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The value of U.S. shareholder class action settlements in the first half of 2022 totaled $2.32 billion, the exact amount as the same period in 2021. However, the quantity of settlements in the first six months of the year increased by 23.7%, from 59 in 2021 to 73 in 2022. The average value of settlements in 2022 was $31.8 million (or 19.1% less than the $39.3 million average in 2021). The largest settlement so far in 2022 was with Teva Pharmaceutical Industries at $420 million, accounting for 18% of the total value of settlements. Interestingly, the largest settlement from the first six months of 2021 was driven, in part, by one mega settlement: Valeant Pharmaceuticals at $1.21 billion, accounting for 52.2% of the total value of settlements. (2020 totals were also driven, in part, by a specific billion-dollar mega settlement: American Realty Capital Properties at $1.025 billion.)
Suncor Energy Inc. says it has reached a deal with activist investor Elliott Investment Management LP that will see it undertake a strategic review of its downstream retail business with the goal of "unlocking shareholder value." The agreement announced Monday will also see three new independent directors join the company's board. [...] "In addition, the board's review of the retail business builds on our long-standing commitment to openly consider alternatives to enhance shareholder value and will help ensure the company is well positioned for even greater success and value creation in the future." Elliott had expressed frustration in April in what it called a recent decline in performance at the energy producer. [...] Suncor chief executive Mark Little resigned earlier this month, one day after the company announced the death of a contractor at its Base Mine north of Fort McMurray, Alta., the latest in a string of workplace deaths and safety incidents that have plagued the energy giant. [...] Two of the new directors will serve on the committee that the board has formed to conduct a global search to select the company's next CEO.
Candidates for director positions can take several steps to prepare for meaningful service. In a rapidly changing business environment that brings a growing number of issues to board agendas, many corporate boards are recruiting new members to expand skills, attributes, and perspectives in the boardroom. Some companies are searching for new directors to add experiences in areas such as technology, finance, or global issues, and some of these companies are also looking for candidates who can increase diversity in the boardroom in areas such as gender, race, ethnicity, or other characteristics.
Activist investor Elliott Management Corp. has taken a big stake in Pinterest Inc., according to people familiar with the matter, as the once-hot social-media company grapples with a decline in users and other challenges. Elliott has told the company that it is the biggest investor in Pinterest, having built a stake of more than 9% in recent months—partly in common stock, one of the people said. The activist has been in discussions with Pinterest over the past several weeks. It couldn’t be learned what they have been discussing. It has been a time of turmoil for Pinterest, which operates a free online platform for sharing images that inspire projects such as planning weddings, completing home renovations and creating recipes. [...] Mr. Silbermann, one of three Pinterest co-founders, has a roughly 37% voting stake in the company, according to its latest proxy filing from April, which could limit Elliott’s ability to force changes.
The board plays a critical role in bringing an organization’s strategic vision to life. As stewards, they help guide the organization through challenging times and are responsible for providing sound oversight that can help to sustain future success. Ideally, the people sitting around the table in a corporate boardroom will each provide different sets of skills, areas of knowledge, and varied work and life experiences that collectively make the board stronger. But when too many sitting directors have similar backgrounds, diversity of perspective can suffer. [...] With developments like the new Nasdaq listing requirement, we are already seeing some positive changes. In addition, large institutional investors and other stakeholders are also demanding more diverse boardrooms, but the fact remains—only 30% of director seats at S&P 500 companies are filled by women.
This report provides insights relating to board leadership, board meetings, and board committees at S&P 500 and Russell 3000 companies. Our findings are based on data pulled on June 8, 2022, from our live, interactive online dashboard powered by ESGAUGE, as well as a Chatham House Rule discussion with leading in-house corporate governance professionals held in April 2022.[1]
Insights for What’s Ahead:
The ongoing increase in board chair independence is likely driven by CEO succession events, as well as the growing workloads of boards and management, rather than shareholder proposals calling for CEO/board chair separation. [...] The number of board meetings is likely to stay at an elevated level, due to factors beyond the ongoing pandemic.
