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4/24/2024

Woodside Investors Vote Down Climate Plan, Rebuking Australia's Top Gas Producer

Reuters (04/24/24) Jackson, Lewis

Shareholders rejected Woodside Energy's (WDS) climate plan on Wednesday, marking a symbolic victory for activists who have called for Australia's biggest gas producer to stop new fossil fuel projects. Following a lengthy campaign, 58% of the votes opposed Woodside's climate transition plan in a demonstration of the growing unease over its strategy for curbing carbon emissions which critics say is unambitious and vague. Woodside Energy chair Richard Goyder said he was disappointed by the plan's rejection but the board respected the result and would keep talking to shareholders about its strategy. "The vote reflects the challenges and complexities of the energy transition, and today's outcome is one we take very seriously," he said. Opposition has grown since a vote two years ago, when 49% were against the climate plan, also in a non-binding vote. A related campaign to block Goyder's re-election and hold him accountable for the plan failed to unseat him but cut his margin of victory down to 83.4%, from the 99.2% support he secured in 2021, in a rare rebuke for an Australian company chairman. A vocal and public campaign against the plan and Goyder won support from major pension funds in the United States, Norway, and Australia along with proxy advisor Glass Lewis. Activists want Woodside to shelve major new oil and gas projects and oppose its reliance on carbon credits to help meet its targets. "It would be belligerent for Woodside to front up to shareholders next year with the same old approach," said Harriet Kater, head of impact at the Australasian Centre for Corporate Responsibility, which led the campaign against Goyder and the climate plan. Woodside has a $20 billion plus portfolio of new projects in various stages of development and is targeting net zero by 2050 for Scope 1 and 2 emissions, which refer to those produced directly or indirectly by its operations. Goyder said he had personally held 83 meetings about climate change with investors since last year and despite the public campaign against the company, there had been no high profile divestments. "I'd like to state very clearly that we are committed to conducting our business sustainably. This means responding to climate change," he said.

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4/24/2024

Proxy Battle Fails to Erupt as Investors Wave Through FTSE 350 Payouts

City A.M. (04/24/24) Conchie, Charlie

A battle over executive pay in London has failed to materialize so far this year as investors wave through bigger salaries despite fears of a backlash, new data has suggested. Boardrooms across London have been braced for rebellions in the coming weeks as they look to hike the compensation of top executives through "annual general meeting season," when shareholders typically gather to vote on corporate policies. Fears have grown of a standoff as top proxy groups Glass Lewis and ISS have mounted resistance against some payouts on the grounds they are “excessive.” However, despite fears of backlash, remuneration packages tabled in the UK between January and March saw an “extraordinary surge in support,” data firm Computershare found in new research. Not one of the 34 FTSE 350 firms to hold their AGM in the first quarter faced “significant opposition” from shareholders, the firm said. Significant opposition was defined as receiving 20% or more "against" votes from shareholders. The numbers are in stark contrast to the same period last year when nearly 12% of pay policies triggered pushback from shareholders. In the first three months of 2022, nearly 18% of pay policies faced resistance. “This trend of fewer remuneration reports being contested suggests a softening approach from some investors on the issue of remuneration and perhaps a willingness to see executive remuneration packages in the UK in the context of global standards,” analysts at Computershare said. The figures come amid a debate raging in London over the salaries made by bosses and the ability of listed firms to attract top talent. Some in the City argue that they face an uphill battle recruiting executives due to the hefty salaries made in the United States, which dwarf those paid to UK executives. Proxy firms have been blamed for resisting payouts for top executives in the UK despite giving the green light to far bigger salaries at US companies. While resistance from proxy groups has picked up in the past month, ISS, the biggest proxy firm, issued no "negative recommendations" on the approval of remuneration reports in the first three months of the year among the 34 FTSE 350 companies to hold their AGMs. During the same period in 2023, ISS opposed three of the proposed pay hikes, and seven of the 39 proposals put forward in the same period of 2022.

