Corporate governance - Vigil

A mass corporate switch in Europe to holding virtual annual shareholder meetings, or AGMs, has picked up pace this year, raising concern among investors that some companies will try to ditch the physical version permanently. The pandemic prompted an overhaul of the way companies meet investors, with those in Britain relying on emergency laws to allow them to hold online AGMs in the 2020 season. But in the second year of the pandemic, there are concerns that permanently virtual meetings could limit investors’ ability to hold executives to account. From January through July, 40 per cent of AGMs globally were fully virtual, compared with 27 per cent in the whole of 2020, data from Computershare showed. [...] Tactics included requiring questions to be submitted in advance, cherry-picking which were answered, stopping follow-up questions and limiting the time for questions.

[...] None of the Berkshire attributes that can be judged as ESG favorable was a factor for BlackRock, the world’s largest asset manger and the biggest force in ESG investing, when it came time to vote in the just-passed proxy season. BlackRock voted against two Berkshire directors — the directors of its audit and governance committees. And it voted with shareholders on requirements that the company produce a climate report and its holding companies produce diversity reports. BlackRock singled out Berkshire Hathaway — a step it takes with only a select group of companies in its annual investment stewardship report — as a company that left it with no choice but to vote against management. “Berkshire Hathaway has a long history of strong financial performance; however, we had concerns related to our observation that the company was not adapting to a world where sustainability considerations are becoming material to performance. For several years BIS attempted to engage with Berkshire Hathaway, but our requests for direct dialogue were not granted,” BlackRock wrote in the report.

Canadian Pacific made a new, higher offer on Tuesday to buy Kansas City Southern worth about $31bn, including debt, reviving its takeover battle for the US freight railroad with arch-rival Canadian National. The CP board increased its cash-and-stock bid to $300 a share, up from an earlier offer of $275. Under the new proposal, KCS shareholders would receive 2.884 CP common stock and $90 in cash for each of their shares. The new offer comes less than two weeks before shareholders of KCS will be called to vote on a previous merger agreement with CN. CP had agreed to purchase KCS in March, but CN gatecrashed the deal with a cash-and-stock offer worth about $320 a share at the time the target’s board approved it in May, valuing the company at about $34bn, including debt. CN’s share price has since fallen about 5 per cent, reducing the overall value of the transaction. CP refused to enter a bidding war at the time. However, it has reconsidered its position because it believes that CN’s agreed merger plan is unlikely to win regulatory approval. [...] Institutional Shareholder Services, the world’s largest proxy adviser, said that KCS shareholders should vote in favour of the deal because they would still stand to cash in on the termination fee from CN, worth $1bn, if the deal was blocked by regulators.

On August 6, 2021, the U.S. Securities and Exchange Commission approved new listing rules regarding board diversity and disclosure, described in our prior Client Alert. The new rules will require a Nasdaq-listed company to have at least two diverse directors (including at least one woman and at least one member of an underrepresented community) or the company will have to explain why it has failed to do so. Subject companies will also be required to disclose board diversity on an annual basis in a prescribed tabular format. The SEC also approved the implementation of a board recruiting service portal that will allow certain Nasdaq-listed companies to access a network of diverse candidates. New Rule 5605(f) generally requires companies listed on Nasdaq’s U.S. exchange to have at least two diverse directors, including:

• One self-identified woman director
• One director who self-identifies as an underrepresented minority (defined below) or as LGBTQ+

If a company does not satisfy both of these criteria, the company must:
Specify the particular aspect(s) of board diversity it fails to satisfy

• Provide the reasons why it does not have two diverse directors
• Such disclosure must be provided in advance of the company’s next annual meeting of shareholders in its proxy or information statement (or Form 10-K or 20-F, if it does not file a proxy) or on its website. 

An expert group examining the cause of a $1.4 billion cost overrun at a giant copper mine run by Rio Tinto RIO +0.28% PLC in Mongolia said in a report that it was caused by mismanagement and not the unfavorable rock conditions blamed by the world’s second-largest miner.

First increase in food insecurity in Europe and North America since UN data began in 2014

Exxon Mobil Corp. was suspended from the Climate Leadership Council, a pro-carbon tax group backed by conservation groups and some of the world’s biggest corporations.

Nasdaq-listed companies will be required to have diverse boards after a divided Securities and Exchange Commission approved the US stock exchange’s unprecedented proposal.

Lorena Jonas has spent the past eight years fighting landlord rent rises in her trendy Berlin district. Her latest battle, though, could affect not just her neighbours but hundreds of thousands of tenants across the city. Jonas is involved in a radical campaign urging Berlin’s city government to expropriate 240,000 properties from Germany’s biggest publicly listed residential landlords, accusing them of squeezing out lower income, long-term residents through shoddy maintenance and jacked-up rents. After collecting more than 350,000 petition signatures, their proposal — which targets corporate landlords with more than 3,000 apartments each — will be voted on in a local referendum in September. Polling suggests nearly half of Berliners support expropriation, which would force the companies to sell their properties to the city government at a “fair” price. “What does it mean that my flat is now a commodity on the stock market, where the goal is to draw as much profit as possible for shareholders?” said Jonas, who lives in a property in Kreuzberg owned by Berlin’s biggest listed landlord Deutsche Wohnen, the main target of the campaign. “These questions are now resonating across Berlin, and beyond.”

[...] Satellite internet is not a new idea. But it is another technology that Mr Musk thinks he can improve. Existing internet satellites fly at high altitude, to maximise coverage. The drawback is that many customers must share a single satellite, limiting capacity. And the time taken for radio signals to travel to high-flying satellites adds unavoidable, and irritating, delays. At the moment satellite internet is usually a last-resort option when nothing better is available—in remote rural areas or on ships at sea, for instance. Starlink hopes to fix those problems by using its cheap rockets to put thousands of small, cheap satellites in low orbits. In the first quarter of 2021, SpaceX launched more objects, measured by mass, into orbit than every other rocket operator combined, says Mr Potter. Starlink’s 1,500-odd existing satellites already account for around a quarter of all those in orbit. SpaceX has firm plans for over 10,000 more, and has filed paperwork for up to 42,000—more than four times as many satellites as have been launched since the start of the space age.

Tobacco giants are counting on sales of noncombustible products to replace carcinogenic smokes. Government duties will influence how quickly that happens.

Two other employees resign, according to CEO’s memo, after woman’s allegations were shared across Chinese social media

Certain sorts of pledge are far less bold than they first appear

Nasdaq-listed companies will be required to have diverse boards after a divided Securities and Exchange Commission approved the US stock exchange’s unprecedented proposal. The SEC on Friday signed off on Nasdaq’s proposed listing rules, which would require companies to disclose consistent diversity statistics for board directors and have two diverse directors — including one who identifies as female and one who identifies as an under-represented minority or lesbian, gay, bisexual, transgender or queer. If companies do not meet that quota, they will have to explain why. Companies will need to publish board diversity information starting next year, and the diverse director rules will be enforced 2-5 years from now, depending on the size of the board. Companies with five board members or fewer will only need to have one diverse board member, Nasdaq said. Foreign companies will also be offered some flexibility.

The SEC on Friday approved Nasdaq’s push to require race and gender disclosures in its listing rules.

Combining the staffs of the two bodies “will be critical during the creation of the new self-regulatory organization and investor protection fund, and will be crucial to their future success,” Louis Morisset, the chair and president of Canadian Securities Administrators, said in a statement.