The week in GRC: FedEx adds directors in deal with DE Shaw and Tesla plans stock split
– The Wall Street Journal (paywall) reported that BlackRock’s efforts to get institutional investors to vote their own shares is taking shape, with its voting-choice platform having added investors representing roughly $120 bn in assets since its launch in October. BlackRock launched the program in response to feedback from clients who said they wanted more control over voting. About 45 percent of eligible investors have expressed interest in the platform.
Asset managers typically vote on shareholder proposals on behalf of investors in passive, index-tracking funds, giving them enormous sway over corporate decision-making. Firms have used their influence to push companies to improve diversity and cut their dependence on fossil fuels, among other things.
Their stance on social issues has drawn complaints from some corporate executives and lawmakers. A group of Republican senators last month introduced a bill calling for individual investors in passive funds to have the option to vote their shares.
– Tesla in its proxy statement revealed it plans a three-for-one stock split and that board member Larry Ellison does not plan to stand for re-election, according to CNBC. The company wrote of the proposed stock split: ‘Our success depends on attracting and retaining excellent talent’ and ‘highly competitive compensation packages’ offering every employee an option to receive equity helped Tesla do that.
‘We believe the stock split would help reset the market price of our common stock so that our employees will have more flexibility in managing their equity,’ the company added.
– Reuters (via CNBC) reported that parcel delivery company FedEx added two directors to its board as part of an agreement with hedge fund firm DE Shaw and raised its quarterly dividend by more than 50 percent. The deal also gives the investment firm a say in the appointment of a third director at a later date. The new directors are Amy Lane, a former Merrill Lynch executive, and ex-Union Pacific Corp COO Jim Vena. Their addition brings the board’s strength to 14 directors, 12 of whom are independent. FedEx has also added total shareholder return as an additional performance metric to its executive compensation program.
‘We look forward to sharing more detail on our strategy and long-term objectives at our investor day later this month,’ said FedEx CFO Michael Lenz in a statement.
– Continental Resources said it received an all-cash offer from billionaire-founder Harold Hamm’s family trust, a deal that could take the US shale producer private at a valuation of $25.41 bn, Reuters reported. In a letter to employees detailing his go-private offer, Hamm complained that the public markets have not supported the oil and gas industry and limited its growth, particularly since the pandemic. Continental said it would form a special committee of independent directors and hire advisers to consider Hamm’s proposal.
– The WSJ reported that the US and UK governments are teaming up to encourage the development of new machine-learning technologies that could be used to combat money laundering. The governments said they are collaborating on a ‘prize challenge’ program meant to spur innovation in ways to train software to combat financial crime. Both countries require financial institutions to detect and report suspicious transactions by their customers. Those rules have created so much data that both government investigators and individual financial institutions have trouble analyzing them.
– Reuters reported that the Basel Committee published a detailed checklist for banks to assess how climate change affects all aspects of their business, including pay and capital. International banks will be expected to examine whether they are quantifying risks from climate change properly, despite sometimes patchy data and time horizons that go beyond traditional risk assessments and remuneration packages.
The guidance is the latest effort by regulators to review how their rulebook covers climate change in a sector at the forefront of efforts to transition to a net-zero economy. Banks must look at how risks from climate change affect their business strategy, training of senior staff and board members, internal controls, capital and pay over the short, medium and longer term, according to the guidance.
‘The board and senior management should consider whether the incorporation of material climate-related financial risks into the bank’s overall business strategy and risk management frameworks may warrant changes to its compensation policies,’ the Basel Committee said.
– According to CNBC, Elon Musk appealed a judge’s refusal to end his 2018 agreement with the SEC requiring a Tesla lawyer to vet some of his posts on Twitter. A court filing states that Musk will ask the 2nd US Circuit Court of Appeals to overturn the April 27 decision by US District Judge Lewis Liman that allowed the agreement to stand.
The SEC declined to comment.
– Reuters reported that the UK pension schemes of Vodafone, BMW and Santander plan to introduce net-zero strategies this year following pressure to catch up with their sponsoring employers in setting climate targets. Regulators, lawmakers and policyholders are calling on pension schemes in the UK to take climate issues into consideration when making investment strategies.
Climate reporting requirements for pension schemes will increase from October, although the rules do not ask pensions to lay out plans to achieve a UN goal of reaching net-zero greenhouse gas emissions by 2050. Despite that, some leading pension schemes said they were looking to go further, in line with their sponsoring employers.
Setting a net-zero policy can involve cutting investment in companies performing poorly on environmental issues, investing in those offering solutions to climate change, setting targets on portfolio emissions and pushing company boards to take more ambitious steps to reduce their emissions.