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SAO PAULO/NEW DELHI/PARIS (Reuters) - Aircraft makers are circling Brazil’s Embraer (EMBR3.SA) weeks after Boeing (BA.N) ditched plans for a historic commercial aviation tie-up, people familiar with the matter said. Boeing axed plans to buy 80% of Embraer’s commercial unit in April, ending a planned move into regional jets that mirrored rival Airbus’ (AIR.PA) purchase in 2018 of a competing model developed by Canada’s Bombardier. China’s state-owned COMAC planemaker has voiced informal interest in co-operation with the world’s third-largest jetmaker, two of the people said. Russian aircraft manufacturer Irkut has also explored the issue, two others said, though the company denied any current interest. India, another rising aerospace power focusing mainly on defence but with a huge civil market, has informally conveyed interest at government level while still studying the matter, sources said. That places Embraer’s fate at the centre of the so-called BRIC group of nations, with each honing aerospace strategies as Airbus (AIR.PA) and Boeing (BA.N) reel from the coronavirus crisis.
Toronto – A Canadian leader in corporate governance, Peter Dey, has been appointed as an Executive-in-Residence at the University of Toronto’s Rotman School of Management. He joins the Rotman School to co-chair a project revisiting the guidance for good governance in the light of 21st century realities and the global COVID-19 pandemic. The project will examine global best practices for corporate boards through a review of scholarly research, research roundtables, debates and stakeholder consultations. This project is sponsored by the Rotman School’s Michael Lee-Chin Family Institute for Corporate Citizenship. The project will be co-chaired by Prof. Sarah Kaplan who has been appointed a Fellow of the Lee-Chin Institute. She is currently Distinguished Professor and Director, Institute for Gender and the Economy at the Rotman School. Her latest book, The 360º Corporation: From Stakeholder Trade-offs to transformation addresses the social impact of business and how corporate social responsibility can be a source of innovation and resilience.
The CEO of SoftBank’s ailing Vision Fund, Rajeev Misra, is to be paid 1.61 billion Japanese yen ($15 million) this year, according to a notice SoftBank sent to its shareholders on Friday that was cited by multiple reports out of Japan. The total package is 113% more than Misra received in the last fiscal year, when he took home around $7 million. Misra’s base pay for the year now stands at 1.42 billion yen ($13.2 million), with the remainder being described as “other” pay. It means the former Deutsche Bank debt trader is the second-highest paid SoftBank employee, behind Marcelo Claure, the former chairman of U.S. telecoms firm Sprint, who is on $19.6 million. SoftBank’s billionaire founder and CEO Masayoshi Son has seen his pay fall 9% to $1.9 million.
Big technology companies are hunting for deals at their fastest pace in years, racking up acquisitions and strategic investments despite increased regulatory scrutiny during the coronavirus-led market turmoil. Alphabet Inc., Amazon.com Inc., Apple Inc., Facebook Inc. and Microsoft Corp. have announced 19 deals this year, according to Refinitiv data from May 26, representing the fastest pace of acquisitions to this date since 2015. The Financial Times on Tuesday reported Amazon was also in advanced talks to purchase the self-driving car company Zoox, which was valued at US$3.2 billion two years ago. Meanwhile, Facebook in March announced its largest international investment yet, purchasing a US$5.7 billion stake in the juggernaut Indian telecoms operator Reliance Jio.
On 20 May 2020, the U.K. government published the Corporate Insolvency and Governance Bill (the bill), which includes measures designed to help businesses through the COVID-19 pandemic and features important substantive reforms to U.K. restructuring law, whose introduction has been accelerated by the crisis. The key temporary measures introduced by the bill are: (1) Statutory Demands and Winding up Petitions. Creditors frequently press companies to pay debts by issuing statutory demands followed by winding up petitions. Most recently, some landlords have been pursuing this route because of the temporary ban on the forfeiture of leases introduced by the Coronavirus Act 2020. The bill prevents a creditor from issuing a winding up petition based on a statutory demand issued between 1 March and 30 June 2020.
In the middle of March, as Americans faced down a terrifying pandemic caused by a novel and poorly understood virus, only one choice felt certain, or at least safe. It was time for America’s all-purpose disaster response; it was time to stock up. But this time-honored routine was newly challenging. The broad, sterile, fluorescent aisles of supermarkets and big-box retailers suddenly felt more like viral gantlets. In some cities, lines stretched out the doors, suggesting chaos and barren shelves inside. In many states, whole categories of brickand-mortar retail were shut down, either voluntarily or by edict. It was, at perhaps more than any moment in its history, Amazon’s time to shine.
