Media Center

Featuring all breaking news and in depth articles and editorial press coverage pertaining to shareholder activism and corporate governance.

Elon Musk and Twitter at Odds Over Terms of Agreement to Close Deal
Bluebell Wants Richemont Succession Plan Made Public
Investor Hits Important 5% Stake in Purplebricks
Swedish Match: Many Moving Parts Around Philip Morris Offer, but Limited Near-Term Upside
German Utility to Extend Life of German Lignite Power Stations to Ease Energy Crisis
Musk Proposes to Buy Twitter for Original Price of $54.20 a Share
Video: Musk Moves Ahead With Twitter Deal in 13D Filing
Turquoise Hill Announces Mailing of Management Information Circular to Consider the $43 Per Share Rio Tinto Transaction
Rubric Capital Management Increases Slate of Proposed Mereo BioPharma Director Nominees to Five
Centene Shareholders Approve Governance Changes, Board Member to Step Down
Opinion: Jana Prepares to Bring Star Nominees to Freshpet's Board. Here's How It May Create Value
Elliott Raises Swedish Match Stake
Standard Chartered Apologizes to Shareholders Over Pay Report
Tyson’s Choice of CFO Raises Concerns About Potential Conflicts of Interest
Canada's CPP Investments Embarks on Governance Voting Blitz
Column: Vodafone Boss Hopes Deal Eases the Pressure
Opinion: The Twitter Fiasco and the Case for Increased Activism
How the SEC's Executive Compensation Disclosure Rule Could Impact the 2023 Proxy Season
Analysis: Why Activists' Boardroom Blues Might Brighten in Q4
PwC Survey Finds Shareholder and Board Communication Up, but Priorities Diverge
Opinion: Why the ESG vs. GOP War Over Energy and Climate Change Is Going Nowhere
High Satisfaction With IR Websites From Both IROs and Institutional Investors
Fund Managers, Regulators Wrestle Over Plans to Tighten ESG Rules
Analysis: Weak Signals for Vodafone Despite M&A Drive
2022 Proxy Season – Shareholder Proposal Review
Hedge Funds May Steer Clear of ESG Designations Over EU Rules
50/50 Women on Boards Annual Gender Diversity Index Study Reveals the Pace is Slowing for Women Joining Boards, However When Women Lead, Boards are More Diverse
Bed Bath & Beyond's Turnaround Plan Leaves 'Questions that Have Really Not Been Answered to Any Degree'
Is Your Board Inclusive — or Just Diverse?
Shareholder Activism Highlights Need for Increased DE&I Standardization

10/6/2022

Elon Musk and Twitter at Odds Over Terms of Agreement to Close Deal

Wall Street Journal (10/06/22) Lombardo, Cara; Corse, Alexa

Representatives of Elon Musk and Twitter Inc. (TWTR) are still struggling with the terms of an agreement that would enable Musk's acquisition to move forward. Sources said both sides discussed a possible reduction of the $44 billion Musk offered before he backtracked and said he would honor the original agreement's terms. Unresolved points in the current negotiations include what would be required from both parties for litigation over the transaction to be terminated, and whether the deal's closing would depend on Musk receiving the requisite debt financing. A trial is scheduled to start Oct. 17, and some people said the two sides have agreed to delay Musk's deposition slated to begin today. Sources reported that informal discussions about a cut in the original purchase price happened in a series of conference calls in recent weeks between attorneys, and halted when both sides could not agree on terms of a potential deal. Musk's apparent reversal shocked many observers after he had spent months trying to renege on the deal amid allegations that Twitter had misled him about key areas of its business, including the volume of spam on its platform. Delaware Chancery Court Judge Kathaleen McCormick on Wednesday ordered Musk's legal team to search for any more possible electronic messages requested by Twitter as both sides prepare for a five-day, nonjury trial. "The parties have not filed a stipulation to stay this action, nor has any party moved for a stay," she wrote. "I, therefore, continue to press on toward our trial set to begin on October 17." Musk's potential acquisition has kept Twitter's stock price buoyant, although its performance has declined. The company disclosed a decrease in revenue in the second quarter that it attributed to weakness in the advertising industry and uncertainty associated with Musk's bid.

