Corporate governance - Vigil

À 6 contre 3, les juges du plus haut tribunal des États-Unis concluent que la loi fédérale interdisant la discrimination fondée sur le sexe protège également les employés LGBTQ. La Cour suprême a estimé que la loi sur les droits civiques, qui interdit la discrimination basée sur le sexe, s'applique également aux personnes de la communauté LGBTQ. Celles-ci ne peuvent donc pas être congédiées en raison de leur orientation sexuelle ou de leur identité de genre. Neil Gorsuch, nommé par le président Trump, de même qu'un autre juge de la mouvance conservatrice, le juge en chef de la Cour John Roberts, se sont joints aux membres plus progressistes du tribunal. Il est impossible de discriminer une personne parce qu'elle est homosexuelle ou transgenre sans la discriminer en fonction du sexe, a écrit le juge Gorsuch, qui a rédigé l'arrêt. L'administration Trump s'était rangée du côté des entreprises qui avaient congédié leurs employés.

Using the courts to punish shareholders for disclosure breaches that also hit share prices is double jeopardy and lets boards and management off the hook. Class actions enable a group of individuals who have suffered similar losses to band together and share the costs of legal action in pursuit of compensation that would otherwise be infeasible. Litigation funders further facilitate that process through fee structures that link remuneration to outcomes achieved. Shareholder v shareholder: the danger of shareholder class actions is they place existing investors in double jeopardy. In this way, the imbalance in financial resources between individual claimants and large defendants that would otherwise inhibit the former taking legal action because of the costs and risks involved, is significantly reduced. If successful, claimants can expect to be compensated for loss or hurt at the expense of those whose actions were responsible. [...] But shareholder class actions are an entirely different kettle of fish. These generally involve as plaintiffs a group of investors who purchased a company’s shares on the stock exchange over some period when the company knew, but had not publicly disclosed, some negative information about itself. [...] The fallacy involved in permitting such shareholder class actions is easily seen. It is the previous shareholders who sold their shares to the “new” shareholders who benefited from the sale at an inflated price. They are no longer shareholders (or have a lower stake) in the company. Unfortunately, it is probably impossible to design a system where compensation of the new shareholders is funded by “clawing back” funds from that group of sellers! [...] So what underpins this ludicrous situation of allowing such shareholder class actions? It would appear to reflect an idealised model of public company governance which is far divorced from reality. In that model, shareholders and management are one and the same, or management simply implements decisions made by the shareholders. In that idealised model (perhaps relevant in early corporate history or where there is a dominant, controlling, shareholder), allowing such actions which penalise those shareholders can make some sense.

OTTAWA — Unclear rules in Canada around intellectual property have given aggressive actors like China backdoor access to sensitive national security assets, two technology experts warned, as concerns run high over the threat of foreign takeovers. Jim Balsillie, former Blackberry head and chair of the Council of Canadian Innovators, told a House committee on Monday that current foreign investment rules fail to properly account for new technologies and IP rights, and “profoundly” need a rethink in an increasingly digital economy. Balsillie said Ottawa has for years scrutinized foreign takeovers based on the value of the deals, or according to vague “strategic interest” outlines, while allowing foreign governments access to critical research and intellectual property — a move he said is “akin to putting an additional bolt lock on the front door, while advertising that our screen door on the side is open.” The House of Commons industry committee is studying potential changes to the Invest in Canada Act amid heightened concerns around foreign takeovers. Some experts last week warned the committee against a unique threat posed by Chinese state-owned enterprises, which can be used to advance the geopolitical ambitions of the country. [...] Some experts last week warned that defining strategic industries or technologies could prove difficult, as reasons for the justification would be nearly impossible to prescribe. [...] “Everybody would want their industry to become strategic,” Patrick Leblond, professor of international affairs at University of Ottawa, told the committee last week. “It is difficult to distinguish what constitutes a strategic industry.”

