The week in GRC: SEC said to subpoena Tesla over tweet, and US bosses earn 312 times more than workers
– According to The Wall Street Journal, Tesla CEO Elon Musk said in a blog post that he has been in talks with the Saudi Arabian sovereign-wealth fund about taking his company private and believes two-thirds of existing shareholders would remain with the company, reducing the capital needed for such a deal.
‘I continue to have discussions with the Saudi fund, and I also am having discussions with a number of other investors, which is something that I always planned to do since I would like for Tesla to continue to have a broad investor base,’ Musk wrote. ‘It is appropriate to complete those discussions before presenting a detailed proposal to an independent board committee.’
– The New York Times reported that, according to people familiar with the matter, Musk’s initial tweet about the prospect of taking Tesla private had not been cleared ahead of time with the company’s board. The tweet was an unusual way of announcing a key strategy change at a public company. A person with direct knowledge of the Tesla board’s thinking said some members of the board had been blindsided by Musk’s decision to air his plan on Twitter.
A Tesla spokesperson declined to comment beyond Musk’s Monday blog post.
– Later in the week the WSJ said that, according to people familiar with the matter, the SEC began investigating last year whether Tesla misled investors about its Model 3 car production problems. The agency subpoenaed a parts supplier for the car company as part of the probe, one of the people said, before the SEC began looking into Musk’s tweet about taking the company private.
Regulators have also subpoenaed Tesla’s directors in an effort to find out what they knew about Musk’s plan to take Tesla private, according to another person familiar with the matter. An SEC spokesperson declined to comment. Tesla didn’t respond to a request for comment.
– According to the WSJ, activist investor Elliott Management has taken a big stake in Nielsen Holdings and intends to push the TV-ratings company to sell itself. Multiple private-equity firms already have expressed interest in Nielsen, people familiar with the matter said.
A Nielsen spokesperson said the board continues to evaluate how to best position the business and welcomes the views of its owners, including Elliott.
Information-services companies have been popular among private-equity buyers recently. Dun & Bradstreet this month said it would be taken private and Thomson Reuters agreed to sell a stake in its financial unit to a group led by Blackstone Group earlier this year. Nielsen was taken private in 2006 and went public again in 2011.
– Deutsche Bank’s supervisory board will discuss extending the contracts of its investment bank boss Garth Richie and a small number of other senior executives at its October meeting, the Financial Times reported.
‘All our management board contracts are fixed term,’ a Deutsche Bank spokesperson told the FT. ‘Several will come to an end within the next year. These contracts are due for renewal, and will be on the agenda at the next regular supervisory board meeting in October.’ The investment bank has been at the heart of restructuring and cost cutting initiatives instigated by new group CEO Christian Sewing.
– The WSJ said Carl Icahn no longer plans to solicit votes from Cigna Corp shareholders against the health insurer’s $54 billion deal to buy Express Scripts after two proxy-advisory firms recommended shareholders support the deal. Significant shareholder overlap between the two companies, which he initially hoped had decreased since the deal was announced, was also a factor in his decision, Icahn said.
Even before proxy advisers ISS and Glass Lewis recommended that shareholders support the deal, Icahn faced an uphill battle. He didn’t publicly criticize the deal until after the record date, which meant he couldn’t recruit others to oppose it.
Icahn said in his statement that he informed the SEC he will no longer solicit proxies to vote against the transaction. Shareholders of both companies are scheduled to vote on the deal on August 24.
– The Guardian looked at a new report by the Economic Policy Institute, which found that the CEOs of the top 350 US companies earned 312 times more than their workers on average last year. The chief executives of America’s largest companies got an average pay rise of 17.6 percent in 2017, with an average of $18.9 million in compensation, while their employees’ wages rose just 0.3 percent over the year.
In 1965 the ratio of CEO to worker pay was 20 to one. That figure had risen to 58 to one by 1989 and peaked in 2000 when CEOs earned 344 times the wage of their average worker. CEO pay dipped in the early 2000s and during the most recent recession, but has been rising rapidly since 2009.
– US district court judge Ed Kinkeade in Dallas rejected Exxon Mobil’s motion to dismiss a securities suit alleging the company and top executives misled investors about the impact of climate change on its business, according to Reuters.
The decision to proceed ‘is an important first step in holding one of the world’s most powerful corporations accountable,’ said Darren Robbins, an attorney for the plaintiffs, which include the Greater Pennsylvania Carpenters Pension Fund.
Exxon had sought to dismiss the suit, arguing plaintiffs failed to state a claim for the civil action. ‘We continue to believe the complaint is meritless and will vigorously defend ourselves from these baseless claims,’ an Exxon spokesperson said.
– The FT reported that Donald Trump advocated ending quarterly earnings updates and said he had asked the SEC to study allowing US companies to report on a semi-annual basis. Trump said he asked ‘business leaders’ what would improve the US job market and one of them suggested shifting from reporting results on a quarterly basis to a ‘six-month reporting system.’ He added the move would allow ‘allow greater flexibility and save money.’