This study examines the impact of risk governance on cybercrime of selected listed firms in the Nigerian financial institutions. To achieve this, a sample size of 50 listed companies from the Nigerian financial sector was selected for the years 2013–2017, resulting in 250 observations. The study employed the use of hierarchical regression analysis to test the impact of risk governance variables (Chief Risk Officer_centrality, Enterprise Risk Management_index, Chief Risk Officer_presence, Board Risk Committee_size, Board Risk Committee_activism, and Board Risk Committee_independence) and other control variables such as corporate governance variables (Board Size and Board of Directors_independence) and firm characteristics variables (Firm size and firm age) on cybercrime. The study observed from the findings that almost all the explanatory variables present a positive and significant relationship with cybercrime, except the Chief Risk Officer_presence, firm age and Board Risk Committee_size which revealed an insignificant relationship with cybercrime. The study concludes that risk governance variables and other variables are likely to reduce and minimize the impact of cybercrime on the sampled firms used in this study.
For profit and non profit corporations are governed to benefit a corporation and its shareholders or, from the non profit perspective, its charitable purpose/members. Conflicts of interest present significant ethical hurdles for any individual sitting on the board of directors (“board”) of a for profit or non profit corporation and may violate a director’s fiduciary duties to the corporation. Conflicts of interest may also undermine the credibility of an organization or divert benefits solely to benefit an individual serving on the board rather than the corporation. Prior to onboarding a director, the corporation should have certain procedures and policies in place to avoid any conflicts of interest. New directors or long time serving directors may encounter various forms of conflicts. Some of these conflicts may not be apparent (even to long time serving directors) and may exist under circumstances where a director is using his or her best intentions.
Most now agree that we will be entering a “new normal” as we move out of the acute phase of the Covid-19 pandemic. For corporate UK, that may mean pivoted business models being made (semi) permanent and/or flexible and remote working as standard. What is less clear is how our reshaped companies will look in terms of diversity, in their staff teams overall and senior leadership teams in particular. Yet the impact of Covid-19 on diversity is vitally important not only to individuals affected, but to the recovery of firms and the economy as a whole. [...] Importantly, McKinsey’s Diversity Wins brings an improved data set (including 15 countries and over 1,000 large companies) to the body of research, including notable studies like Credit Suisse’s Gender 3000, linking diversity to better business outcomes. It doesn’t matter how you cut the data or which geographical area you look at: diverse teams deliver better results.
In a working paper just posted on SSRN, I consider whether the COVID-19 pandemic, the governmental responses thereto, and a company’s actions taken in reaction to both of these are likely to constitute a “Material Adverse Effect” (MAE) within the meaning of a typical MAE clause in a public company merger agreement. In addition to the conclusions about COVID-19 and MAEs summarized below, the paper also reviews important Delaware caselaw on MAEs, identifies open problems in those cases, and suggests a more comprehensive theory of MAEs that rationalizes the caselaw and solves most of the open problems. As to COVID-19 and MAEs, although in any particular case everything will depend on the exact effects on the company and the precise wording of the MAE clause, nevertheless because MAE definitions tend to follow common patterns, some general conclusions about typical MAE clauses are warranted, including the following:
FRANKFURT (Reuters) - Lufthansa’s (LHAG.DE) $10 billion government bailout was thrown into doubt on Wednesday after the German airline’s supervisory board refused to accept the conditions attached by Brussels. The board, which had been expected to sign off on the aid, instead refused EU requirements that Lufthansa permanently give up take-off and landing slots at Frankfurt and Munich airports, where it commands a two-thirds market share. The bailout plan nevertheless remains “the only viable alternative” to insolvency, Lufthansa said, and negotiations will continue over EU demands that would “lead to a weakening” of its airport hubs as well as its ability to repay loans. The European Commission had “no comment on the specific case”, a spokesperson said. Terms discussed with Brussels included the forfeiture of 72 slots used by 12 of 300 jets based at the two airports, a source familiar with the matter said. But whereas Lufthansa wanted to reclaim the slots after repaying aid, the Commission sought permanent concessions, the person said.
WeWork's board is set to vote on Friday to add two temporary independent directors. The duo, who bring deep business and legal expertise, would decide whether the current lawsuit against SoftBank can continue. A pair of current board members who are not affiliated with SoftBank contested the additions in court on Wednesday, arguing that the process would hurt WeWork's minority shareholders. The dispute stems from SoftBank's April decision to pull the plug on a tender offer to buy up to $3 billion of WeWork stock from investors, founder Adam Neumann, and 850 current and former employees.
