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The philanthropic response to the COVID-19 pandemic has shown the sector at its best. From the launch of community-based rapid-response funds to the development of diagnostics and vaccines, philanthropy is showing up both to help flatten the curve in the short term and to address the inequities the crisis will exacerbate over the long term. What’s striking is not only the scale of capital being committed by major philanthropists (at least $10.3 billion globally in May 2020, according to Candid, which is tracking major grants) but also how it is being given: at record speed, with fewer conditions, and in greater collaboration with others. According to the Council on Foundations, almost 750 foundations have signed a public pledge to streamline grant-making processes, and individual donors are partnering with their peers to make sizable grants with less paperwork.
Activist investors have been operating in Europe for some time, usually reserving their demands for countries with robust equity markets with sizeable large-cap segments. However, today, the tide is changing. Activists around the globe, including more and more European activists, are diversifying their targeting strategy, increasingly investing in mid- and micro-cap companies across many European markets. As activism becomes more accepted, it is changing into a type of shareholder behaviour rather than a tactic waged by specialised funds. As a result, markets that were previously off the radar, like Belgium, are seeing a spike in shareholder activism.
In-House Counsel will be asking themselves questions that seemed unfathomable months ago as they oversee employees returning to the workplace. Should they take employees’ temperatures? What’s the legal risk? How much immunity could the business face from liability suits? Bloomberg Law has put together the General Counsel’s Guide to Reopening to help in-house lawyers think about these sorts of questions as they consider how best to resume operations. Click here to download the PDF, which contains the complete report. The guide includes tips from top-notch law firms and Bloomberg Law’s own in-house experts on issues related to reconfigured workspaces, employee benefits, liability, litigation, insurance, and corporate governance.
The easyJet founder, Sir Stelios Haji-Ioannou, has failed in his attempt to oust the chairman and chief executive of the low-cost airline in a shareholder vote on Friday. Haji-Ioannou, the airline’s largest shareholder, had been seeking to oust four directors in a special shareholder vote as he seeks the cancellation of a £4.5bn order for more than 100 new aircraft that he believes will put the future of the airline in jeopardy. Haji-Ioannou was hoping to oust the chief executive, Johan Lundgren, the chairman, John Barton, the finance chief, Andrew Findlay, and the non-executive director Andreas Bierwirth over the board’s refusal to cancel the aircraft order, placed with Airbus in 2013. [...] Earlier this month Haji-Ioannou offered £5m for a whistleblower to come forward with information that could derail the airline’s 107-plane order from Airbus.
(Bloomberg) -- Alphabet Inc.’s executive pay packages have come under fire from a second influential shareholder advisory firm ahead of the Google owner’s annual meeting. Chief Executive Officer Sundar Pichai’s pay packet of about $250 million is “excessive” and not aligned closely enough to the company’s performance, according to a report from Glass Lewis & Co. seen by Bloomberg. The firm recommended investors reject the company’s proposal for executive compensation at its June 3 annual meeting. “Shareholders should note the lack of outperformance” in returns relative to the level of pay to be awarded, the report said. “In light of the disconnect of pay to performance and our concerns with the quantum of Mr. Pichai’s pay, we do not believe shareholders should support this proposal.”
OAKLAND, Calif. — Facebook said on Thursday that it would allow many employees to work from home permanently. But there’s a catch: They may not be able to keep their big Silicon Valley salaries in more affordable parts of the country. Mark Zuckerberg, Facebook’s chief executive, told workers during a staff meeting that was livestreamed on his Facebook page that within a decade as many as half of the company’s more than 48,000 employees would work from home. “It’s clear that Covid has changed a lot about our lives, and that certainly includes the way that most of us work,” Mr. Zuckerberg said. “Coming out of this period, I expect that remote work is going to be a growing trend as well.”
The chief risk officer is likely becoming a hot commodity in the wake of the coronavirus pandemic as many businesses face a wide range of threats to their operations and their workforces.