Until fairly recently, activist hedge fund Elliott Management’s core technology investing strategy was pretty straightforward: Target a smallish company known for selling software to businesses, agitate for a sale -- sometimes by offering to buy the company -- and profit when a buyer came along. Some of the targets were well-known within particular tech sector niches, like BMC, Novell and Informatica, but none were giants or household names. Elliott, founded by billionaire Paul Singer, notched sale after sale, reaping gains from the associated premiums on the acquisitions. Its track record gave Singer a reputation among CEOs and board members as the world’s most feared investor. Former AthenaHealth CEO Jonathan Bush, whose company was targeted by Elliott in 2017, described doing research on Elliott as ’googling this thing on your arm and it says, ‘You’re going to die.’” The New Yorker called Singer a “doomsday investor,” highlighting a series of unflattering tactics taken by one of Singer’s top lieutenants, Jesse Cohn, to oust Bush from his role. But in the past few years, a gradual but noticeable transformation has taken place at Elliott: The technology targets have gotten bigger. [...] Finding suitable software targets has also become more difficult as multiples have expanded, companies have consolidated, and management has become more sophisticated. [...] The bigger targets have required the firm to adjust its tactics. Elliott has had to be more collaborative, working with companies that have no obvious buyers given their size.

The lockdowns European countries imposed when the COVID-19 pandemic hit have caused supply-and-demand shocks in all industry sectors. In response, governments have launched lifeboats, such as loan guarantees, and value transfers, which include income support and exceptions to social-security contributions. Loan guarantees form the backbone of fiscal measures in Europe, accounting for at least 69 percent in each of the five largest economies (Exhibit 1). While the measures are unprecedented in scale, so is the value at stake. According to the McKinsey Global Institute, the difference between a weak and strong recovery in the eurozone could be as much as €1.7 trillion. To improve the chances of making a strong recovery, European governments must allocate resources in the best possible way. In this article, we argue that for some sectors, this will mean focusing on navigating safely through the COVID-19 crisis. However, for others—such as those that were already in structural decline and were then badly hit by the crisis—it will mean catalyzing structural change and preparing for restructuring.

Despite recent challenges, venture capital firms are still seeking out investment opportunities across the country. Since our last analysis of most active VCs in January 2020, we've seen shake-ups across 10 states. Our graphic maps out the most active VC investor in every US state. Although startups based in California, New York, and Massachusetts have traditionally accounted for the majority of VC tech investment in the US, VCs are spurring other hotbeds of innovation across the country. The Covid-19 pandemic put a dent in VC deal activity during Q1’20, while investors cut fewer but larger checks, with funding up 14% quarter-over-quarter. Using CB Insights data, we analyzed the most active venture capital firms investing in tech startups in every US state.

By the time eight-year-old Lee Ji-ho is bundled out the door for his one day a week of in-class schooling, his mother has already completed an online form detailing his temperature, any signs of a cough or other respiratory complaints, and whether any family members have recently arrived home from overseas or are in quarantine. Once at school in Seoul’s Seocho district, he sits metres apart from classmates and is instructed not to talk to friends — not even during lunch, where instead he eats in solitude, separated from the other children by a plastic divider. The rigour faced by the young Ji-ho and his parents is just one example of an ever-expanding series of guidelines, rules and regulations imposed on a country of 52m by health officials desperately trying to avoid fresh waves of coronavirus. It is more than three months since South Korea’s coronavirus infection rate peaked. In that time political leaders and health experts around the world have credited the government of President Moon Jae-in for teaching important lessons in the swift deployment of mass testing and aggressive contact tracing to counter what was for a time the worst Covid-19 outbreak outside of China.

Companies and their boards are largely facing reopening decisions alone, and their decisions in the coming weeks and months will be fundamental to the companies’ survival. Akerman LLP’s Bill Ide gives boards four important steps to take now to build the stakeholder trust, which can inoculate them from being viewed as responsible for their stakeholders’ health and economic misfortunes. Government committees, whistle blowers, the plaintiffs’ bar, activists, customers and special interest groups all appear to be readying to assail company boards, for failing the public trust. It also appears inevitable that unemployment will continue to rise and vitriolic public elections in the fall of 2020 will fan the flames of public anger, which will predictably spill over into calls for more accountability of companies and their boards. It is with this backdrop that the country is now looking to reopen. With inconsistent and often vague guidelines being provided by various levels of government, companies and their boards are largely facing reopening decisions alone. The decisions that they make in the coming weeks and months will be prove to be fundamental to the company’s survival. [...] Companies and boards who are viewed as having not done the right thing will be prime targets for opportunists. Boards should take four important steps now to ensure to build the stakeholder trust that can inoculate them from becoming a target.

