The week in GRC: Google employees send diversity resolution to Alphabet board, and Elliott plans push for takeovers
– The Guardian reported that Nissan confirmed it was being investigated by the SEC. Former Nissan leader Carlos Ghosn was arrested in November by Japanese authorities after the company reported him for allegedly under-declaring his income by millions of yen. Nissan quickly removed him from his position as board chair following the arrest, but insisted it was not involved in any wrongdoing. Ghosn has denied the allegations against him.
Nissan said in a statement it ‘can confirm that we have received an inquiry from the SEC, and are co-operating fully. We cannot provide further details.’ The company is planning an extraordinary general meeting of shareholders in April to discuss the appointment of a new director to its board nominated by alliance-member Renault.
– According to Reuters, Lazard Asset Management (LAM), an indirect subsidiary of financial adviser Lazard, said it had appointed two co-heads for its sustainable investment and ESG divisions. Jennifer Anderson and Nikita Singhal will work with LAM’s analysts to integrate ESG considerations into research and portfolio management across its businesses, the company said. Anderson has served as a board director for the Institutional Investors Group on Climate Change since 2015. Singhal is a former portfolio analyst with ClearBridge Investments.
– The Chinese government replaced the country’s top securities regulator with a senior banker, The Wall Street Journal reported. Yi Huiman, chair of the Industrial & Commercial Bank of China (ICBC), will be the new chair of the China Securities Regulatory Commission, replacing Liu Shiyu, the official Xinhua News Agency reported. Yi started leading ICBC in 2016. He is known within the banking industry for enforcing strong risk controls, according to people familiar with him.
Liu couldn’t immediately be reached for comment.
– The SEC said Shamoil Shipchandler, director of the agency’s Fort Worth regional office, left the agency on January 25. Since 2015 he had led a team of roughly 140 enforcement attorneys, accountants, investigators and compliance examiners who investigate and enforce the federal securities laws and perform compliance inspections in the Fort Worth region, which includes Texas, Oklahoma, Arkansas and Kansas.
‘Shamoil approached his public service with passion, commitment and flair, and always with the interests of our investors in mind,’ said SEC chair Jay Clayton in a statement. ‘The Fort Worth office made significant contributions to both the enforcement and examination programs under his leadership, and I thank him for his service to the agency.’
– CNN reported that the US Department of Justice unsealed two cases against Huawei detailing a slew of allegations. One indictment accuses Huawei of trying to steal trade secrets from T-Mobile and of promising bonuses to employees who collected confidential information on competitors. A second indictment claims the company worked to skirt US sanctions on Iran.
Huawei said it was ‘disappointed’ by the US move to bring charges against it. ‘The company denies that it or its subsidiary or affiliate have committed any of the asserted violations of US law set forth in each of the indictments… and believes the US courts will ultimately reach the same conclusion,’ it said in a statement. The Chinese government reacted angrily to the charges, accusing the US of using ‘its state power to smear and crack down on targeted Chinese companies in an attempt to kill their normal and legal business operations.’
– The WSJ reported that PG&E filed for bankruptcy protection as it struggles with billions of dollars in potential liabilities from its role in sparking California wildfires, launching one of the most complex corporate reorganization cases in years. California’s largest utility sought protection under Chapter 11 of the bankruptcy code.
Following the Chapter 11 filing, BlueMountain Capital Management, a hedge fund firm that argued PG&E could avoid bankruptcy and continue to operate until its liability issues became clearer, said it was ‘deeply disappointed’ the board had chosen to go to bankruptcy court. It said it would propose a new slate of board members for the company by next month.
John Simon, PG&E’s general counsel since 2017, is serving as interim CEO while the board searches for a new chief and several new directors. ‘Throughout this process, we are fully committed to enhancing our wildfire safety efforts, as well as helping restoration and rebuilding efforts across the communities impacted by the devastating northern California wildfires,’ Simon said.
– Bloomberg reported that Google employees and shareholders have written a resolution to Alphabet’s board calling for reform in areas including racial and gender diversity, and asking the board to consider tying these metrics to executive bonuses. ‘The tech diversity crisis threatens worker safety, talent retention, product development and customer service,’ the shareholder resolution states. It also criticizes the treatment of contract staff and asks the company to address the displacement of poorer residents where it buys real estate.
The resolution claims Alphabet – Google’s parent company – ‘has not responded adequately to key demands’ made by workers in a walkout in November, such as adding a worker representative to its board and ending forced arbitration for its entire workforce, rather than only for direct employees and only for cases of alleged sexual harassment or assault. It also asks the board’s compensation committee to look into including ‘sustainability metrics’ such as executive diversity in its bonus system or stock-vesting protocols. Similar policies are in place at Microsoft, Intel and other companies.
‘We’re working hard to make Google more representative and to build an inclusive workplace where employees feel respected, supported and valued,’ a company spokesperson said. ‘We report our progress extensively every year, including hiring and attrition rates across lines of race and gender.'
– The WSJ said the annual Corruption Perceptions Index produced by Transparency International, which is used by companies when deciding whether to invest in markets across the globe, found that the US scored 71 out of 100, down four points, dropping its ranking to 25th. It was the country’s first showing outside the top 20 since 2011. ‘The US is experiencing threats to its systems of checks and balances, as well as an erosion of ethical norms at the highest levels of power,’ Transparency International said. Denmark, New Zealand and Finland were seen as least corrupt, the index found.
– Blackstone Group’s $3.3 billion deal to buy a controlling interest in pipeline operator Tallgrass Energy would put four Blackstone executives on the firm’s nine-member board, Reuters reported. The private equity firm agreed to purchase Tallgrass’ general partner and take a 44 percent stake in the publicly traded limited partner. The deal was through Blackstone’s new $40 billion infrastructure fund.