Corporate governance - Vigil

If an average American decided that last month was high time to buy a new sofa and then spent his evenings drinking beer on it, he would have been lucky. Both the furniture and the brew cost a little less than a few weeks earlier. Unfortunately, that same American may have been painfully aware that just about everything else—his rent, the petrol for his car, his food and even that new leafy plant next to the sofa—cost a fair bit more. The best level for inflation, economists joke, is when people do not notice it. In America it is becoming very noticeable. In October the consumer-price index rose by 6.2% compared with a year earlier, the highest rate in more than three decades

Strategic risk is occupying more of board directors’ time and headspace than ever. The need to identify and tackle the significant risks your organization faces is a priority action for all directors. To do this effectively, you need a thorough understanding of strategic risk, what it is and how you can respond to the strategic threats you face.

You need to understand the latest approaches to strategic risk management and the board’s role in creating a strategic risk management plan. Here, we explore the essentials of strategic business risk.

A simmering Tokyo legal battle could embolden Japan Inc to hang on to cross-shareholdings as a defence against hostile takeovers, a setback for corporate governance reforms championed under former Prime Minister Shinzo Abe.

Last week, ISS released for public comment its proposed benchmark policy changes for 2022. If adopted, the proposed policy changes would apply to shareholder meetings held on or after February 1, 2022. The proposed changes for U.S. companies relate to board diversity, board accountability for unequal voting rights, board accountability for climate disclosure by high GHG emitters and say-on-climate proposals.

China and other big polluters are resisting a push to bring forward the submission of new emissions targets to the UN as negotiations enter the final stretch of the COP26 summit.

Boeing Co. on Wednesday agreed to acknowledge liability for compensatory damages in lawsuits filed by families of the 157 people killed in the 2019 Ethiopian Airlines 737 MAX crash, according to a filing in U.S. District Court in Chicago.

As a result of the agreement between Boeing and the families, lawyers for the victims will not seek punitive damages and Boeing will not challenge the lawsuits being filed in Illinois.

Federal prosecutors in New York charged a former McKinsey & Co. partner with securities fraud for allegedly trading insider information related to Goldman Sachs Group Inc.’s acquisition of specialty lender GreenSky Inc. 

As with other matters, the role of the board of directors regarding environmental, social, and governance (“ESG”) issues is that of oversight. ESG encompasses a broad set of issues, ranging from human capital and compensation issues, to climate change, deforestation, and water and waste management, to supply chain management. Some of these issues are interrelated, and many are continually evolving.

Finnish food delivery startup Wolt Enterprises Oy built a thriving business focusing on mid-tier markets since its launch in 2015. On Tuesday, its surprise sale to DoorDash Inc. gave the company a top level exit.

The UK plans to scale back corporate governance and audit reforms after a fierce backlash from business over the costs of proposed boardroom rules.

Officials are close to finalising a reform package that will mark the largest overhaul of British audit and corporate governance for generations following high profile scandals, including at outsourcer Carillion and retailer BHS.

Taiwan Semiconductor Manufacturing Co. and Sony Group Corp. said they would build a $7 billion chip plant in Japan in a bid to ease the strained global supply chain for semiconductors.

Barclays PLC’s new chief executive made a slew of executive appointments, putting his stamp on the bank after his predecessor, Jes Staley, resigned last week over how he described his interactions with convicted sex offender Jeffrey Epstein.

C.S. Venkatakrishnan took over leadership of the London-based lender vowing to build on Mr. Staley’s strategy of expanding both retail banking operations in the U.K. and a trans-Atlantic investment bank that includes the former U.S. operations of Lehman Brothers.

Institutional Shareholder Services (ISS) recently released its proposed voting policy changes for the 2022 proxy season and has invited comments from issuers, shareholders and other market participants. The proposed changes focus on climate, board diversity and uneven voting rights in multi-class share structures. Final voting policies are expected to be released shortly following the end of the comment period on November 16, 2021, and final policies would generally apply to shareholder meetings held on or after February 1, 2022. The proposed changes follow the release of ISS’s 2021 Global Benchmark Policy Survey and its inaugural 2021 Global Policy Survey on climate. The surveys’ findings had led to expectations of more significant policy revisions for the U.S. market that reached environmental, social and governance (ESG) performance metrics in executive compensation, racial equity audits and virtual-only meetings, among other topics.

