June 24, 2021 | Editor: Martin Wennerström
Activision Blizzard narrowly passes say-on-pay proposal
The June 14, 2021, AGM of video game publisher and developer Activision Blizzard approved the firm’s non-binding say-on-pay resolution with only a scant 54% majority. Moreover, this level of support was achieved only after the meeting was adjourned and polls for this voting item were extended, purportedly to provide shareholders with “adequate” time to review the firm’s responses to “misleading” statements. CtW Investment Group, an entity that coordinates activist campaigns on behalf of union-sponsored pension funds, had urged shareholders to reject the proposal due to the firm’s failure “to address longstanding shareholder concerns about executive pay practices.” Meanwhile, proxy advisors had recommended a vote against the resolution due to, inter alia, the “outsized” pay of founder and CEO Robert Kotick. Kotick’s 2020 remuneration package included equity awards valued at USD 150 million, with the bulk granted in Q4 2020 and vested in March 2021 based on Activision Blizzard’s 2017 - 2020 cumulative TSR performance.
SEC sued over amendments to shareholder proposal rules
Interfaith Center on Corporate Responsibility, As You Sow, and governance activist James McRitchie are suing the U.S. SEC over its recent decision to sharpen requirements for submitting shareholder proposals. The new requirements effectively raise the minimum shareholding threshold for shorter-term holdings from USD 2,000 to USD 25,000. In addition, they curb shareholders’ ability to aggregate their holdings and use representatives, while raising resubmission thresholds. The plaintiffs demand that these changes be vacated, citing shareholder unfriendliness and a lack of adequate justification on the part of the SEC.
Crown Resorts founder receives revised exit offer
Australia’s Crown Resorts announced that U.S. private equity firm Oaktree increased its offer to acquire “some or all” of the 37% stake indirectly held by Crown founder James Packer. Packer had agreed in April 2021 to measures aimed at limiting his powers over the casino giant, after the government-commissioned “Bergin” report described his influence as “disastrous.” This agreement prevents Packer from, inter alia, seeking to install representatives on Crown’s board or initiating discussions with Crown about its businesses or operations. The AUD 3.1 billion deal would cap Oaktree’s stake at 9.99%, in line with the 10% ownership cap recommended by the Bergin report.
Mizuho releases report on IT failures, offers remedies
Japan’s third-largest lender Mizuho Financial Group has released a report into a series of IT system failures that occurred between February and March 2021. The investigation concluded that weaknesses in crisis response capabilities were a root cause of the incidents, while noting “inadequate” communication with executives and reporting delays. The probe also identified a hesitation to speak up and act when the failures were first noticed. The lender will establish a dedicated IT system failure response committee, while Mizuho Financial Group CEO Tatsufumi Sakai and Mizuho Bank CEO Koji Fujiwara will have their monthly pay halved for six and four months, respectively.
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.