The many facets of the Covid-19 fallout are putting CROs on the front lines, working with executives and boards of directors to respond to these challenges. Companies are expected to lean more heavily on their risk officers for the foreseeable future to account for new and heightened dangers. [...] Risk oversight is often assigned to the board’s audit committee. But those committees have taken on a “heavy workload” as their focus on financial reporting has expanded to include other areas like cybersecurity, Biskup said. Past experience with managing a crisis—from the terrorist attacks of Sept. 11, 2001, to major hurricanes—is also becoming a sought-after trait for new directors. [...] “I never thought when I interviewed potential board members I would focus on experience with catastrophes,” he said.
Heavily indebted “zombie” companies happen to control nearly 2.2 million jobs at a time when the U.S. is in a deep employment crisis. The companies occupy a large swath of American industry, from big conglomerates to the restaurants and bars that have suffered so much during the coronavirus pandemic and the associated social distancing measures that have torn a hole through the U.S. economy. They’re generally designated as companies that continue to operate even without the revenue stream to pay off their debts. At the sector level, they range from the 233,000 jobs in industrial to conglomerates to 738 in the insurance business, according to data compiled by Arbor Data Science. The unemployment rate has surged to 14.7% during the coronavirus crisis as more than 23 million Americans were out of work as of the end of April.
“Chairman contagion”—the process of trouble afflicting a shared chair spreading from one portfolio company to another—is among the key reputational risks identified by chief executives and communications specialists in a new report. In research that ranges across a host of reputational issues faced by companies and their public relations experts, headhunting firm Cayhill Partners also suggests that the Covid-19 pandemic has created its own reputational risk and highlighted the necessity of good communications. [...] Among the other results was that almost three-quarters (73%) of communications leaders believe their chief executive fails to “appreciate” what corporate reputation management is and the role it plays. That will probably come as no surprise to many in PR still contending with executives using “old media” command-and-control thinking in a social media age.
The world today can make us feel like we are living under occupation. The coronavirus pandemic has resulted in lockdowns in many communities, taking away our freedom of movement and assembly. It threatens our lives and is destroying our economies. In these warlike conditions, the battlefront is moving fast from safeguarding our lives to safeguarding our livelihoods. These are two massive fronts, evolving at exponential speed, and no one has more experience in responding to such conditions than professional military leaders do. Military commanders are accustomed to operating under a fog of uncertainty and great time pressure and to making myriad decisions with fateful consequences—some tactical, for winning a battle, and some strategic, for winning a war.
As the COVID-19 pandemic causes commercial and financial difficulties, many businesses will be considering M&A to address strategic issues, take advantage of market opportunities, and, in some cases, ensure their survival. This memorandum considers the merger control implications of the pandemic for businesses contemplating transactions at this time. First, this memorandum provides an overview of how European agencies are responding to the pandemic. Second, it considers how the crisis may affect the substantive assessment of transactions, including the implications of changed competitive conditions, the availability of the “failing firm” defense, and agencies’ evaluation of the counterfactual. Finally, we provide some practical guidance, which may be summarized as follows
The potential of artificial intelligence (AI) to cause harm as well as create a greater good has aroused great interest in the field of ethics and made it one of the most publicized areas, as well as an emerging topic of focus within a board’s oversight responsibilities.
If any place was prepared for quarantine, it was Milton Keynes. Two years before the pandemic, a start-up called Starship Technologies deployed a fleet of rolling delivery robots in the small city about 50 miles northwest of London. The squat six-wheeled robots shuttled groceries and dinner orders to homes and offices. As the coronavirus spread, Starship shifted the fleet even further into grocery deliveries. Locals like Emma Maslin could buy from the corner store with no human contact. “There’s no social interaction with a robot,” Ms. Maslin said. The sudden usefulness of the robots to people staying in their homes is a tantalizing hint of what the machines could one day accomplish — at least under ideal conditions. Milton Keynes, with a population of 270,000 and a vast network of bicycle paths, is perfectly suited to rolling robots. Demand has been so high in recent weeks, some residents have spent days trying to schedule a delivery.
