Corporate governance - Vigil

According to the Financial Times, “[p]ension funds and retail investors have complained for years over their lack of ability to vote at annual meetings when using an asset manager.” Last week, BlackRock, the largest asset manager in the galaxy with $9.5 trillion under management, announced that, beginning in 2022, it will begin to “expand the opportunity for clients to participate in proxy voting decisions.” BlackRock said that it has been developing this capability in response “to a growing interest in investment stewardship from our clients,” enabling clients “to have a greater say in proxy voting, if that is important to [them].”    BlackRock will make the opportunity available initially to institutional clients invested in index strategies—almost $2 trillion of index equity assets in which over 60 million people invest across the globe. It is also looking at expanding “proxy voting choice to even more investors, including those invested in ETFs, index mutual funds and other products.” Will this be a good thing? 

David Card, a Canadian economist whose groundbreaking research challenged conventional wisdom on a number of labour issues, has won this year’s Nobel Memorial Prize in Economics.

Global supply-chain bottlenecks are feeding on one another, with shortages of components and surging prices of critical raw materials squeezing manufacturers around the world.

The supply shocks are already showing signs of choking off the recovery in some regions.

Emerson Electric Co. plans to merge two of its software businesses with Aspen Technology Inc. in a roughly $11 billion deal aimed at capturing growing demand for industrial technology.

The Rogers Communications Inc. board of directors will meet next week to discuss chair Edward Rogers’s future interactions with the company’s management in light of Mr. Rogers’s thwarted attempt to oust the telecom giant’s chief executive, says a source familiar with the plans.

The board meeting is planned for the week of Oct. 18, according to the source, who The Globe and Mail is not identifying because the person is not authorized to speak publicly about the matter. Rogers is scheduled to release its third-quarter results that week, on Oct. 21.

Henry Kravis and George Roberts are stepping down as co-chief executive officers of KKR & Co., as the founders of the seminal private-equity firm become the latest to pass the torch to handpicked successors.

This heightened level of uncertainty changes the way boards and CEOs should view, and prepare for, crisis management. During the past year and a half, boards have stepped up to the plate in addressing the pandemic with increased attention to the areas that mattered most, holding special meetings, receiving frequent briefings, and making the physical, emotional, and financial health of employees a top priority. Despite these efforts, a year-end survey of over 550 C-suite executives found that only 30 percent say their board is able to respond well in a crisis.

With shareholders getting more aware and exercising their rights guided by proxy advisory firms, more than 72 corporate resolutions were rejected by them between March 2020 and September 2021.

Corporate advisory firms believe the trend is likely to continue in future with minority shareholders becoming more aware in raising questions.

As much as agility and dynamism is important for overall corporate success, it is not going to be accomplished without the same traits being cultivated at the top most level of the business as well – the corporate boards. Whilst investors and analysts alike consciously evaluate the quality of management before investing in a company, only a few go to the extent of evaluating the quality of the apex steering unit of a company – leadership, steering and composition of boards are increasingly seen as fundamentally important by institutional investors in a vast majority of developed markets.   

Security pros may not think of the boardroom first when considering how to improve cyber security and better manage cyber resilience. However, board members can use their considerable power and experience to become a great asset to an organization’s overall cyber security posture.

Given the continuing occurrence of costly data breaches, boards know they must take more responsibility to protect their organizations against financial and reputation loss as a result of cyber security failures. Boards can help in threat defense by doing the following: adopt better practices in risk reporting and analysis; seek informed external opinion; and support the use of the most advanced technology to accurately assess their organization’s cyber resilience.

Richardson Wealth Ltd.’s vice-chair Dean Manjuris has departed the company after only five months in the newly created position.

Mr. Manjuris, who joined the company on May 3, resigned from his position earlier this week, according to an internal memo obtained by The Globe.

Within the consumer industry, mega-cap (>$70B market cap) and large-cap ($20B to $45B market cap) companies show varying degrees of conformity in corporate governance practices. Notably, slight differences between mega-cap and large-cap consumer companies exist regarding board composition, committee structure, diversity, shareholder rights, shareholder composition and corporate disclosures.

In regard to board composition, mega-cap consumer companies have less board refreshment, greater recruitment of board members with consumer or retail industry knowledge, and greater likelihood of having separate CEO and Chair positions when compared to large-cap consumer companies.

With the rapid rise in circulation of stablecoins over the past couple of years, central banks have stepped up efforts to explore their own stable digital currencies.

Hasbro said that its board of directors has reappointed Edward Philip as lead independent director, and Tracy Leinbach to chair the board’s Nominating, Governance and Social Responsibility Committee.

The Nobel Prize in Economic Sciences was awarded to David Card, Joshua D. Angrist and Guido W. Imbens for their work on natural experiments, in particular their contributions to better understanding how the job market works.

Blackstone Inc. plans to invest $1 billion in acquiring music rights and managing catalogs, a move the asset manager said will benefit from the rapid growth of online streaming.

The investment will come as part of a partnership with an advisory firm affiliated with Hipgnosis Songs Fund Ltd., a music-investment company that trades on the London Stock Exchange. Hipgnosis, led by former pop-star manager Merck Mercuriadis, buys artists’ song catalogs and earns revenue when the music is streamed online or used in movies or advertising.

Since 2020, the number of initial public offerings (IPOs) by Special Purpose Acquisition Companies (SPACs) has outpaced the number of traditional IPOs. SPACs are blank-check companies that raise capital from investors with the intent of finding a private target to merge with, effectively taking it public through a process known as a de-SPAC merger. For private firms, one of the benefits of going public through a de-SPAC merger rather than a traditional IPO is the ability to provide forward-looking statements. Under the Private Securities Litigation Reform Act of 1995, public companies are provided qualified safe harbor from liability for forward-looking statements, provided they issue appropriate cautionary language. However, given skepticism of the information integrity of private firms, Congress excluded IPOs from the safe harbor. Thus, SPACs provide private firms an alternate route to going public that permits disclosure of forward-looking information without facing an increase in litigation risk.

It’s clear that corporate boards have a lot on their plate. From climate change to cybercrime, there is no shortage of emerging risks that demand directors’ attention. How can boards best oversee these matters while balancing existing obligations? Could a new committee be the solution?

How you answer that question depends on your own company and board’s unique circumstances. But before making a decision, there are some universal considerations that every board should think over. Creating a committee can signal that directors are taking the issue it will focus on seriously, but it’s not without its costs. Before moving ahead, it’s wise to put all the options on the table.

The key to maintaining a healthy board-CEO relationship, whether you’re dealing with needy shareholders or an external economic shock, is an emphasis on transparency and mutual respect.

“More transparency means more trust between the board and the CEO, and less transparency means less trust,” says William Klepper, author of The CEO’s Boss: Tough Love in the Boardroom and a management professor at Columbia Business School. “You want to trust one another, and that means being transparent, not only on financial matters, but on non-financial matters as well.”

Zuckerberg has veto power over investors thanks to Facebook’s share class structure.

Being a CEO comes with immense responsibility and pressure to succeed. Like most of us, if a CEO tries to focus on too many things at once, they can make mistakes without realizing it. Unfortunately, the missteps of a chief executive can have a more profound impact across their organization than those of other staff members. While a CEO may possess the vision and talent to run a business, they also have inevitable blind spots that can lead them to make poor decisions.

Thankfully, there are ways to prevent similar issues from arising again in the future. To help chief executives uncover and address their own blind spots, 14 members of Forbes Coaches Council share some common mistakes they’ve observed CEOs make and actions they can take to improve their leadership.