Corporate governance - Vigil

Whatever flight path Boeing BA -0.23% finds through the Covid crisis, it is unlikely to improve the U.S. aerospace giant’s competitive position versus European rival Airbus. Alongside reporting first-quarter results on Wednesday, Boeing is expected to give investors clarity on how it hopes to rebuild its cash buffers and downsize its operations. The company probably had about $15 billion in cash at the end of March, which could rise to $24 billion by June as the company raises yet more debt, according to FactSet’s consensus of analyst estimates. Even that might not cover Boeing’s potential cash outflows if travel restrictions last for longer than expected, especially given that the ill-fated 737 MAX is still awaiting recertification. So one closely watched question is whether Chief Executive David Calhoun will tap the federal government’s $60 billion aid package for the aerospace industry. He was previously reluctant to accept public aid on the basis that it could come with costly strings attached.

Leo Strine Jr., the sharp-tongued former head of Delaware’s influential business court, is joining corporate-law giant Wachtell, Lipton, Rosen & Katz. The 56-year-old will advise Wachtell’s clients on mergers, litigation and other matters. He retired last fall as chief justice of the Delaware Supreme Court, a position he held for five years following a lengthy stint on the state’s influential business court. Delaware’s courts play an outsize role in corporate governance because most big U.S. companies are domiciled in the state. [...] Though quick to chide corporate boards that stepped out of bounds—and hand down sometimes expensive punishments—Mr. Strine mostly defended the rights of chief executives to manage and sell their companies without being second-guessed. Through a series of rulings over 20 years on the bench, he pushed a standard of review for mergers and other corporate actions that gives boards wide leeway.

Some of world’s biggest asset managers, including Aviva, Federated Hermes and Robeco, have signed up to the Investor Alliance for Human Rights. The issue of mandatory human rights due diligence for companies will not go away. This week a group of investors with $5trn in assets under management called on governments around the world to impose an obligation on companies to undertake the due diligence process for people working in supply chains. Campaigners say the current Covid-19 crisis has highlighted the need to step away from a voluntary approach to force companies into compliance. [...] Many of the investors signed up after becoming convinced that a voluntary approach had failed to encourage more companies to take action to check their supply chains.

Social media platforms enable a free flow of content — regardless of source. And because of that system, content creators and online influencers (whether they are credible or not) shift public opinion, and spark polarization. Governments and platforms have been working on this issue, but now, in light of the COVID-19 pandemic, the dissemination of factual, credible information — and the removal of misleading information that could cause harm — is urgent. In this episode of Big Tech, co-hosts David Skok and Taylor Owen speak with Angie Drobnic Holan, editor-in-chief of PolitiFact, a fact-checking organization focused on reviewing statements made by political figures and rating them for accuracy. PolitiFact is one of the fact-checking sites that is part of the Facebook fact-checking program. They provide Facebook with fact-checks that are displayed alongside user posts that have been flagged as misleading.

Hedge funds have had a rotten decade. Star managers were once perceived to be infallible “masters of the universe” who made money for wealthy individuals and big institutional investors in both good times and bad. But steep losses during the global financial crisis of 2007-09 tarnished that reputation, and subsequent returns have failed to resurrect past success. The result has been a humbling comedown. Many of the hedge-fund industry’s biggest names—like Leon Cooperman, who ran Omega Advisors, and Eric Mindich, once the youngest-ever partner at Goldman Sachs—have thrown in the towel, returned investors’ capital and converted their hedge funds into family offices.

The general purpose of a shareholder rights plan or “poison pill” is to deter and mitigate the time pressures of non-negotiated, hostile takeover attempts made at unfair or inadequate prices, or by coercive or unfair tactics. Rights plans have been around for quite some time. Rights plans generally give the adopting corporation’s stockholders (excluding the potential acquiror) the right to purchase stock at a nominal price, triggered by the acquirer’s acquisition of beneficial ownership of a specified percentage of the corporation’s stock. This right is typically applicable to stock in the corporation prior to the proposed business combination, or in the final corporation after a successful hostile takeover. There is, however, no one-size-fits-all rights plan and it is incumbent upon a board that is considering the adoption of a rights plan (including the adoption of a rights plan that was previously “on the shelf”) to receive input from its advisors concerning the current state of the market with respect to key features of the plan.

