SEC and Private Companies, ESG and Unilever, Activists Kick Off 2022
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Public disclosure requirements may soon be coming to a private company near you. Continuing to work through its long to-do list, this week the SEC signaled that it is considering new rules that would require large private companies to routinely disclose details about their financials and operations. A proposed set of rules still seems a ways off, however detractors of the concept aren’t waiting to find out the details, calling this an overreach and warning of unintended consequences.
Next, a question on ESG: should mayonnaise have a purpose? In his 2022 letter to investors, Terry Smith, who runs the Fundsmith Equity Fund, argues that the only purpose for mayonnaise is to go on sandwiches. He thinks Unilever’s ‘obsession’ with publicly displaying ESG credentials at every turn signals a management team that has ‘lost the plot.’ Strong words, especially when coming from a top-10 shareholder. Bloomberg’s Matt Levine takes an interesting deeper dive into this argument and what it means for companies to balance fiduciary shareholder obligations and invest further in ESG.
Finally, there was an uptick in shareholder activism this week. Here is a quick rundown of some of the biggest stories to watch over the coming weeks:
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Starboard Value and Huntsman Corp appear to be headed towards a proxy fight. Starboard announced a minority slate contest on Wednesday, with Bloomberg breaking the news.
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Janus Henderson has sided with fellow activist investors to oppose Zendesk’s proposed takeover of SurveyMonkey parent Momentive Global. They join Legion Partners and Jana Partners to form a formidable roadblock to Zendesk’s current plans.
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One of Japan's largest pension funds has now said Toshiba should overhaul its board and management team. This comes just one week after 3D Investment Partners called for a special meeting aimed at forcing the company to win supermajority support for its three-way separation plan.
Best,
Chris and Felipe
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Wall Street Journal: SEC Pushes for More Transparency From Private Companies
‘Unicorn’ firms have a huge impact and ‘absolutely no visibility’ for regulators, says SEC Commissioner Allison Lee. Read More
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Financial Times: Unilever Has ‘Lost the Plot’ by Fixating on Sustainability, Says Terry Smith
Public display of climate and social credentials comes at cost to the business, claims fund manager. Read More
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Bloomberg: Activist Starboard Nominates Four Directors at Huntsman
Activist investor Starboard Value has nominated four directors to the board of Huntsman Corp. as it believes additional oversight is needed to deliver on the chemicals group’s promises to improve performance. Read More
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Bloomberg: Zendesk Deal for SurveyMonkey Parent Slammed by Janus Henderson
Janus Henderson Group Plc has come out against Zendesk Inc.’s proposed takeover of SurveyMonkey parent Momentive Global Inc., questioning the deal’s strategic, tactical and financial rationale. Read More
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Reuters: Toshiba Should Overhaul Board and Management, Major Japan Pension Fund Says
Toshiba Corp’s proposal to split itself into three companies won’t solve its governance issues and the conglomerate should prioritize an overhaul of its board and management, said a senior executive at one of Japan’s largest pension funds. Read More
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Axios: Powell Likely Won't Do What Green Activists Want Most
Federal Reserve chairman Jerome Powell is offering Democrats fresh pledges to make climate change a priority, but there's little sign he believes the central bank should act to thwart Wall Street finance for polluting industries. Read More
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Fast Company: How will ESG change in 2022? Here are 7 predictions
From required disclosures to the risks of politics, here’s what the sector could see in the coming year. Read More
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Investment Week: Number of Retail Investors Using Vote to Hold Corporates Accountable Increases 110%
According to data from interactive investor, the investment platform processed a total of over 161,900 shareholder votes last year, more than double 2020's total of 77,185. Read More
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The Deal: Behind the Buyouts: Blackstone's Chung, Morrell Talk Spanx Deal and More
On the latest episode of The Deal’s Behind the Buyouts podcast, Ann Chung and Kelley Morrell talk about the firm’s majority stake in Spanx Inc., its investment process and value-add initiatives as well as the private equity giant’s efforts to improve diversity in its ranks. Listen Here
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EY Global Integrity Report 2022
The EY Global Integrity Report 2022 reveals a growing gap between what senior leaders assert is important and what they are prepared to do for individual gain. Additionally, we see businesses adopting new reporting methods that improve rigor and transparency and bring opportunities to leverage advanced analytics for risk mitigation. Read More
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Latham & Watkins LLP: ISS, Glass Lewis Focus on ESG in 2022 Benchmark Proxy Voting Policies
In late 2021, Institutional Shareholder Services (ISS) and Glass, Lewis & Co (Glass Lewis), the two leading proxy advisory firms, released updated policy documents for the 2022 proxy season. Read More
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When it comes to workforce-related policies such as recruitment, retention and compensation, many employers are finding themselves flying blind in an environment that has been fundamentally altered. Understanding the labor market is therefore no longer good to know; it is a must-know. As many workforce-related policies take some preparation time, the ability to anticipate future trends in the market will remain crucial. Register Here
Hosted at The Westin New York Grand Central, this event will focus on the latest campaign practices of activists, how they unfold, their outcomes, and how boards and executives work constructively toward improved stock performance.
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