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10/5/2022

Swedish Match: Many Moving Parts Around Philip Morris Offer, but Limited Near-Term Upside

Seeking Alpha (10/05/22)

Philip Morris (PM) has again extended the acceptance period on its offer for Swedish Match (SWMAY), whose shares have risen 3% above Philip Morris' SEK 106 offer. Librarian Capital analysts believe the current offer will fail, as three investors opposed to the offer have effectively reached the 10% needed to block it. Philip Morris' offer is conditional on a 90% acceptance from all Swedish Match shareholders. The 90% figure is crucial because, under Swedish law, an acquiror can only force other shareholders to sell their shares if it is holding 90% or more of the shares. Conversely, minority shareholders can block any bid if they hold 10%. Key shareholders opposed to the Philip Morris offer have effectively reached the 10% threshold in the past few weeks. Elliott Management disclosed in regulatory filings that it has built a 7.25% stake as of September 30. U.S.-based Framtiden Management, which holds about 1% of Swedish Match announced its opposition in a public letter on September 21. Bronte Capital, an Australian hedge fund also with around a 1% stake, has opposed the offer from the start. These three firms, based on their disclosed numbers, own 9.25% of Swedish Match. According to a Bloomberg report in September, other hedge funds have also bought into Swedish Match, with Davidson Kempner and HBK "both approaching the 5% level" and hedge funds in total owning "at least 25%" of the shares.

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10/4/2022

German Utility to Extend Life of German Lignite Power Stations to Ease Energy Crisis

Bloomberg (10/04/22)

RWE AG (RWE) said in a joint press conference with Germany's Economy Ministry that it will advance its coal exit to 2030, after it extends operations at two German lignite-fired power units until the end of next winter to ease Europe's energy crisis. Unlike in previous negotiations, the company will not be remunerated by Germany's government. RWE's operations at the Neurath D and E facilities will be extended until at least March 2024 to help accommodate Germany's dependence on gas supplies. "In the current crisis, we are contributing to security of supply in Germany by temporarily increasing the use of our lignite-fired power plants and are thus also helping to displace gas from electricity generation," said RWE CEO Markus Krebber. "At the same time, we are investing billions of euros to accelerate the energy transition and are ready to phase out lignite by 2030." The announcement follows criticism by RWE investor Benedikt Kormaier, who took the company to task for increasing U.S. investments in the U.S. amid one of the worst energy crises in history. Krebber said RWE's $6.8 billion deal to purchase Consolidated Edison Inc.'s (ED) renewable assets will dampen European investment. RWE said the deal to schedule the lignite phase-out in 2030 means staff reductions will ramp up toward the end of the decade, while the amount of coal produced at the Garzweiler open cast mine "will be roughly halved," and the third resettlement planned for some villages has been canceled. RWE also said it will cut the amount of anticipated carbon emissions by about 280 million tonnes. The company promised continued investment in renewables in Germany, although Krebber warned of bottlenecks that limit investments, including the amount of land available for renewables development, regulatory transparency for the hydrogen market, and bureaucratic approval processes. RWE intends to invest 15 billion euros ($14.8 billion) in offshore and onshore wind, solar, batteries, flexible backup capacities, and hydrogen in Germany by the end of the decade.

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10/4/2022

Musk Proposes to Buy Twitter for Original Price of $54.20 a Share

Bloomberg (10/04/22) Feeley, Jef; Hammond, Ed

Elon Musk is proposing to buy Twitter (TWTR), of which he already owns almost 10%, for the original offer price of $54.20 a share, say insiders. Musk made the proposal in a letter to Twitter, according to the sources. Musk had been trying for months to back out of his contract to acquire Twitter, signed in April. Musk began showing signs of buyer’s remorse shortly after the deal was announced, alleging that Twitter had misled him about the size of its user base and the prevalence of automated accounts known as bots. Musk formally quit the accord in July, and Twitter sued him in Delaware Chancery Court to force him to go forward with the purchase. A trial is scheduled to begin Oct. 17. Musk’s side needed to demonstrate that Twitter violated the terms of the deal. Twitter alleged that Musk used the bots issue as a pretext for backing out a deal he no longer found economically sound. Musk’s legal team was getting the sense that the case was not going well, as Judge Kathaleen St. J. McCormick sided repeatedly with Twitter in pretrial rulings, according to one source. Twitter shareholders voted Sept. 13 to accept the buyout offer as Musk submitted it. The company said at the time that 98.6% of the votes cast were in favor of the deal. Musk, Twitter’s largest shareholder, didn’t vote at all, according to two people familiar with his decision. Musk was scheduled to answer questions about the deal on Oct. 6-7, according to a court filing Tuesday.

