The week in GRC: New York pension fund targets board diversity, and CEOs on course for bumper pay
– Standard Chartered units were fined S$6.4 million ($4.9 million) after the Monetary Authority of Singapore (MAS) accused them of failing to meet Singapore’s anti-money laundering requirements, according to Bloomberg. The lender’s Singapore branch was ordered to pay S$5.2 million and its local trust unit was fined S$1.2 million by MAS. The regulator found that risk management and controls in relation to certain transfers were ‘unsatisfactory.'
‘We regret that we fell short of our own standards in adequately mitigating the risks involving some clients [that] might have attempted to avoid reporting obligations under the common reporting standard by transferring their trusteeships,’ Standard Chartered said in a statement.
– The Financial Times reported that Edward Bramson’s activist investment fund has acquired an interest in Barclays that gives it voting rights over a shade more than 5 percent of the bank. Barclays said in a statement on Monday that entities controlled by Sherborne, Bramson’s investment vehicle, had acquired voting rights over 5.16 percent of its issued share capital.
Bramson is understood to have met with members of the Barclays board to discuss the bank’s annual results and to hear its outlook for the coming year. Barclays said Bramson had not made any specific demands, such as to gain a seat on the bank’s board or to change its strategy.
– According to Bloomberg, the EU is determining what level of access it’s prepared to give the UK’s financial services industry after Brexit, and the proposal falls far short of what the UK and its banks think is fair. The EU will consider offering the UK ‘improved equivalence’ for its financial services, according to the latest draft of the bloc’s negotiating position. That means the EU will let UK banks access its market only for as long as it considers British rules to be equivalent to the bloc’s.
– The WSJ reported that three former Newell Brands directors would part ways with the activist investors they aligned with in a proxy fight, opting out after the company struck a deal with activist Carl Icahn. Starboard Value enlisted the directors in an effort to oust Newell’s whole board and CEO. Starboard said Tuesday it may still seek some board seats this spring but is open to giving Icahn a shot at fixing the consumer products company. Newell declined to comment. Its deal with Icahn will give him control over five of 11 board seats.
‘My agenda was not to win but to change the attitude within the company,’ said Martin Franklin, one of the three former Newell directors working with Starboard. ‘Carl Icahn is putting his money where his mouth is and if he wants to sort this out, I wish him all the best.’
– The UK government proposed a series of measures to punish directors who behave irresponsibly as well as protect workers and suppliers from the worst impacts of bankruptcies, Bloomberg reported. The government stated that ‘a small number of recent corporate governance failures have raised concerns that company directors can unfairly shield themselves from the effects of insolvency and – in the worst cases – profit from business failures while workers and small suppliers lose out.’
Proposals include fines and disqualification for company directors who sell companies ‘recklessly’, reversing ‘inappropriate asset stripping’ to return money to creditors such as workers and suppliers, and giving the government’s Insolvency Service the power to investigate directors who dissolve companies to avoid large debts.
– The WSJ reported that the New York State Common Retirement Fund plans to oppose the re-election of all directors at hundreds of US corporate boards that do not have a single female member. The campaign reflects the fund’s growing impatience with the pace of progress on gender diversity in the boardroom. In 2017, women held 16.5 percent of directorships at Russell 3000 companies at year-end, up slightly from 15.1 percent in 2016, according to Equilar, which also predicts that Russell 3000 boards won’t achieve gender parity until 2048. ‘We need to speed up that time frame,’ said Thomas DiNapoli, New York State’s comptroller.
– According to the FT, global M&A deal making in 2018 has crossed the $1 trillion mark this week, the fastest it has ever eclipsed that level, amid a wave of consolidation in the US, the UK, China, Germany and Japan. Bankers have cut a string of $10 billion-plus deals so far this year. US corporate tax cuts have also been an added accelerant, as boards reassess the amount of capital they can plough into acquisitions.
– The CEOs of the largest US companies are on course for another banner year of compensation, boosted by a rising stock market and an improving economy, according to the WSJ. Median pay for the CEOs of 133 of the largest US companies reached an all-time high of $11.6 million in 2017, up from $11.2 million in 2016, a WSJ analysis of proxy statement data found. Total pay – including salary, cash incentives, equity, perquisites and more – rose at least 9.9 percent for half of the executives, the fastest annual growth since 2014.
– The FT reported that UN human rights experts have expressed concern about reports that female workers and labor activists were subjected to ‘intimidation and harassment’ in Vietnam after speaking out about working conditions at Samsung’s two manufacturing plants in that country. The Office of the United Nations High Commissioner for Human Rights said it had asked Samsung for clarification on reports that workers in the company’s two factories in Vietnam were threatened with lawsuits if they talked to people outside the company about working conditions.
Samsung said in response: ‘We take the concerns of the UN human rights experts very seriously. We have already taken actions to investigate and will co-operate closely with relevant UN bodies and experts to clarify the matter. As a global manufacturer, we value all of our employees at our manufacturing facilities around the world and are committed to complying with local and international labor standards and regulations. We have the global code of conduct and business conduct guidelines that require all of our employees globally to follow in protecting and respecting human rights.’
– Bloomberg reported that the Basel Committee on Banking Supervision proposed concessions to lenders that may cut the amount of extra capital the industry’s biggest companies will need in 2022, when the new market-risk rules are due to take effect. The proposed revisions will come as a relief to traders in swaps, bonds and other securities. The Basel Committee’s decision to take a second look at the rule, known as the fundamental review of the trading book, follows an outpouring of industry opposition since it was published in 2016.
– JPMorgan Chase CEO Jamie Dimon earned as much in a day as the typical employee at his bank took home in the whole of last year, putting him near the top of an emerging league table of big bank CEO pay, according to the FT. In an annual proxy filing, the bank said Dimon was paid $28.3 million last year, or 364 times the pay of the median employee, who received $77,799, including firm-paid benefits.
The median ratio for the listed US banks to have reported so far is 135 times, according to Autonomous Research. JPMorgan declined to comment.
– The WSJ reported that Hong Kong Exchanges & Clearing is planning to allow biotechnology companies to sell shares before generating any revenue – and companies are preparing to take advantage. Dozens of early-stage drug makers and other biotech firms are planning to list in Hong Kong over the next two years, according to executives, bankers and investors, as the exchange pushes through its biggest regulatory overhaul in decades.
Hong Kong Exchanges & Clearing is expected to finalize rules by late April that will allow biotech companies that have yet to generate any revenue or profit to list in the city, making it the second exchange after Nasdaq to do so.
– According to the FT, Samsung Electronics has shaken up its board of directors to improve governance and decision-making. The technology company appointed Kim Sun-uk to its board, only the second woman board member in the firm’s 49-year history. Samsung also separated the role of chair from that of the CEO and increased the number of board members from nine to 11. The changes are aimed at enhancing the power and independence of the board.