchange's top-tier Prime section are required to have independent outside directors account for at least one-third of all directors, or at least a majority if there is a controlling shareholder…. Independent outside directors accounted for at least one-third of all directors at nearly 90% of the companies that close the books in December and held shareholders' meetings in March this year…”?JAPAN TIMES
In Toshiba Board Overhaul, Seats Will Go to M&A Expert and Activist Investors
“Toshiba nominated an executive from M&A advisory firm Houlihan Lokey as chairperson and activist shareholders as outside directors… in a board overhaul that could intensify pressure to take the conglomerate private…. Toshiba, which has since 2015 been bedevilled by accounting and governance crises, has been exploring strategic options, including potential deals to go private, since shareholders voted down a management-backed restructuring plan.”?REUTERS
U.K. Introduces New Audit Regulator, Shifts Business From Big Four Firms
“The U.K. government unveiled plans to revamp the country’s audit and accounting sector, taking aim at the dominance of the Big Four firms. The changes will give audit oversight authority to a new regulator and expand company directors’ responsibilities around internal auditing controls. Under the plans, British businesses in the FTSE 100 and FTSE 250 stock indexes will be required to appoint an auditor outside of the Big Four… or hand off a portion of their audit work to a smaller audit firm…. directors from large listed companies will have to state why they think internal controls are sufficient, per a provision that is expected to be added to the U.K. corporate governance code, a guidebook for companies’ conduct that directors can comply with or explain reasons for why companies aren’t.”?WALL STREET JOURNAL
JD Sports Exec Chair Exits After Internal Governance Review
“JD Sports executive chair Peter Cowgill is to leave the retailer immediately after an 18-year tenure during which its value has soared. The company said the shake-up was a ‘consequence of an ongoing review of its internal governance and controls’…. He has run JD Sports without a chief executive since Barry Bown left the business in 2014, but has always insisted that investors were unconcerned about the concentration of power in his hands…. Cowgill’s robust personality and no-nonsense approach have generated controversy but until now he has always retained the support of the Rubin family, whose company Pentland is JD’s controlling shareholder.”?FINANCIAL TIMES
From the Boardspan Library
The Changing Role Of Board Involvement In Strategy
“Board members are increasingly seeking a more hands-on approach to setting strategy with the CEO, offering their broad and deep expertise to shore-up gaps in experience that might exist within the management team… Boards and management should be working closely together to set in place strategies that provide good working parameters for the CEO. The Chief Executive should be empowered to navigate successfully in the execution of the organization’s strategy, yet be encouraged, or required in some cases, to seek board approval on changes to strategy are being contemplated. With the stalled economic growth we are currently experiencing, another evolutionary step may soon be coming in regard to board involvement in strategy.”?METHOD FRAMEWORKS via BOARDSPAN
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