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10/4/2022

Turquoise Hill Announces Mailing of Management Information Circular to Consider the $43 Per Share Rio Tinto Transaction

Yahoo! Finance (10/04/22)

Turquoise Hill Resources Ltd. (TRQ) has mailed to shareholders a Management Proxy Circular and associated Form of Proxy and Letter of Transmittal to consider Rio Tinto International Holdings' (RTNT) arrangement to purchase the approximately 49% common shares it does not presently own for C$43.00 per share in cash, following the Sept. 29 public filing. Turquoise Hill's board unanimously concurred that the transaction is in the best interests of the company and fair to holders of Minority Shares, and it recommends that those holders support the resolution pertaining to the arrangement at the Nov. 1 special shareholders meeting. A special committee of the board took various items into consideration, including a 67% premium to the closing price of C$25.68 of the company's common shares on the Toronto Stock Exchange (TSX) on March 11, being the last trading date prior to Rio Tinto's initial public proposal to purchase the Minority Shares. Also weighed was a 26% increase in the consideration compared to Rio Tinto's initial proposal made on March 13 of C$34.00 per share; an 8% increase in the consideration compared to Rio Tinto's revised proposal on August 24 of C$40.00 per share; and a 19% premium to the closing price of C$36.12 of Turquoise Hill's common shares on the TSX on August 31, being the last trading day prior to the Sept. 1 announcement of the deal principle and term sheet entered into by the parties with respect to the arrangement. To be legitimized, the Arrangement Resolution must be passed by at least two-thirds of votes cast by shareholders in person, virtually, or represented by proxy at the special meeting, voting as a single class; and by over half of votes cast by shareholders in person, virtually, or represented by proxy, discounting votes attached to shares owned by Rio Tinto and its affiliates and any other shareholders whose votes are required to be excluded per Multilateral Instrument 61-101.

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10/3/2022

Rubric Capital Management Increases Slate of Proposed Mereo BioPharma Director Nominees to Five

Business Wire (10/03/22)

Rubric Capital Management LP, whose funds and accounts collectively own approximately 14% of the outstanding equity of Mereo BioPharma Group plc (MREO), on Monday issued an open letter to Mereo's shareholders, detailing Mereo's entrenching tactics in a "desperate attempt to once more thwart Rubric's effort to call a general meeting of shareholders." Rubric is increasing the size of its slate of proposed directors to five director nominees, "who it believes will provide the board with the financial, regulatory, and strategic expertise to maximize value for all shareholders." The five candidates are: Annalisa Jenkins, Daniel Shames, Marc Yoskowitz, Justin Roberts, and David Rosen. In the open letter, Rubric states, "The Mereo Board has once again rejected our request for a special meeting based on the flimsiest of pretexts." It continues, "Not since CSX (CSX) held its 2008 annual meeting in an 'inaccessible rail yard' in a futile attempt to prevent TCI/3G's proxy challenge have we seen such depths of entrenchment and wasteful use of shareholder resources." Rubric concludes, "It is clear to Rubric (and we hope other shareholders) that the problems on the board of Mereo run deeper than we anticipated. In light of this development and our belief that further boardroom change is required to achieve the best outcome for shareholders, we are increasing the size of our slate of proposed directors to five."

