July 29, 2021 | Editor: Henry Hofman
Japan updates CG Code
The Japanese Financial Services Agency has released an updated Corporate Governance Code. The revision, released on June 11, anticipates the upcoming restructuring of the Tokyo Stock Exchange (TSE) in 2022 and is focused, inter alia, on board independence, diversity, and sustainability. Following consultation with institutional investors, the TSE will be reorganized into three segments: Prime Market, Standard Market, and Growth Market. Pursuant to the revised Code, Companies that wish to be listed on the Prime Market will have to comply with higher governance standards. Specifically, at least one-third of the Board members will be required to be independent outside directors and the membership of the nomination and remuneration committees must comprise a majority of independent directors. Moreover, controlled companies listed on this segment will be required to set up either a majority independent board or a fully independent committee to deliberate and review material transactions and conflicts of interest. Regarding sustainability, the revised Code calls for Prime Market companies to collect and analyze data on the impact of climate change-related risks and earning opportunities, as well as improve their climate-related disclosure based on the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), or an equivalent framework.
Institutional Investor | Japan Exchange Group (1) | Japan Exchange Group (2) | Chambers and Partners| IFLR
Volkswagen shareholders approve settlement deal
At Volkswagen’s July 22 AGM, shareholders approved a settlement deal with four former executives, including former CEO Martin Winterkorn, related to the company's emissions scandal. The carmaker stands to receive compensation amounting to EUR 288 million, of which EUR 11.2 million will be paid by the former CEO. Winterkorn, who resigned in 2015, was found guilty by VW’s Supervisory Board of having breached his duties of care. Notably, last month prosecutors accused him of giving a false testimony to the German Parliament, in which he claimed that he was not aware of the firm rigging diesel engine tests. The ‘dieselgate’ scandal has reportedly cost Volkswagen over EUR 32 billion so far, while shareholder lawsuits for compensation are still ongoing.
Reuters (1) | Reuters (2) | Reuters (3) | VW (1) | VW (2) | VW (3)
Star Entertainment abandons buyout bid for Crown Resorts
Australian casino operator The Star Entertainment Group has abandoned a AUD 9 billion buyout proposal for rival Crown Resorts. The decision follows reports that Crown could lose its main license to operate, with the inquiry of Victoria’s Royal Commission exposing evidence of illegal conduct at the company. Citing the potential material impact of these issues on the value of Crown, Star decided to withdraw the offer as announced on 10 May 2021. Nevertheless, Star stated that it remains open to explore further opportunities with its rival. Notably, Crown has another offer in place from U.S. private equity firm Oaktree Capital Group, which offered to buy “some or all” of the 37% stake held by Crown founder James Packer.
Star (1)| Star (2) | Crown | AFR | ABC | Reuters
JPMorgan grants retention award to CEO
JPMorgan Chase has awarded its CEO Jamie Dimon a one-time retention award of 1.5 million options in the form of stock appreciation rights, according to a regulatory filing on July 20. Citing the CEO’s “exemplary leadership” and “significant contributions”, the bank aims to incentivize Dimon to lead the bank “for a further significant number of years”. Dimon has been serving as combined Chairman/CEO since 2006, having been appointed CEO the previous year. The retention award comes in addition to the CEO’s regular pay package, which amounted to USD 31.6 million in 2020. Subject to continuous leadership, the options have a ten-year term and will become exercisable in five years.
WSJ | CNBC | JPM&Co (1) | JPM&Co. (2)
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.