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4/24/2024

Environmental & Social Policy Issues in the 2024 U.S. Proxy Season

Harvard Law School Forum on Corporate Governance (04/24/24) Welsh, Heidi

Proponents as of mid-Feburary 2024 had filed at least 527 shareholder resolutions on environmental, social and related sustainable governance issues for this year's proxy season, down by just a few from 536 in 2023 at the same point. Support levels have dropped significantly on average in the last two years, primarily because the largest asset managers have stopped backing as many proposals. Some of the chill clearly comes from attacks on the use of investment strategies that weigh social and environmental issues in business, highlighted by related litigation that is testing out novel legal theories that could upend shareholder rights and decades of investor engagement. Some also comes from the kinds of resolutions filed, as well as the context of a robust U.S. economy and fallout from global conflicts that have pushed energy prices up. Proposals that favor changes that would strengthen corporate approaches to societal responsibility continued to decline, with the pro-ESG average dropping to 21.5% in 2023, down from an apex of 33.3% in 2021. However, the relatively small number of anti-ESG proposals still have won no traction, and 2023 saw their already low average decline to just 2.5%. The number and proportion of voted proposals increased in 2022-23, even as fewer were omitted given a policy change at the Securities and Exchange Commission in late 2021. Companies in 2023 responded to the new SEC approach by lodging fewer challenges, but in 2024 their efforts to exclude proposals spiked back to earlier levels. As of mid-February there were only seven omissions and 94 challenges remained to be decided — compared to 12 omitted and 76 to which SEC staff had not responded in mid-February 2023. Furthermore, this report counts approximately 70 proposals that are not described in detail, more than double the figure from last year, as participants keep their engagements out of the public eye. As of mid-February, a total of 479 proposals on social and environmental issues were slated for votes, up from 450 at the same time in 2023. Some of the most notable new proposals ask companies about their use of artificial intelligence, and a few also reference new recommendations to protect biodiversity and nature. Otherwise, the broad strokes of previous years are similar — with approximately one-third on environmental topics; about 30% regarding diversity, decent work and human rights; and 17% pertaining to corporate political influence. Anti-ESG proposals comprise less than 10% of the total but this is expected to rise since these proponents do not share their proposals prior to voting starting in the spring. As of mid-February, the SEC was on the verge of releasing its long-awaited climate disclosure rule, which may reshape how companies report on greenhouse gas emissions and strategies, but breaking news on February 23 was that the new rule would exclude Scope 3 indirect emissions, in a seeming win for those opposed to greater disclosure.

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4/24/2024

Bank of America Shareholders Reject Proposal to Split CEO, Chair Roles

Reuters (04/24/24) Anand, Nupur; Bautzer, Tatiana

Bank of America (BAC) shareholders on April 24 spurned a proposal to divide the CEO and chairman roles held by Brian Moynihan at the company's virtual annual meeting. Proxy advisers had recommend investors vote for the bank to separate the roles in an attempt to boost governance. The proposal was supported by 31% of shareholders. All of the company's management proposals were approved by shareholders.

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4/24/2024

Genco Shipping & Trading Limited Mails Letter to Shareholders

GlobeNewswire (04/24/24)

George Economou's public disclosures mischaracterize Genco Shipping & Trading's (GNK) interactions and make misstatements about the board and directors, the company says in a letter mailed to shareholders in connection with its May 23 annual shareholders meeting. A drybulk competitor of Genco, Economou has initiated a proxy fight to add his director nominee to the board and advance an agenda, the letter says. However, Genco says its board has reviewed Economou's suggestions and believes they are not in the best interest of all Genco shareholders. Genco says its directors regularly engage with shareholders and are open-minded with respect to value-creation opportunities. The letter goes on to highlight the corporate strategy, which includes compelling dividends, lowering debt, and investing in the fleet, and Genco says it is working, as the company is outperforming. As a result, Genco urges shareholders to vote withhold on Economou's nominee Robert Pons, and to vote for the re-election of each of the company's seven nominees currently serving on its board.