Concerns about a lack of viewpoint diversity in stakeholder capitalism have been touched upon in commentary about the SEC’s recent climate change proposal. For those not caught up, the SEC has proposed a rule that would “require registrants to provide certain climate-related information in their registration statements and annual reports. [...] A 2021 survey reported that, while 82 percent of Democrats view climate change as a critical threat, only 16 percent of Republicans reported a similar level of concern.
There is no net zero without nature. When we speak with CEOs and CFOs, the question is no longer if they should act, but how and if their businesses should be part of the solution. For this, organizations need to embed practical and credible approaches into their business models and across their supply chains. It is critical that material sustainability issues are embedded into business decision-making practices, and governance mechanisms are in place to ensure effective oversight of risk management and controls. Embedding ESG and sustainability considerations into the Three Lines Model, written in collaboration with The Institute of Internal Auditors (IIA), provides guidance on applying The IIA’s Three Lines Model to embed sustainability and ESG considerations in the appropriate structures and processes that support the achievement of business objectives to create and protect value for the organization.
Wall Street’s watchdog is taking new steps to empower investors and proxy advisory firms through a pair of rules voted on at a Wednesday meeting. The US Securities and Exchange Commission approved final rules by a 3-2 partisan vote to free proxy advisers from some restrictions placed on them at the end of the Trump administration. Critics of the 2020 rules say they hampered firms’ independence. Institutional Shareholder Services Inc. and Glass Lewis & Co., the two largest proxy advisory firms, were the primary targets of earlier rules, which required them to share voting recommendations with companies that were the subject of their reports before or at the same time as shareholders. [...] Investors said they worried the strictures would impair the timeliness of voting recommendations and also curb proxy advisers’ independent assessments of companies and their boards.
People keep quitting at record levels, yet companies are still trying to attract and retain them the same old ways. New research identifies five types of workers that employers can reach to fill jobs. It’s the quitting trend that just won’t quit. People are switching jobs and industries, moving from traditional to nontraditional roles, retiring early, or starting their own businesses. They are taking a time-out to tend to their personal lives or embarking on sabbaticals. The Great Attrition has become the Great Renegotiation. [...] Our research identified distinct pools of workers with varied workplace priorities. Their differences show that employers have to take a multifaceted approach to attract and retain talent. [...] In this article, we take a closer look at five crucial employee personas that companies must understand to solve the attrition and attraction problem for the longer term.
Stewardship has, along with sustainability, social equality, biodiversity, and climate risk management, emerged in recent years as a favorite buzzword in corporate governance and investment management circles. But the language used by investors to express stewardship objectives and practices varies significantly. For some, stewardship is nearly synonymous with voting: it is a matter of shareholder engagement with company management and is aimed at maximizing long-term value. Others expand the long-lamented notion of shareholder ownership to include active ownership and responsible investing. For still others, stewardship is about “building stronger portfolios,” both active and passive.
Netflix has teamed up with Microsoft to offer a cheaper subscription plan to customers that will show adverts. The streaming giant says the service will be an "addition" to its existing plans, which do not include adverts. The company has not yet revealed how much it plans to charge subscribers for the new service. Netflix announced the move after it reported its first subscriber loss in more than a decade and cut hundreds of jobs earlier this year. [...] "But our long-term goal is clear. More choice for consumers and a premium, better-than-linear TV brand experience for advertisers." Netflix never wanted ads. Its entire business model was built around monthly subscriptions. Yet Netflix executives have had to rip up their own rules.
The Bank of Canada announced its fourth interest rate hike of the year at Wednesday’s July policy meeting. The central bank raised its benchmark interest rate by one percentage point, the third consecutive oversized rate hike of the year and an aggressive step forward in its campaign to tackle runaway inflation. [...] “With the economy clearly in excess demand, inflation high and broadening, and more businesses and consumers expecting high inflation to persist for longer, the governing council decided to front-load the path to higher interest rates,” the bank said in its rate decision statement. Ahead of Wednesday’s announcement, investors and private-sector economists were widely expecting a 0.75 percentage point increase. The Bank of Canada’s governing council, however, opted for a super-sized move in response to broadening inflation pressures and worrying signs that inflation expectations are becoming unanchored.
