The week in GRC: McConnell demands Covid-19-linked liability shields, and Tyson Foods creates chief medical officer role
– CNBC reported that Under Armour disclosed it had received notice of a possible enforcement action from the SEC related to the accounting treatment of sales it booked between the third quarter of 2015 and the fourth quarter of 2016. Under Armour and two executives – Kevin Plank, its former CEO and current executive chair, and David Bergman, its CFO – on July 22 received Wells notices related to a previously disclosed probe by the agency, the company said.
The SEC is looking at the timing of Under Armour’s sales. A Wells notice doesn’t necessarily mean the company or the executives violated the law, but it indicates the agency is considering bringing an enforcement action.
‘The SEC staff [have] not alleged any revenue recognition or other violations of [Gaap] relating to that or any other period,’ the company said in a filing. ‘The Wells notices informed the company and the executives that the SEC staff [have] made a preliminary determination to recommend that the SEC file an enforcement action against the company and each of the executives that would allege certain violations of the federal securities laws.’ Under Armour said it maintains its actions were ‘appropriate,’ and it intends ‘to work toward a resolution of this matter’ with the SEC.
– Walgreens Boots Alliance said CEO Stefano Pessina has decided to step down from the position and will assume the role of executive chair once a successor is appointed, Reuters reported. Pessina was appointed CEO in 2015 following the merger between Walgreens and Alliance Boots. Executive chair James Skinner will step down but will remain on the board, Walgreens added.
– Reuters reported that the Australian Competition and Consumer Commission (ACCC) accused Google of misleading consumers to get permission for use of their personal data for targeted advertising, and is seeking a fine ‘in the millions’ and aiming to establish a precedent. The move comes as scrutiny grows worldwide over data privacy. The ACCC accused Google of not explicitly getting consent or properly informing consumers of a 2016 move to combine personal information in Google accounts with browsing activities on non-Google websites.
Google said the change was optional and consumer consent was sought through prominent and easy-to-understand notifications. ‘If a user did not consent, [his or her] experience of our products and services remained unchanged,’ a Google spokesperson said, adding that the company intends to defend its position.
– Reuters reported that Senator Josh Hawley, R-Missouri, introduced legislation that would penalize large technology companies that sell or show targeted advertisements by threatening a legal immunity for the industry. The bill is intended to clamp down on data gathering by large technology companies such as Facebook and Google that targets users based on their behavioral insights.
It does so by threatening Section 230 of the Communications Decency Act, which shields online businesses from lawsuits over content posted by users. The legal shield has recently come under scrutiny from both Democrat and Republican lawmakers worried about online content moderation by technology companies.
Facebook and Google did not immediately respond to requests for comment.
– According to the Pittsburgh Post-Gazette, US Steel said Tracy Atkinson has joined its board of directors. Atkinson retired in March from State Street Corp after working at the firm in roles such as chief compliance officer, treasurer and chief administration officer. With her appointment, US Steel now has three women on its 14-member board. The total percentage of female corporate directors at Pittsburgh-based companies is 26.4 percent.
– The SEC announced the creation of the event and emerging risks examination team (EERT) within the agency’s office of compliance inspections and examinations (OCIE). The EERT will work with financial services firms on emerging threats and current market events and mobilize quickly to provide expertise and resources to the SEC’s regional offices when critical matters arise.
The EERT will also work with OCIE staff to provide expertise and support in response to significant market events that could have a systemic impact or put investor assets at risk, such as exchange outages, liquidity events and cyber-security threats. Adam Storch has been named associate director of the EERT.
– Senate majority leader Mitch McConnell, R-Kentucky, said he will not pass a coronavirus relief bill in the Senate that does not include corporate liability shields linked to the pandemic, according to CNBC. ‘We’re not negotiating over liability protection,’ he said. Democrats have generally opposed the legal shield because it could remove a recourse for workers who return to an unsafe workplace as the pandemic spreads around the country. McConnell said: ‘There’s no chance of the country getting back to normal without it.’
Asked about a poll that found a majority of voters in six swing states oppose shielding corporations from lawsuits, McConnell said, ‘This is not just liability protection for businesses, although they are included like everyone else.’ He noted that it would also cover doctors, universities and K-12 schools, which could not get sued unless they were ‘grossly negligent or caused intentional harm.’
– Reuters reported that shareholders Cannae Holdings and Senator Investment Group said they will propose nine new directors to CoreLogic’s board in an effort to move ahead with their offer to buy the property data and analytics company. The two investment firms said they will call for a special meeting to nearly replace the company’s 12-member board.
Earlier in July CoreLogic rejected the investors’ unsolicited buyout offer of $7 billion at $65 a share, saying it was inadequate.
– The WSJ reported that the CEOs of Amazon.com, Facebook, Apple and Google faced criticism at a Congressional hearing as Democrats and Republicans challenged their business practices. The session featured lawmakers pointing to internal company emails and witness interviews as evidence that the platforms improperly abuse their dominant position.
The executives defended their companies’ practices and said they face tough competition that forces them to serve customers and innovate. Lawmakers covered a range of topics including how the companies moderate social media posts and the tactics they use to gain sizable positions in markets from digital advertising to e-commerce. Republicans appeared more skeptical of an antitrust crackdown, with Rep James Sensenbrenner, R-Wisconsin, saying he wouldn’t support a change in competition laws to deal with large tech platforms.
– Lloyd’s of London set a target for women to make up at least 20 percent of boards and executive committees at its member firms by the end of 2023, compared with 15 percent at present, as it seeks to improve diversity in the commercial insurance market, according to Reuters.
Lloyd’s has faced criticism since admitting last year it had problems with sexual harassment and daytime drinking in the market. ‘While we have put in place a series of actions to accelerate change, it is abundantly clear we have much work to do and we must be impatient in our resolve to get there,’ said John Neal, CEO of Lloyd’s of London.
Lloyd’s also said it was setting an interim target for 35 percent among broader leadership positions to be filled by women by the end of 2023, with the aim of ‘parity over the next decade.’
– Reuters reported that British Airways owner IAG named Javier Ferrán as its new chair. He is due to take over at the beginning of next year, just months after a new CEO takes up his/her position. Ferrán, who is also chair of Diageo, has been on the IAG board since 2019 and will replace Antonio Vázquez. By the time he steps down at the end of this year, Vázquez will have been in the role for almost a decade, dating back to the formation of IAG in 2011 through the merger of British Airways and Iberia.
– According to the WSJ, Tyson Foods has created a chief medical officer position and plans to hire almost 200 nurses and administrative personnel as part of its Covid-19 monitoring program. The company said its program involves screening employees each day as they arrive at work and testing for Covid-19, including those without symptoms. An algorithm-based process will pick a number of employees each week to be tested based on factors such as the number of positive cases involving plant workers as well as the surrounding community, it said.
Plant shutdowns to slow the spread of the coronavirus cut US beef and pork production by more than a third in late April. In response, meatpacking companies spent hundreds of millions of dollars on safety equipment such as personal protective gear, thermal scanners and workplace partitions.