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4/23/2024

Bank of America, Goldman Sachs Urged to Disclose Clean Energy Financing in Proxy Voting

Morningstar (04/23/24) Norton, Leslie P.

The New York City Employees' Retirement System filed a proposal for the April 24 annual meeting of Bank of America (BAC) that asks the bank to provide more details regarding its exposure to climate risk. A related proposal was filed for Goldman Sachs' April 24 annual meeting. JPMorgan Chase (JPM), Citigroup (C), and Royal Bank of Canada (RY) already have agreed to disclose their ratio of clean energy financing to fossil fuel financing. New York pension funds argue that the clean energy transition is not moving fast enough. On Thursday, HCA Healthcare (HCA) shareholders will vote on a proposal that asks the company to report on risks faced beyond litigation following the enactment of state laws that severely restrict abortion rights. Rhia Ventures filed the proposal on behalf of United Church Foundation, the investment manager for the United Church of Christ churches and ministries. The AFL-CIO filed unionization proposals for the April 30 and May 1 meetings of Wells Fargo (WFC) and International Flavors & Fragrances (IFF), respectively, after engagement at Warrior Met Coal (HCC) prompted the company's board to adopt limits on executive severance benefits. Meanwhile, 20% of shareholders supported John Chevedden's proposal at Adobe (ADBE) to force the board to accept resignations of unpopular directors, and 34% backed his proposal at Sonoco Products (SON) to require the company to detail political spending.

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4/23/2024

Turtle Creek Asset Management Responds to Gildan Board’s Governance Charade

GlobeNewswire (04/23/24)

Turtle Creek Asset Management Inc., a decade-long shareholder of Gildan Activewear Inc. (GIL) has responded to the latest governance charade by the board of directors of Gildan and released a statement, saying, From the outset of our private and public communications with the Board, we have been very clear in our singular desire for the Board to reverse its hasty, haphazard and value destructive termination of Glenn Chamandy. Our meeting with CEO Vince Tyra, his public statements to-date, and the Company’s most recent and bizarrely staged “Investor Update” reinforced our belief that the loss of Mr. Chamandy seriously impaired Gildan’s ability to drive value for shareholders. The Board’s embarrassing retreat in the face of unprecedented shareholder opposition only proves that they care about one thing and one thing only — themselves. Rather than facing certain defeat at the upcoming 2024 annual and special meeting of Gildan shareholders, the Board has stampeded for the exits, but not before hand-picking their replacements — a collection of individuals who have already declared that they will “stay the course”. We can’t fathom why the incoming board members would throw their full support behind Mr. Tyra when his leadership is opposed by so many shareholders, without first engaging with the owners of the Company. The statement by the incumbent Board that it decided that “near-term board refreshment was in the best interests of Gildan” is ludicrous. The only thing that has been refreshed are the directors’ names. The Board’s arrogance, intransigence, and disdain for Gildan’s shareholders remains. Over the past months, the Board has wasted significant company resources in a desperate attempt to avoid criticism for their terrible decision to replace Mr. Chamandy with Mr. Tyra and to frustrate the owners of the Company. The Board has engaged in a series of underhanded actions including character assassination, the advancement of an ever-changing narrative for its ill-conceived termination of Mr. Chamandy, legal maneuvers, a seemingly failed process to attract bids for the Company that the Board commenced at the worst possible time, and now a partial reconstitution of the Board. Each of these actions has imposed costs on Gildan’s shareholders, distracted the Company’s management team, and impaired shareholder value. The statement goes on to say, In a separate Bloomberg report, the incoming Chair both disparaged and dismissed the owners of the Company, calling them “the egos and the drama-seekers” and urging them to “get away”. It is the Board who should check their egos and end the drama. Reinstate Mr. Chamandy and fully endorse all eight of Browning West’s nominees. Let’s turn the page on this surreal chapter in Canadian governance history and get on with the business of growing Gildan’s shareholder value. We intend to support each of Browning West’s nominees at the upcoming Annual Meeting.