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[...] Non-Quebec companies made $1.74-billion worth of investments in Canada’s second-largest city through the first six months of 2022 as they launched a record 57 projects and created some 4,700 jobs, according to the latest figures from Montréal International, the city’s investment promotion agency. Thirty one companies established a subsidiary in Montreal for the first time. Last year over the same period, corporations committed $1.86-billion for 40 new projects. But Montréal International, a public-private partnership partly funded by the Quebec and Canadian governments, counts only investments it facilitated, meaning the absolute numbers could be much higher. The Montreal region, known for its substantial knowledge and research base, has drawn particular attention from global investors over the years for its expertise in artificial intelligence (AI) and deep learning.
BCE Inc. chief executive officer Mirko Bibic is joining the board of directors at Royal Bank of Canada, expanding the powerful web of bankers and executives who straddle two of Canada’s largest industries. [...] The appointment draws two of Canada’s largest companies, which are already intertwined, even closer. Former RBC CEO Gord Nixon chairs BCE’s board, and former RBC executive Jennifer Tory is also a BCE director. She joined BCE’s board in April, 2021. The country’s three telecom giants are major customers of the big banks for loans and other financing arrangements, and the banks’ asset management arms are significant investors in the telecom companies. Company filings show RBC subsidiaries are some of BCE’s largest shareholders. [...] The frequent overlap among executives and directors carries the danger of “locking in one way of thinking about things, and that creates risks of its own,” she said.
Imagine: Elon Musk, known for his delight in defying authority, is ordered to move ahead with his $44 billion purchase of Twitter Inc. — and refuses. It’s an unusual scenario, but one in which the court would have tools to enforce its orders. It could slap an epic fine on Musk, appoint receivers to get the deal done or even enable the seizure of his assets. Twitter sued Musk on Tuesday to force him to consummate the acquisition after he pulled out. [...] A court judgment Musk refused to pay would become like any other debt, said Charles Elson, a retired University of Delaware finance professor and the former head of the school’s Weinberg Center for Corporate Governance. But seizing Tesla shares to collect that debt could be a long, tortuous legal road, he said.
JPMorgan Chase CEO Jamie Dimon didn’t mince words when it came to the regulatory process that forced his bank to suspend its stock buybacks. Asked by veteran banking analyst Betsy Graseck of Morgan Stanley on Thursday about the Federal Reserve’s recent stress test, Dimon unleashed a series of critiques about the annual exercise, which was implemented after the 2008 financial crisis nearly capsized the world’s economy. “We don’t agree with the stress test,” Dimon said. “It’s inconsistent. It’s not transparent. It’s too volatile. It’s basically capricious, arbitrary.” JPMorgan, the biggest U.S. bank by assets, is scrambling to generate more capital to help it comply with the results of the Fed test. Last month, steadily increasing capital requirements within the test hit the biggest global financial institutions, forcing the New York-based bank to freeze its dividend.
Plaintiff Twitter, Inc. (“Twitter”), by and through its undersigned counsel, as and for its complaint against defendants Elon R. Musk, X Holdings I, Inc. (“Parent”), and X Holdings II, Inc. (“Acquisition Sub”), alleges as follows:
Nature of the Action
1. In April 2022, Elon Musk entered into a binding merger agreement with Twitter, promising to use his best efforts to get the deal done. Now, less than three months later, Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests. Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he—unlike every other party subject to Delaware contract law—is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away. This repudiation follows a long list of material contractual breaches by Musk that have cast a pall over Twitter and its business.
Directors are spending more time on their work, yet few say their boards are better at creating long-term value. Survey data highlight the operating models that correlate most with value creation. Over the past two years, company leaders have faced unprecedented management challenges in multiple dimensions of their business, and our ongoing research indicates that many board directors have risen to the occasion. In our newest McKinsey Global Survey on boards,1 directors report both a growing number of days spent on board work and that they expect to devote even more time to board work this year than they did in 2021. [...] #1. Seek company information more proactively.