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The UK financial watchdog warns that reporting should reflect the impact of Covid-19—under different scenarios—on liquidity, viability and solvency. UK companies are under notice to be transparent about their prospects for survival as a result of the Covid-19 crisis. The warning comes from the Financial Reporting Council (FRC), the UK’s governance and financial reporting watchdog, in guidance issued this week to highlight “key areas of focus for boards”. In gloomy news for business, the FRC says it expects more companies to disclose “material uncertainties”—events leading to corporate failure—in their going concern statements. The watchdog stressed the need for companies to supply information to investors and stakeholders, declaring: “At this time, the need for fuller disclosure is paramount.” The guidance comes against a backdrop of companies contemplating the prospects for recovery as the UK lockdown wears on, though with some restrictions lifted.
Rule 14a-8 under the Securities Exchange Act of 1934 requires companies that are subject to the federal proxy rules to include shareholder proposals in their own proxy statements to shareholders, subject to certain procedural and substantive requirements. No similar requirement exists under California's General Corporation Law. Companies wishing to exclude a shareholder proposal under Rule 14a-8 will typically seek no-action advice from the Securities and Exchange Commission's staff. While not binding on either the Commission or the courts, these no-action letters have become a de facto body of Rule 14a-8 "law".
It started with silence, or something close to silence, or perhaps it was simply the absence of a low-level hum that nobody knew was humming until it stopped. In the quiet we realized that, until the pandemic arrived, we had lived in a vast, elaborate, whirring contraption that delivered culture and commerce at spectacular speeds, with astonishing efficiency. Logistics — the science of making Thing A and delivering it to Point B — had become a national art form, the corporate answer to jazz, stand-up comedy and end-zone dances. America was like an operating system that upgraded itself so regularly that its design and endless enhancements were taken for granted. Now, the heart of the great American logistics machine is beating slowly and erratically, and in some places it has gone into full-on cardiac arrest. Inevitably, one of our many reactions is pure bewilderment.
LONDON (Reuters) - As the hedge funds once clustered in London’s Mayfair negotiate gyrating markets, they are facing a new line of investor questioning: who has contracted COVID-19? With billions sometimes riding on the performance of one star manager, or a small constellation of talent, investor interest in delving into the medical status of staff — a realm considered by many private — is perhaps understandable during a pandemic. “The important thing for managers is planning – what do they intend to do on the basis of when, not if, they get the virus,” said one of three investors who told Reuters they wanted to be informed about any coronavirus infections at the hedge funds they invest with. But most of Britain’s hedge fund managers have no protocol for divulging such details and there are no specific legal requirements for them to do so, according to Samuel Brooks, a partner at law firm Macfarlanes. As many infected by the novel coronavirus appear to show only mild symptoms, some hedge funds – normally based in the well-heeled west London enclave but now scattered and working from home – are taking a ‘need to know’ approach to staff health disclosures.
Every other Monday Kirill Dmitriev, the boss of the Russian Direct Investment Fund (rdif), dials in to Zoom to chat with 15 peers from around the world. The hours-long calls often yield precious nuggets of information, both about the state of the pandemic and of financial markets. Mr Dmitriev says he was convinced early on that the outbreak would be severe. rdif, which manages $50bn on behalf of the Russian state, has since invested in vaccine research and testing. It has also injected cash into private ventures like uchi.ru, an online-education platform, and ivi.ru, Russia’s Netflix. Meanwhile other sovereign funds, such as Saudi Arabia’s Public Investment Fund (pif), have taken advantage of bargains in stockmarkets. In the first three months of the year pif spent $8bn buying up stakes in companies ranging from Boeing to Uber.
Generational identity can influence many aspects of life, from family and work to political views to consumer and corporate behavior. In the United States today, there are four adult generations: Millennials (born 1982 – 2005), Generation X (born 1961 – 1981), Baby Boomers (born 1943 – 1960), and the Silent Generation (born 1925 – 1942).[1] Of these four, only one – the Baby Boomers – have a dominating presence in U.S. corporate boardrooms. While the Millennial and Silent generations may be too young and too old, respectively, to have meaningful representation on corporate boards, Gen Xers (between the ages of 39 and 59 as of 2020) should be well-positioned to make a valuable contribution as corporate directors. Indeed, some of the most successful business leaders today are Gen Xers. In 2007, Gen Xers held a negligible 5 percent of board seats in S&P 1500 companies, but by 2017, 20 percent of the board seats were held by Gen Xers. Are these “New Kids on the Block” able to imprint some of their core values and beliefs on the organizations they now help lead? Do they influence overall firm performance? These are the questions we explore in a new paper, “New Kids on the Block: The Effect of Generation X Directors on Corporate Performance.”
