April 6, 2023 | Editor: Martin Wennerström
Alibaba to cleave off business units
Chinese e-commerce group Alibaba has announced plans to split its operations into six separate business groups. The units are Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics Group, Global Digital Commerce Group and Digital Media and Entertainment Group. Alibaba will likely seek to list the individual entities, except for Taobao Tmall Commerce Group, the company’s largest source of revenue. Each of the units will be run independently, with its own board of directors and CEO. Alibaba would initially retain influence as a major shareholder in the new listings, although its long-term ownership interest remains unclear. Daniel Zhang will continue as CEO of Alibaba, while also serving as CEO of the cloud and artificial intelligence business. Zhang has stated that the reorganization is aimed at improving the efficiency of the company’s operations and unlocking shareholder value. The restructuring is also expected to ease regulatory pressure over antitrust concerns.
Saudi National Bank reshuffles board leadership
Ammar al-Khudairy has stepped down as Chairman of Saudi National Bank (“SNB”), Credit Suisse’s largest shareholder. The resignation was allegedly prompted by al-Khudairy’s statement that SNB would not increase its 9.9% stake in Credit Suisse should the lender require additional liquidity. The comments exacerbated investors’ loss of confidence in the Swiss bank, leading to a selloff and a 24% fall in share price. SNB CEO Saeed Mohammed Al Ghamdi will assume the chairmanship, while his deputy Talal Ahmed Al Khereiji will take over the CEO role on an interim basis. SNB’s initial USD 1.46 billion investment in Credit Suisse lost over USD 1 billion in value following the bank’s failure.
India ends guaranteed board
India’s securities and market regulator SEBI has approved a series of regulatory amendments aimed at strengthening corporate governance at listed entities. In particular, the reforms will end to the practice of permanent board positions, instead requiring shareholders to approve the appointment of each director at least every five years. Permanent board positions have been established at listed companies either through explicit clauses in their articles enabling such appointments, or through the appointment of directors not liable to retire by rotation, often with the aim of safeguarding promoter’s board seats.
AMP receives first strike on remuneration report
AMP has received its “first strike” under Australia’s “two strike” rule for say-on-pay resolutions. 49.1% of votes were cast against the resolution at the wealth manager’s 2023 AGM. Opposition of over 25% at the 2024 AGM would constitute a “second strike,” paving the way for a shareholder vote to remove the board. This outcome was reportedly prompted by both pay quantum and bonus funding in the face of flagging performance. AMP has struggled to recover following a 2018 court ruling that overturned its vertically integrated business model, leading to a 75% share price decline over the past five years.
Governance in Brief – June 8, 2023
European Parliament approves CSDDD The European Parliament has approved the “Corporate Sustainability Due Diligence Directive.” Under the new rules, companies will be required to identify and address the negative impact of their activities and value chains on human rights and the environment. Additionally, companies will need to implement climate transition plans, and, in the case of companies with more than 1,000 employees, tie directors' variable compensation to target achievement.
Governance in Brief – June 1, 2023
Citigroup to IPO Banamex after Mexican gov’t interventions hamper sales deal Citigroup has announced a plan to spin off its Mexican business, Banamex, after a failure to sell the unit to conglomerate Grupo Mexico. Citigroup had been in talks with German Larrea, CEO and Chairman of Grupo Mexico, for over a year in an attempt to orchestrate the sale of the bank, which was first announced at the start of 2022.
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.