April 15, 2021 | Editor: Martin Wennerström
Credit Suisse grapples with Archegos, Greensill fallout
Credit Suisse has announced far-reaching changes following the collapse of U.S. hedge fund Archegos Capital Management and UK supply chain finance company Greensill Capital. Archegos’ failure to meet margin commitments will cost Credit Suisse USD 4.7 billion, with the lender having liquidated USD 10 billion worth of funds managed with Greensill. The developments prompted Credit Suisse to amend its 2021 AGM proposals, slashing executive bonuses, cutting its dividend by two thirds, and suspending its share buyback program. In addition, two executive board members were replaced, and the lender withdrew the proposal to discharge the board of directors and executive board members for FY2020, arguing that it is in shareholders’ interest to postpone the vote until after investigations into these recent developments have been concluded. Notably, shareholders approving the discharge proposal are precluded from bringing legal action against the discharged directors and executives with regard to facts duly disclosed at the time of the meeting. The developments occur against the backdrop of a high-profile espionage scandal that led to the departure of CEO Tidjane Thiam in February 2020.
Credit Suisse (1) | Credit Suisse (2) | P&I Online (1) | P&I Online (2) | Georgeson | Schellenberg Wittmer
Amazon fails to block racial equity proposal
The U.S. SEC has denied a request from Amazon to block a shareholder proposal from being voted on at the company’s upcoming 2021 AGM. The resolution, submitted by the New York State Common Retirement Fund, calls for the online retailer to conduct an independent audit of its civil rights practices, diversity, and inclusion. The New York State Comptroller argues that Amazon needs to take “an unbiased look” at how it addresses racial justice and equity, raising concerns over recent allegations of discriminatory practices. Amazon did however succeed in halting a proposal from the New York City Comptroller requesting a report on Amazon’s health and safety risks during the COVID-19 pandemic.
NYC Comptroller | Reuters | P&I Online
Japan launches consultation on CG code updates
The Japanese FSA has launched a public consultation on proposed revisions to the country’s corporate governance code. The changes would, inter alia, enhance board independence, diversity, and climate-related disclosure. Notably, the revised code recommends that Prime Market companies have one third of the board be comprised of independent directors, with the committees being majority independent. In addition, controlled companies listed on this segment are to establish a majority independent board or set up a fully independent committee to oversee material transactions and conflicts of interest.
Lufthansa shareholders to vote on capital increase proposal
Lufthansa shareholders will vote on a EUR 5.5 billion capital authorization, billed as a “preparatory measure” for repaying the silent participation received from the German federal government in May 2020 at the outset of the COVID-19 pandemic. The bailout’s terms restricted executive remuneration, halted dividend payments, and reserved two supervisory board seats for government representatives. Notably, these representatives are not to vote on “usual” resolutions submitted at the AGM, outside of takeover situations. The capital increase resolution will be voted on at the May 4, 2021 AGM, with a simple majority voting standard.
LH (1) | LH (2) | LH (3) | LH (4) | Bloomberg
Governance in Brief – March 23, 2023
SVB Financial Group sued after the collapse of Silicon Valley bank unit SVB Financial Group, the parent company of Silicon Valley Bank, and two of its top executives, CEO Greg Becker and CFO Daniel Beck, are being sued by shareholders following the bank’s collapse. The lawsuit, filed by retail shareholder Chandra Vanipenta on behalf of a group of shareholders, accuses the bank and its two top executives of filing false and misleading financial reports.
Governance in Brief – March 16, 2023
Canada introduces climate reporting framework Canadian regulators have issued new guidance for the country's banks and insurance companies to better manage climate-related risks. The framework, which requires disclosure on governance, strategy, risk management, and metrics related to financial institutions’ greenhouse-gas emissions, was first drafted in 2022.
Governance in Brief – March 9, 2023
The U.S. Congress has passed a resolution repealing a Department of Labor (“DOL”) rule empowering retirement plan managers to consider climate change and ESG factors in their investment decisions. The rule, introduced by the Biden administration, falls under the Employee Retirement Income Security Act (“ERISA”), a federal law which sets protection standards for participants in private pension plans. Biden’s ruling entered into force in January this year, overturning prior Trump-era DOL rules that limited pension fund managers to restrict their investment strategies to “pecuniary factors.”
Governance in Brief – March 2, 2023
Indian regulator proposes enhancement to ESG disclosure rules India’s securities and market regulator SEBI has released a new ESG disclosure framework for public consultation. The proposed regulations impact India’s 1,000 largest companies by market capitalization, ESG funds and ESG ratings providers. For the largest companies, the regulator proposes areas of assurance of ESG disclosures and reporting and assurance of ESG footprint of the supply chain. The proposals expand on the 2021 Business Responsibility and Sustainability Report (“BRSR”) guidelines and propose mandatory assurance of certain KPIs under ESG disclosure. The KPIs contain intensity ratios such as GHG emissions, water consumption, and waste generation. For supply chain, SEBI will introduce a comply-or-explain approach for the top 250 companies starting in 2024, and assurance beginning in 2025. For ESG funds, SEBI proposes that at least 65% of AUM be invested in companies reporting on comprehensive BRSR and provide assurance on BRSR core disclosures. Under the proposed rules, ESG rating providers should also provide a “core ESG rating” based on assured information in addition to their own products.