The typical pay package for CEOs at the biggest U.S. companies topped US$12.3 million last year, and the gap between the boss and their workforces widened further, according to AP's annual survey of executive compensation. Median pay for CEOs in the survey climbed 4.1 per cent last year. For the typical worker at their companies, it rose 3.2 per cent. It would take two lifetimes for the typical employee at most S&P 500 companies to make what their CEO did, or 169 years, according to data analyzed by Equilar for The AP. For the first time since the AP's annual pay survey began in 2011, a woman is at the top of the list: Lisa Su of Advanced Micro Devices. She had compensation valued at US$58.5 million after guiding her company's stock to the best performance in the S&P 500 for two straight years. [...] CEOs such as Alphabet's Sundar Pichai and Intel's Robert Swan had packages that were valued even higher that Su's, but were excluded because the AP's survey looks only at S&P 500 bosses who have been in the job for at least two years, in part to avoid distortions caused by sign-on bonuses.
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A dual-class structure involves two different classes of shares with differential voting rights. This means that founders and other pre-IPO holders are able to maintain voting control of the publicly listed company through holding shares with enhanced voting rights compared to the shares held by public shareholders. For example, the shares held by founders may have 10 votes per share, while the shares held by public shareholders have one vote per share. Higher vote shares convert into low vote shares when sold, so control is held by the early holders that continue to hold shares once public.
It was a difficult question even before the coronavirus pandemic hit: When self-driving cars eventually rule the roads, will Americans own their cars or make use of ride-hailing fleets? The challenge is now threefold. Self-driving car technology had already reached a plateau, and getting to full Level 5 autonomy will be more difficult than many had thought. With the nation’s economy hobbled by the virus, investment is slowing. And to car owners, their private automobile is now a sanctuary, and it’s unclear how long that attitude will persist. [...] The question about the long-term future for the world’s cars is far from settled, and the experts (some of whom see disaster for the planet if people own autonomous cars as we own our cars now) differ sharply in their perception of where we’re heading.
Data gaps are rife, but statisticians may eventually understand better how the economy works. An air-conditioner that overheats in hot weather, or an insurance policy that fails to pay out after a natural disaster: some things do not work as expected, just when you need them most. So it is with official statistics in the pandemic. As they try to gauge the depth of the downturn, policymakers and investors are keener to pore over the latest gdp figures than ever. But estimates have rarely been as uncertain. Many economists expect the initial estimate of America’s output growth in the first quarter of 2020, published on April 29th, to be revised downwards eventually. Some of that may arrive as soon as May 28th, after The Economist went to press, when an update to the figures was due.
Reduced frequency, increased cybersecurity, and COVID-19 committees are all on the horizon for corporate boards. FEI Daily spoke with Claudia Allen, a Senior Advisor with KPMG’s Board Leadership Center, about how to reinforce the board’s cybersecurity protocols and the rise of COVID-19 committees. FEI Daily: What are the biggest challenges boards are facing today? Claudia Allen: The board is responsible for oversight. In this environment where directors can't be in the same room, one of the real issues is how they get the information they need in an efficient way -- so that they are discharging their oversight responsibility but not unduly overburdening management. Most budgets no longer are relevant because things have changed so much. So how do you forecast? How do you see where the business is going? Do you use a rolling forecast? Do you just look a couple of quarters out? It’s a very different paradigm. Directors are trying to figure out how to do this and how to support management while also being constructively skeptical and keeping an eye on the future.
The JOBS Act and Regulation Crowdfunding were intended to create a new and inclusive type of online capital market where all entrepreneurs, regardless of their physical location, gender, or anything else, can go directly to the public (the “crowd”) to raise capital for their early-stage startup companies. Has it met this goal? To answer this question, my research assistant and I created an original data set using every Form C (the official form that all crowdfunding issuers must file with the SEC) from 2016 to 2018 – roughly 1,500 filings in all. Our results are reported in a recently published article, and here are the highlights:
At the Berkshire Hathaway shareholders meeting this month, CEO Warren Buffett told a shareholder that Berkshire would certainly insure against pandemics “at the right price.” “We would have written pandemic insurance if people had come to us and offered what we thought was the right price,” Buffett said. “We would have been wrong, probably in doing it. But we have no reluctance to quote on very unusual things and very big limits — we’re famous for it.” Being open to writing pandemic insurance makes Berkshire, which owns 70 insurance companies including Geico, Gen Re, NRG, and Berkshire Hathaway Assurance, somewhat unique among insurance companies. Most insurers see this kind of insurance as too risky, and policies would be prohibitively expensive.
As Scott B. Guernsey, Saura Masconale, Simone M. Sepe, and Charles K. Whitehead write in “Banking on the Lawyers,” banks and financial institutions increasingly include lawyers on their boards of directors. In “Lawyer-Director or Director-Lawyer?: Three Paths to the Boardroom,” we follow three lawyers along their distinct career paths, observing how each found their way from practicing law to board service. In this article, we consider board service from a broader perspective in an attempt to shed light on how lawyer-directors fit into the bigger picture of a board’s needs and composition. What are companies looking for in prospective board members? What skills and approaches are particularly valuable in the boardroom? What bearing does professional background and training have on these factors? We look at these issues through a variety of distinct lenses—that of an educator, a director, and a board search firm—to explore the work and goals of boards and to consider what it means for the aspirational lawyer-director.