Relevant crisis management skills can’t be read about in a book. Corporate board members develop them in unforeseen but unique situations that test business leaders’ reputation, along with financial health, culture, and the overall resilience of their organizations. Unwelcome media attention increased stakeholder and community interest, regulatory and governmental actions and/or sudden CEO succession will often come hand-in-hand with these crises.

More Canadian companies are self-reporting allegations of bribery and corruption to the RCMP to avoid criminal prosecutions that could land executives in jail and damage their businesses.

RCMP Inspector Denis Beaudoin of the National Division Sensitive and International Investigations unit said Canadian companies are taking advantage of a 2018 Criminal Code amendment that could allow them to pay financial penalties rather than face trial and potential conviction under the federal Corruption of Foreign Public Officials Act.

Many public companies conduct periodic corporate governance reviews as they prepare for year-end, preferably on a “clear day” where the absence of a threat can support a lower standard of judicial scrutiny for bylaw changes. 

New research reveals how US public companies have been leveraging disclosure committees to address ever-evolving disclosure requirements.

As Larry Culp revealed his plan to break GE into three on Tuesday, he closed a defining chapter in US corporate history, signalling how far from favour the conglomerate business model has fallen.

General Electric Co., the company that for more than a century stood as a beacon of U.S. manufacturing might and management prowess, will split into three public companies, drawing the curtain on an era of modern business—the dominance of industrial conglomerates.

The decision, announced Tuesday by Chief Executive Larry Culp, ends the myth that GE wielded a magic touch to run companies better, and make everyone richer, through its management of varied enterprises around the world.

Today, a climate of dynamic, shifting expectations among investors is changing the corporate landscape. Investors are stepping up their engagement and raising their voices through policy and voting as they seek to influence corporate policies, mindsets and activities.

In doing so, investors risk confusing companies with a wide range of voices: those looked at as part of this research have adopted their own unique fashion, have issued policies and guidelines that diverge significantly from each other. This depends to some degree on the profile of the institutional investor, their geographic location, and the laws and regulations applicable to them.

Overconfidence is prevalent among corporate executives, and a number of academic studies have blamed overconfidence for distorting executives’ investment and merger decisions. Traditionally, these studies have measured overconfidence using executives’ personal option holdings, using the so-called Longholder measure that was introduced in a seminal study by Ulrike Malemendier and Geoffrey Tate. However, no direct link has been drawn between overconfidence as a psychological trait and the option-based Longholder measure. The findings thus could be confounding overconfidence with other personality traits correlated with but different from overconfidence. It is also possible that the executives’ option holdings are rational, for example capturing a response to governance constraints on executive compensation or private information, rather than reflecting overconfidence.

“The worst case (with dual-class shares) is what we see at Rogers now,” said François Dauphin, chief executive of the Institute for Governance of Private and Public Organizations in Montreal.

But even these scenarios don’t often cause investors to balk at putting money behind companies with dual-class shares because the structure is so common, especially at top-earning companies, he said.

One of Asia’s most aggressive activist funds has resorted to a high-profile online campaign to disrupt a buyout deal involving Goldman Sachs, Japan’s biggest energy group and an 87-year-old construction company.

Oasis, a Hong Kong-based hedge fund, has launched a website which lists a personal email address and other contact details of the head of business planning at Nippo Corporation, encouraging would-be bidders to make a takeover offer for the construction group.

Rogers Communications Inc. has withdrawn its court challenge of a boardroom makeover by Ed Rogers that has divided the board, pitted him against his family and complicated a pending $16 billion takeover.

The company said late Sunday night that it is no longer planning to appeal a court ruling by a Canadian judge Friday that approved Mr. Rogers’s bid to reconstruct the board at the company, one of Canada’s biggest wireless and cable-television providers.