Climate Kerfuffle, Musk In Primetime
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All eyes are on the E in ESG as listed companies continue to face mounting pressure on forthcoming SEC proposals related to climate disclosure and emissions reporting. Late last week, Goldman Sachs was the latest bank under the microscope as the SEC’s list of investigations into greenwashing grows. Energy companies are each taking their own path, with oil and gas producer Continental Resources choosing to try go private to reduce scrutiny of the public markets.
While deal flow is down, legal and governance advisors are keeping busy as they help their clients navigate the new SEC reporting requirements. A webinar this week hosted by Latham & Watkins and Georgeson highlighted the increasing demand for the expertise of ESG consultants. More than 25% of the webinar audience polled agreed that “ever increasing reporting and disclosure requirements” is what keeps them up at night.
Here are some other activism stories and developments on our radar this week:
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D.E. Shaw drives changes at FedEx, stock pops: Add FedEx to the list of companies suffering from the post-pandemic slump and activist pressure. This week, the company announced board additions, an increased dividend and executive compensation changes. This news came along with a cooperation agreement with D.E. Shaw, which holds a $200 million stake, and helped add the two new directors.
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Musk Enters the Twitter Zoom Room: In an extremely wide-ranging all-hands meeting, Elon Musk addressed topics such as user growth, free speech, the company’s financials, the importance of in-person work and even aliens with Twitter employees yesterday.
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Toshiba Board Suffers a Setback: ISS and Glass Lewis shared their verdict on the ongoing Toshiba activist situation and recommended the full slate of director nominees, which includes two nominees from Elliott Management and Farallon Capital. The Annual Meeting is set for June 28th.
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Universal proxy draws near: At yesterday’s Skytop Strategies Shareholder Activism ESG Super Summit at the Lotte New York Palace, Sean Donahue, Partner at Goodwin LLP shared in a panel session titled Universal Proxy, The Perfect Storm, that the beginning of universal voting in September and the continuation of ESG as a hot button issue may open doors to more ESG-centric activist campaigns.
Have a great weekend,
GPP Team
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Bloomberg: The SEC’s War on Greenwashing Has Begun
Goldman Sachs is the latest bank to be investigated by the SEC for its ESG metrics, potentially signaling more to come from the regulatory body. Read More
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Reuters: Proxy Advisers ISS, Glass Lewis Back All Toshiba Director Nominees
In a loss for the Toshiba board, ISS and Glass Lewis have both recommended the appointment of the full slate of director nominees, which includes two nominees from Elliott and Farallon Capital Management. Read More
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The Washington Post: Market Apathy to Shale Pushes Continental to Go Private
Bloomberg Opinion writer Liam Denning argues that “Assuming Continental’s ticker disappears, the company can dispense with catering to the growing ESG investment movement.” Read More
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Breakingviews: Harold Hamm’s Deal Ushers in Oil’s Last Hurrah
Robert Cyan reports Harold Hamm’s conclusion that “private markets are a better place for companies like Continental” in a letter to employees following his bid for the remaining 17% of Continental. Read More
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MIT Sloan: Experts Flag 3 Concerns With Proposed SEC Climate Disclosure Rule
In a recent panel session at MIT Golub Center for Finance and Policy, panelists identified potential challenges with the SEC’s proposed climate changes, including their limited scope, public versus private sector disclosure requirements and using data in a narrow-minded way. Read More
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The Wall Street Journal: FedEx Boosts Dividend, Adds Directors in Deal with Activist D.E. Shaw
After building a $200 million stake and speaking with FedEx since April, hedge fund D.E. Shaw will gain board seats at the company. Separately, FedEx will increase its quarterly dividend by 53%. Read More
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Financial Times: Musk’s $44bn Twitter Deal Is an M&A Arb Dream – Or Nightmare
While dizzying for the average consumer, George Steer describes how Twitter’s stock price movements and rapidly changing deal updates create a positive environment for arbitrage hedge funds. Read More
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CNBC: Here’s what Elon Musk just told Twitter Employees
Elon Musk took the microphone at Twitter’s all-hands meeting yesterday, instilling some fear among employees that layoffs may come. Read More
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ADDITIONAL LISTENINGS AND READINGS
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Axios: The Problem with Shareholder Democracy
In light of changes at BlackRock with its new Voting Choice Product allowing institutional investors to have voting power, Axios’ Felix Salmon argues that the change doesn’t carry much weight because of ISS and the resources required to complete due diligence on proxies. Read More
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European Corporate Governance Institute: The New Corporate Governance
Oliver Hart, Harvard University and Luigi Zingales, University of Chicago explore the older concept of shareholder value maximization and “how shareholder welfare maximization can be implemented in practice” in the context of present day business challenges. Read More
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Insightia: What Is the Reality of a Majority Vote?
Sanford Lewis of the Shareholder Rights Group discusses trends in shareholder proposals in an interview about company support of proposals (especially those on climate), voting power and the rising volume of proposals on social issues, such as racial equity. Listen Here
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The Deal: Shifting M&A Climate Changes Activism
Ron Orol discusses the impact of market forces on the activism landscape and the M&A market.
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FROM OUR DESK TO YOURS
GPPers attended Harvard Corporate Governance Roundtable, Skytop Strategies Shareholder Activism ESG Super Summit, and the New York Public Library Young Lion’s Fiction Award gala celebrating budding young authors.
On our bookshelf this week we all gained a fresh copy of CEO of Fortune, Alan Murray’s new “Tomorrow’s Capitalist” – a great business beach reach.
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PEOPLE MOVES
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Ray McGuire, former Vice Chairman of Citigroup and former NYC mayoral candidate was appointed to the Board of Directors of KKR & Co., effective this week. (Business Wire)
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David Carnevali will join Reuters as an M&A reporter in industrials and healthcare after most recently covering venture capital at The Wall Street Journal. (Talking Biz News)
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UBS Asset Management appoints Andrew Morris as head of infrastructure equity within its Real Estate and Private Markets (REPM) group (Investment Week)
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