The world's largest proxy adviser has advised Tesla investors should vote against the re-election of its Australian chairwoman Robyn Denholm, citing high compensation for board members as well as billions of dollars worth of shares board members have pledged as security for personal loans. Tesla under Ms Denholm's stewardship has failed to give reasonable rationale for consecutive years of high director pay, Institutional Shareholder Services said in a report ahead of the electric carmaker's shareholder meeting on July 7. Ms Denholm, and company founder and chief executive Elon Musk are two of the three directors facing re-election at the meeting. [...] "The increase in pledging activity at the company with the absence of a clear rationale and lack of a more robust anti-pledging policy call into question the audit committee's ability to effectively oversee risk," ISS researchers led by Robert Kalb wrote in the report. Denholm, 56, serves on all of the board committees and chairs the audit committee. The recommendation against Ms Denholm is a setback to Tesla - one of the most polarising companies on the US stock market - following internal and external efforts to improve the company's governance. Last year, the carmaker announced several longtime directors who are close to Musk would leave the board, and board members' terms would be shortened to allow shareholders to vote more regularly on their re-election. [...]  Ms Denholm is also a member of the board's compensation committee, which ISS criticises over how much money was awarded to directors last year. The company paid $US7.4 million ($10.6 million) to Kathleen Wilson-Thompson, $US5.9 million to Larry Ellison, $US2.7 million to Denholm and $US1.2 million to Steve Jurvetson. [...] Her shares and options are estimated to have a value of $US125 million. "These amounts are considered to be significant outliers" compared with directors at other companies, ISS researchers wrote.

Corporate boards forced to move meetings online during the coronavirus pandemic are trying to guard against cyberattacks with secure communication platforms and instructions for members on notetaking and eavesdropping. Boards are gravitating to platforms such as Cisco Systems Inc.'s Webex, LogMeIn Inc.'s GoToMeeting, and Microsoft Corp.'s Teams, according to directors and consultants. Nasdaq Inc. has added 2,000 customers over the past few months for its board platform that offers secure messaging and presentation aids, the company said. The move has forced corporate leaders, often better at networking in-person than virtually, to burnish their technology skills. “Everybody’s online now, including the board,” said Bob Zukis, CEO and founder of the Digital Directors Network, which advocates for corporate governing bodies to add technology experts to their ranks. Boards are building security into online meetings because the items they discuss, like layoffs and government loans, make them attractive targets for hackers. That’s driving demand for digital portals such as Nasdaq’s and one from Diligent Corp., which offer secure means for discussions and document sharing compared with more-easily-compromised apps. [...]  Directors participating in board meetings from their homes have to worry about a threat the boardroom didn’t present—eavesdropping. [...] The virus has been “a wakeup call” for boards to evaluate their makeup and consider adding at least one member with high-tech expertise, said Kelly Bissell, who leads Accenture Security globally. [...] Some directors are avoiding online platforms they view as having insufficient security protections, such as Zoom Video Communications Inc. Organizations, including Elon Musk’s SpaceX and Tesla Inc. and New York City’s Department of Education, banned usage of Zoom early during the pandemic because of privacy flaws the video platform has since pledged to resolve.

Many employees at New York City hedge funds and other investment firms are now scattered around the region, working from home. Some view that as an opportunity to avoid a New York City tax, tax specialists say. The city’s 4% unincorporated business tax raises about $2 billion a year for the city by taxing investment-fund managers, law firms and other individually owned businesses, based on the portion of sales or services performed within the city. As employees sheltered at homes in the Hamptons or in the suburbs, a group of hedge funds and other investment-management firms have begun using apps to track where their New York-based employees are working day to day. Their goal is to show that a large portion of the fees paid to investment managers were for services performed outside the city and therefore not subject to the city tax. The city is already forecasting a $359 million decline in collections of the unincorporated business tax compared with the $2.14 billion in last year’s budget, without taking into account actions of companies looking to shift accounting of sales outside the city.