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4/23/2024

Walmart Faces Vote on ‘Living Wage’ Proposal

Governance Intelligence (04/23/24) Maiden, Ben

Walmart (WMT) investors appear set to vote on a proposal aimed at the company’s wage policies after the SEC declined to give it the green light to exclude the measure from its proxy statement. The proposal, filed by The Shareholder Commons (TSC) on behalf of Legal & General Investment Management America, requests that Walmart’s board and management "exercise their discretion to establish company wage policies that are consistent with fiduciary duties and reasonably designed to provide workers with the minimum earnings necessary to meet a family’s basic needs, because company compensation practices that fail to provide a living wage are harmful to the economy and therefore to the returns of diversified shareholders." The supporting statement notes that Walmart increased the minimum hourly wage for its store associates to $14 per hour in 2023, but adds that while "that is good progress, the living wage in 2022 was $25.02 per hour per worker annually for a family of four (two working adults)." TSC says wage inequality and disparity harm the economy as a whole. "By paying so many of its employees below a living wage, [Walmart] may believe it will increase margins and thus financial performance," the proponent writes. "But gain in company profit that comes at the expense of society and the economy is a bad trade for company shareholders who are diversified and rely on broad economic growth to achieve their financial objectives." The proposal, TSC says, asks Walmart’s board to set a company compensation policy of paying a living wage to prevent contributing to inequality and racial/gender disparity. Walmart asked the SEC for no-action relief if it omitted the proposal from its proxy materials on the grounds that per Rule 14a-8(i)(7) the resolution "deals with matters related to the company’s ordinary business operations." Walmart wrote in its request: "The proposal requests that the company establish a policy of paying workers a living wage. Other than a few references to socioeconomic implications of income inequality, the proposal and the supporting statement concern the level of the company’s pay for its employees (associates)." The company described its focus on wages and benefits, noting that its websites states: "Offering competitive wages by role and market enables us to recruit the talent we need to run our business." It said that as of the end of first quarter of fiscal year 2024, "the average hourly wage for company associates in the U.S. was [more than] $17.50 per hour, more than double the federal minimum wage." The company added: "Particularly in the context of [Walmart’s] approximately 2.1 million associates around the globe, the proposal seeks to address workforce management issues that are not appropriate for shareholder oversight." The SEC was not persuaded, writing: "We are unable to concur in your view that the company may exclude the proposal under Rule 14a-8(i)(7). In our view, the proposal transcends ordinary business matters."

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4/23/2024

Japan's 7-Eleven Convenience Chain Targets Aggressive Global Growth

Reuters (04/23/24) Swift, Rocky

Japanese retail giant Seven & i Holdings (SVNDY) said on April 23 it wanted to see big growth for its 7-Eleven convenience store chain worldwide, and would be accelerating its entry into Europe, Latin America, the Middle East and Africa. Its goal is to increase the worldwide number of 7-Eleven stores 18% to about 100,000 by 2030 and for the chain to be in 30 nations and regions, up from 20 now. The plan is part of a large-scale overhaul that involves selling off lower-performing supermarket assets — a strategy pursued after pressure from activist investors. Since last year, the company has announced the closure of dozens of Ito-Yokado supermarkets, exited its apparel business, and finalized the sale of its Sogo & Seibu department store division. It also agreed to spend over $2 billion to buy convenience stores in Australia and the U.S. 7-Eleven North America chief Michael DePinto stated the group will "continue to aggressively pursue opportunities" in mergers and acquisitions in the region. ValueAct Capital, which has harshly criticized the company's asset allocation and attempted to expel its president, last week praised the group's overhaul plan, saying it would vote in favor of its board nominees.

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