March 25, 2021 | Editor: Martin Wennerström
Starbucks shareholders revolt over executive pay
Starbucks faced a rare rebuke at its 2021 AGM, where its advisory say-on-pay resolution was rejected following opposition by 53% of votes cast. The executive pay proposal included two special one-time retention awards granted in December 2019 to CEO Kevin Johnson and then-COO Rosalind Brewer. Johnson stands to receive up to USD 50 million in cash, provided he continues as CEO through 2022 and boosts total shareholder return to the 80th percentile relative to the S&P 500 index. The award will be delivered in cash at the end of a three-year performance period running from 2019 to 2022.
Ahead of the AGM, proxy advisers ISS and Glass Lewis had recommended shareholders to oppose the pay proposal. As a basis for its recommendation, ISS cited the frequency of the one-time awards, the lack of an adequate rationale for the size of the award, and the use of cash in lieu of equity. In response, Starbucks argued that its market value had risen by USD 39 billion under the CEO’s leadership and urged shareholders to approve the resolution, as the final payout will not be known until the end of fiscal 2022.
Starbucks (1) | Starbucks (2) | WSJ | CNBC
UAE to require at least one female board member
The UAE Securities and Commodities Authority has made it compulsory for listed companies to appoint at least one female director. The decision aims “to empower Emirati women and encourage them to play a greater role” as board members. Although listed companies were already nominally required have at least 20% female board representation, this was on a comply-or-explain basis. 28 of the 110 UAE-listed companies have at least one female director, although only 3.5% of Emirati board seats are held by women. UAE’s Central Bank has recently partnered with local social enterprise Aurora50 to promote female representation on both private and public sector boards.
SCA | Reuters | Bloomberg | UAE CB
Berkshire board opposes SRI-related shareholder proposals
Berkshire Hathaway’s directors are “unanimously” opposing two separate shareholder proposals at the upcoming 2021 AGM. The first requests annual reporting on material climate-related risks and opportunities, while the second requests annual reporting on the firm’s policies and quantifiable performance relating to diversity and inclusion. Berkshire cites the decentralized structure of its businesses across “dissimilar industries,” which makes it “unreasonable to ask for uniform, quantitative reporting.” Warren Buffet, who holds 32.1% of voting power, has previously stated that he does not consider climate change to be a major threat to Berkshire’s insurance operations.
BH | Reuters | Bloomberg Quint
Pinduoduo founder steps down as Chair
E-commerce platform Pinduoduo Inc. has announced that its founder and Chairman Colin Huang has stepped down from the board, with CEO Chen Lei replacing him. Huang had turned over the CEO role to Lei as recently as July 2020, and will now give up the supervoting rights that currently give him control over the company. He will, however, maintain his 28.1% stake in the company for a three-year lock-up period, while entrusting the board with exercising his voting rights. The e-commerce giant, which is valued at USD 168 billion, has seen its share price fall over 9% since the initial announcement of Huang’s departure.
Governance in Brief – May 25, 2023
Activist investor pushes for leadership and strategy changes at NRG Energy Activist investor Elliott Investment Management has disclosed a 13% stake in the US-based NRG Energy and called for leadership and operational changes at the company to remedy its “meaningful underperformance.” The investor urged NRG to add independent directors with experience in the power and energy sector to its board, noting that it has already identified five executives to guide the operational and strategic changes.
Governance in Brief – May 19, 2023
EU court sides with Ryanair on Lufthansa’s 2020 bailout. The EU General Court, the second-highest court in the EU, has annulled the European Commission’s decision on the approval of state bailout for Deutsche Lufthansa prompted by the 2020 pandemic. The judgment found the EC erroneously considered that Lufthansa could not obtain financing on the markets and failed to ask for the implementation of an incentive mechanism for the airline to buy back the German Government’s stake.
Governance in Brief – May 11, 2023
JPMorgan Chase takes over failed First Republic Bank JPMorgan Chase has acquired the assets and deposits of First Republic Bank after California authorities seized and auctioned the troubled lender. The Federal Deposit Insurance Corporation (“FDIC”), an independent governmental agency established to maintain financial stability through the insurance of banks’ deposits, took possession of First Republic Bank after the lender suffered a severe liquidity crisis following the failure of SVB and Signature Bank earlier in March.
Governance in Brief – May 4, 2023
TotalEnergies sells Canadian oil sands operations to Suncor TotalEnergies has announced that it will sell its Canadian operations to Suncor Energy, in an agreement worth up to CAD 6.1 billion (USD 4.47 billion). The French energy giant had originally planned to exit Canadian oil sands by spinning off TotalEnergies EP Canada, but later agreed to instead sell the operations after having received unsolicited offers from both Suncor and other parties.