Each year, Jeff Bezos writes an open letter to Amazon’s shareholders. Over the last 2 decades, these letters have become an unparalleled source of insight into how the world’s richest man thinks about efficiency, online customer experience, retention, managing through crises, and more. Amazon is a hugely successful, precedent-breaking company. The online bookseller didn’t turn a profit for 6 years — today, it’s the second publicly traded company ever to hit a $1T market cap. [...] To read Bezos’ shareholder letters is to get a crash course in running a high-growth internet business from someone who mastered it before any of the playbooks were written. Below, we analyze the letters and unpack the most important wisdom in each. We also include an appendix linking to each letter at the bottom of the post. Together, these letters form a library of Jeff Bezos’ most distilled thinking on running a successful, high-growth company.

Billionaires dominate our politics, culture, and economy. Their wealth, as this report shows, has concentrated mightily over the last four decades — even as the number of U.S. households with zero or negative net worth is increasing and most of us are living paycheck to paycheck. The current pandemic is exposing our central economic and social reality: Extreme wealth inequality has become America’s “pre-existing condition.” In this report, we show how billionaire wealth has grown astoundingly over the last few decades — and, for some “pandemic profiteers,” even more dramatically since the COVID-19 crisis — even as billionaire tax obligations have plummeted. If this inequality isn’t treated with both short and long-term tax reforms and oversight, America’s “pre-existing condition” of extreme inequality could overwhelm not only our economy, but our democracy itself. Between January 1, 2020 and April 10, 2020, 34 of the nation’s wealthiest 170 billionaires saw their wealth increase by tens of millions of dollars. 

On March 23, Pay Governance released a Viewpoint article discussing COVID-19’s impact on executive compensation programs. The article—“Everything Should Be On The Table”—outlined several high-level initial considerations that should be “on the table” as possible responses to the disruption caused by COVID-19. It is still too early to understand the full impact, financial and otherwise, that the pandemic will have. Its effect on business and the appropriateness of potential responses will vary by industry and company. Our objective in presenting these considerations broadly is to arm compensation committees with a toolkit of possible adjustments and a general understanding of the benefits, drawbacks, and implications of any such actions.

As someone who has served on over twenty corporate boards, Warren Buffett knows a little bit about what the job of a director should be. Unfortunately, far too often directors seem to only exist to agree with the management that appointed them. At the 2007 Berkshire Hathaway, Buffett explained what he believes the three main tasks of a board of directors are. Buffett says that most CEOs don’t really want the input of their directors. [...] For this reason, many directors are what Buffett referred to as "potted plants," or high profile people whose main function is to rubber stamp what management does. [...] What a board should be doing first of all is picking the correct CEO. Buffett says that “90% of your job as a director is having the right CEO." A director should pick someone who is highly competent and empower them to implement their vision for the company.

OSLO (Reuters) - Norway’s sovereign wealth fund, the world’s largest, named a London-based hedge fund manager as its new chief executive on Thursday and said it had lost $124 billion (104 billion pounds) this year as stock markets tanked due to the coronavirus pandemic. “Tangen has built up one of Europe’s leading investment firms and has delivered very good financial results as an international investment manager,” Norwegian central bank Governor Oeystein Olsen said while announcing the appointment. “He has extensive experience with equity management, which is the fund’s largest asset class,” Olsen told a news conference in Oslo.

[...] Quebec ranks the most vulnerable province, according to the scorecard. The epicentre of Canada’s COVID-19 outbreak with over 20,000 of the country’s 41,000 cases, the province has a large share of residents over 65 (19.3%) and the lowest number of hospital beds per 1,000 people (2.1). The 14% of its economy in manufacturing puts it at greater risk to disruptions to supply chains and factory closures. Quebec’s dependency on tourism and retail trade, which represents 9% of GDP, also make it vulnerable.

Selon l’Aqueduct Floods, une émanation du groupe de réflexion mondial World Resources Institute, le nombre de sinistrés par les inondations va plus que doubler dans le monde, passant d’environ 65 millions en 2020 à 132 millions en 2030. Le coût des dommages provoqués par ces désastres aux actifs urbains comme les maisons, les entreprises et les infrastructures publiques, dépassera les 700 milliards. Comparativement, les inondations ont coûté un peu plus de mille milliards de dollars au cours de l’ensemble des trois dernières décennies, selon l’étude. Sans rien n’est entrepris, il en coûtera en moins de deux ans autant qu’au cours des 30 dernières années. Le Canada ne sera pas épargné par ce phénomène. L’institut dit avoir constaté que les dommages provoqués par les inondations avaient totalisé environ 2,4 milliards. Si rien n’est fait pour prévenir ou atténuer ces désastres, le coût de la facture passera à près de 6,6 milliards US.