Norges Bank Investment Management will publish and explain all votes against company boards at shareholder meetings starting Wednesday. The firm, which runs the assets of the 10.2 trillion Norwegian kroner ($986 billion) Government Pension Fund Global, will publish rationale for its votes against a company board one day after shareholder meetings. "In most cases, we will support the board's recommendation," NBIM said in a statement on its website. NBIM made the move to be more transparent over its voting decisions to help the market better understand its positions [...] As part of the move NBIM also published Wednesday four position papers clarifying its views on board independent, multiple-share classes, shareholder rights in equity issuances and related-party transactions. The positions outlined in the papers "will serve as a basis for our discussion with boards," NBIM said.
M&A practitioners are well aware of the several standards of review applied by Delaware courts in evaluating whether directors have complied with their fiduciary duties in the context of M&A transactions. Because the standard applied will often have a significant effect on the outcome of such evaluation, establishing processes to secure a more favorable standard of review is a significant part of Delaware M&A practice. The chart below identifies fact patterns common to Delaware M&A and provides a preliminary assessment of the likely standard of review applicable to transactions fitting such fact patterns. However, because the Delaware courts evaluate each transaction in light of the transaction’s particular set of facts and circumstances, and due to the evolving nature of the law in this area, this chart should not be treated as a definitive statement of the standard of review applicable to any particular transaction.
Companies that score poorly on both gender and ethnic diversity are 27% more likely to underperform on profitability, according to the latest McKinsey report on diversity. There is a stark warning in the McKinsey report on diversity in business. Those companies that are the least gender diverse are 19% more likely to underperform on profitability. That’s up on the 15% McKinsey found in 2017. Those companies that score badly on both gender and ethnic diversity are 27% more likely to underperform. Those stark figures are included in the managing consultancy’s Diversity Wins report, last produced three years ago, charting both the benefits of diversity as well as its progress. McKinsey’s findings may seem self-evident in 2020. The penalties for failing on diversity are harsh. And yet despite the obvious advantages, progress in achieving diversity is surprisingly poor.
A series of recent papers (here, here, and here, for example) have argued that maximizing shareholder value remains the proper goal of the modern corporation – and in some cases that stakeholderism is in fact harmful to stakeholders. Yet giving up on stakeholderism for the sake of stakeholders cannot be the right answer or strategy, even though there are significant challenges to steering away from the currently prevailing framework. Although the papers differ in the details of their arguments, they share some common themes.
As directors of every company grapple with the effects of COVID-19 on their organizations, it is inevitable that corporate governance in general and boardrooms specifically will be forever changed, in ways both big and small. Since the onset of the pandemic, I have had the opportunity, in my role leading WomenCorporateDirectors, to have conversations with hundreds of board members across the U.S. and around the world to discuss how this crisis is affecting governance concerns, best practices, and their direct involvement with their companies. These discussions have revealed some new examples and nascent trends of board oversight that may well carry over to post-COVID governance. As we face this existential threat together, but experience its impact in highly different ways, there are some takeaways that might prove enlightening to other corporate directors around the world.
The UK government has banned large corporations that access its revamped Covid-19 bailout loan scheme from paying shareholder dividends after it raised the borrowing limit from £50m to £200m. Ministers said investors should not benefit directly from dividend payouts when firms borrow from the more generous coronavirus large business interruption loan scheme, to be launched next week. Companies that use the extended scheme will also face restrictions on the bonus payments to board directors and the level of share buybacks during the period of the loan. The move comes after the Treasury faced criticism for allowing Tesco to pay a £635m dividend while accepting a similar-sized tax break through the business rates holiday which forms part of the taxpayer-funded emergency coronavirus support package.
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