An examination was performed on whether director interlocks enabled the adoption of a dividend policy for the benefit of the parent company in the ownership structure. Specifically, the study investigated the dependence of the impact of the central position in the board network on the probability of dividend payment. Based on sample of firms listed on Polish capital market, it was observed that the more central the company’s position in the interlocking directorate network, the more likely it is to pay dividends to a subsidiary. This effect is related to the eigenvector centrality. The results obtained suggest that corporate financial policy can be spread across firms through the board network.
For close to 50 years, the SEC has periodically contemplated whether ESG [1] disclosures are material and should be incorporated into its integrated disclosure regime for SEC registered Issuers. [2] This recommendation asserts that the time has come for the SEC to address this issue. Addressing ESG disclosure now will (a) provide investors with the material, comparable, consistent information they need to make investment and voting decisions, (b) provide Issuers with a framework to disclose material, decision-useful, comparable and consistent information in respect of their own businesses, rather than the current situation where investors largely rely on third party ESG data providers, which may not always be reliable, consistent, or necessarily material,(c) level the playing field among all US Issuers regardless of market cap size or capital resources, (d) ensure the continued flow of capital to US Issuers, and (e) enable the SEC to take control of ESG disclosure for the US capital markets before other jurisdictions impose disclosure regimes on US Issuers and investors alike.
The United States has threatened to strip Hong Kong of the special legal status that has enabled it to remain a global business powerhouse in a move that could escalate tensions with China. Secretary of State Mike Pompeo said Wednesday that he informed the U.S. Congress of his view that in light of recent events, Hong Kong is no longer autonomous from China. Pompeo's announcement would enable Congress to end longstanding rights to freer trade and travel between Hong Kong and the U.S. that are more open than conditions applied to mainland China. "No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China given facts on the ground," Pompeo said in a statement. "Hong Kong and its dynamic, enterprising and free people have flourished for decades as a bastion of liberty, and this decision gives me no pleasure. "But sound policy-making requires a recognition of reality. While the United States once hoped that free and prosperous Hong Kong would provide a model for authoritarian China, it is now clear that China is modelling Hong Kong after itself."
[...] Reuters found 75 other companies that disclosed they are considering changes to executive pay plans in light of the pandemic’s impact on their businesses. Among them are ridesharing giant Uber Technologies Inc (UBER.N), hotel operator Hilton Worldwide Holdings Inc (HLT.N), carrier Delta Air Lines Inc (DAL.N), satellite radio company Sirius XM Holdings Inc (SIRI.O) and Thomson Reuters Corp (TRI.TO), the parent company of Reuters News. [...] Thomson Reuters said in a filing that it had approved executive performance targets in February and early March without the benefit of being able to consider the pandemic’s impact on its business, which it said it would continue to monitor and assess. David Crundwell, a vice president for corporate affairs, referred to the filing and declined to comment further. Reuters identified the companies by searching filings submitted to the U.S. Securities and Exchange Commission this year and finding those that mentioned the pandemic in the context of executive compensation. The findings are a sampling and do not include companies that may have changed executive pay without explicitly tying the moves to the pandemic. Critics say protecting executives’ pay in downturns undermines practices intended to tie compensation to shareholder returns. Nell Minow, vice chair of corporate governance consultant ValueEdge Advisors, said such plans need both an upside and a downside. “Otherwise, there is no point,” she said.
New York | Bill Ackman has sold his stake in Berkshire Hathaway, he disclosed on Wednesday (Thursday AEST), saying his hedge fund can seize on opportunities in the market faster than Warren Buffett’s sprawling conglomerate. “The one advantage we have versus Berkshire is relative scale,” Mr Ackman said on a quarterly call with investors in his hedge fund, Pershing Square. “We can be much more nimble.” Pershing Square Capital founder Bill Ackman: “The one advantage we have versus Berkshire is relative scale." The Berkshire sale comes less than a year after Pershing first bought the stake and just weeks after Mr Ackman increased it, declaring that the company was “built by Warren Buffett to withstand a global economic shock like this one”. Mr Ackman has long considered the 89-year-old Mr Buffett a mentor, adding particular interest to Pershing Square’s decisions to buy and sell. [...] The stock market rout in March provided Mr Ackman a $US2.6b gain from hedges he took out earlier in the year, when he bet that the creditworthiness of companies would be severely hit by the pandemic. While Mr Buffett has stood mainly on the sidelines, Mr Ackman has ploughed his funds back into the stock market.
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