#2. Invest time in onboarding.
#3. Increase the cadence of board evaluations.
#4. Create space for nonexecutive voices.
#5. Appoint a chair who can facilitate effectively.
While U.S., European and Canadian employment laws are often similar, there are important differences involved in managing employees in Canadian workplaces that U.S. and international companies need to know about to successfully do business in Canada. Our recently updated Cross-Border – Navigating Canadian Employment Law Guidebook breaks down the key differences between Canadian and U.S. labour and employment laws to help you avoid missteps in navigating local labour, employment and human resources issues. Although primarily designed with the U.S. attorney and HR practitioner in mind, the guide is equally helpful to European and other international lawyers and HR professionals seeking to understand Canadian employment law. This resource offers clear and easy-to-understand information on various topics.
Molson Coors Beverage will return to the Super Bowl next year, making its first appearance during the big game in more than 30 years. The move comes after archrival Anheuser-Busch InBev announced in June that it would end a 33-year deal with the NFL that made it the exclusive alcohol advertiser during the Super Bowl. The company still plans to run ads during the game this year. [...] “The minute we heard that the exclusivity was no longer and we had a chance, we were like ‘Yes, we are in, game on’,” said Michelle St. Jacques, chief marketing officer for Molson Coors. [...]
“We’ve changed a lot in the past three years, not only the name of our company, from ‘Brewing’ to ‘Beverage,’ but also the way we’re approaching marketing and building brands in general,” St. Jacques said.
Dual-class share structures are often billed as controversial since they offer a select group of shareholders voting rights that are superior to what common shareholders of the same publicly traded venture receive. This is especially true when dual-class shares play a role in a high-profile corporate dispute or battle for control. Such was the case in 2021 when board members at Rogers Communications disagreed over whether the company needed a management shakeup last year The Toronto-based firm was founded in 1960 by the late Ted Rogers, who built a single FM radio station into a major player in cable, wireless services, broadcasting, publishing, and sports. [...] In this article, we aim to elevate the debate by highlighting four different ways that Canadian firms, including Rogers and Shaw, implement dual-class share structures. We then discuss the related advantages and risks and finish with some governance considerations.
If a U.S. firm is a takeover target, it is almost entirely up to its board to decide whether to offer resistance, i.e., to formally reject a specific bid, and potentially take financial or operational actions to defend against the bid. Such actions include standstill agreements, litigation, asset/liability restructurings, and targeted repurchases. In contrast, boards in the UK and most EU countries — those that have adopted Article 9 of the E.U. Takeover Directive — are largely prevented from taking any action that could frustrate the bid, unless it has been duly considered and approved by stockholders.
The summer of 2020 was a turning point in the push for corporate diversity and inclusion initiatives. The tragic murder of George Floyd and the reactions that followed it resulted in demands for racial equality and anti-racism measures that resounded across the globe, including the corporate world.
Subsequently, many companies pledged to do their part to address inequalities and, likewise, many investors began to seriously reflect on their racial and ethnic diversity policies. [...] As the ISS board diversity data shows, there has been visible progress since 2020 in the number of racially/ethnically diverse directors on US company boards, and this uptick in diversity and inclusion initiatives has been dubbed by some “The George Floyd Effect”.
Short-seller Hindenburg Research said on Wednesday it had taken a long position in Twitter Inc shares and warned the social media firm’s lawsuit against Elon Musk, the world’s richest man, could pose a threat to his companies. Twitter’s shares rose about 6 per cent to $35.90 on the news, a day after the company sued Musk for violating his $44-billion deal and asked a Delaware court to order him to complete the merger at the agreed $54.20 per Twitter share. [...] Hindenburg did not elaborate on the threat the lawsuit poses to Musk, but legal experts have said that from the information that is public Twitter would appear to have the upper hand. [...] Hindenburg, which earlier had a short position, had said in May that Musk’s offer could get repriced lower if he walked away from the deal.
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