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10/3/2022

Centene Shareholders Approve Governance Changes, Board Member to Step Down

St. Louis Business Journal (10/03/22) Drew, James

Stockholders of Centene Corp. (CNC) overwhelmingly approved three changes to how the company is governed, and the corporation announced that another member of its board of directors is departing. In a regulatory filing Friday, Centene disclosed the shareholder votes and said board of directors member William Trubeck, a former H&R Block (HRB) chief financial officer, will step down before Centene's 2023 annual meeting. Trubeck joins board members Orlando Ayala, a retired chair and executive at Microsoft Corp. (MSFT), and former House Majority Leader Richard Gephardt in leaving the board; the latter two were previously disclosed by Centene. The healthcare services firm said in the regulatory filing that shareholders voted to make the terms of all board members end at the 2023 annual meeting of shareholders, with all directors standing for election annually. Board members currently serve staggered terms. They also voted to eliminate the prohibition on stockholders calling special meetings. Finally, shareholders agreed to allow stockholders to act by written consent. H. James Dallas, chair of Centene's board, has said he plans to step down by the 2023 annual meeting but will remain on the board and stand for re-election next year. In a regulatory filing in December 2021, Centene said it had reached an agreement with Politan Capital Management. Politan, whose stake in Centene was worth about $900 million, had spoken with Centene about boosting the company's stock price and bringing on new board members. As part of the agreement, the company expanded the board from 13 to 14 directors and said six directors would retire. The board also appointed five new directors for this year: Ken Burdick, Christopher Coughlin, Wayne DeVeydt, Theodore Samuels, and Leslie Norwalk, who was agreed upon by Centene and Politan. Norwalk resigned in April from Centene's board. Without identifying the specific matter, Norwalk wrote in her resignation letter that the governance process around "a recent important decision" by the board fell short of what she and "a number of other board members" thought appropriate, including the board not receiving adequate information or having opportunity for discussion and debate.

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10/1/2022

Opinion: Jana Prepares to Bring Star Nominees to Freshpet's Board. Here's How It May Create Value

CNBC (10/01/22) Squire, Kenneth

Freshpet (FRPT) investor Jana Partners has entered into nomination agreements, pursuant to which six candidates have agreed to become members of a potential Jana director slate for election at the pet food manufacturer's annual meeting next year. "Since late April 2021, Freshpet's stock has declined from about $184 per share to roughly $45 per share in late September, while revenue has increased from $425 million to over $500 million in the past year and is continuing to grow," notes 13D Monitor President Kenneth Squire. "The problem is not the top line. The problem is that the business has quickly scaled to a point where the capabilities of the management team are not sufficient for the challenge." Squire sees opportunities for value creation through Jana's moves, with the first being "to moderate Freshpet's expansion plans and get the supply chain right. Without this, the company could end up using all of its cash and balance sheet capacity to fund its expansion." Squire writes that the company's senior management does not appear to be positioned, or focused on, value-boosting expansion. For example, President/COO Scott Morris appears more committed to his new company Hive Brands than to Freshpet. Selling the company is another possibility for value creation. "There would likely be significant interest in Freshpet from larger CPGs [consumer packaged goods] that already have a pet food business or CPGs that want to start a pet food business," Squire remarks. "These larger companies already have the management team and infrastructure capable of managing almost any rate of growth with 95%+ fill rates. This would be the much easier option with less time and uncertainty and is something the company should definitely explore." Squire observes that Jana's board director nominees "include former CEOs, CFOs, and CMOs of large public companies and two individuals who we are more used to seeing on a court or a field than a boardroom." Both Norris and Freshpet CEO William Cyr are up for election next year, and Squire writes that their replacement would entail a major power shift, as well as a shareholder push for change. "Moreover, there is a high likelihood that this shareholder base will support Jana based on the severe underperformance of Freshpet," he argues. Squire suggests these investors "would also likely support a sale of the company at a 40% premium despite that being far below the 2021 highs of roughly $184 per share."

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9/30/2022

Tyson’s Choice of CFO Raises Concerns About Potential Conflicts of Interest

Wall Street Journal (09/30/22) Williams-Alvarez, Jennifer

Tyson Foods Inc.’s (TSN) move to elevate the 32-year-old son of its board chairman to chief financial officer is in line with the company’s history of putting members of the namesake founding family in positions of power. But corporate governance experts say the appointment raises particular concerns around potential conflicts of interest. The company — which is largely controlled by the Tyson family — on Tuesday said John R. Tyson, who currently serves as executive vice president of strategy and chief sustainability officer, will step into the CFO role on Oct. 2. He succeeds Stewart Glendinning, who was named CFO in 2017 and will remain with the company. Mr. Tyson joined the company in 2019 after working in investment banking at JPMorgan & Chase Co. While the company, which trades on the New York Stock Exchange, has not run afoul of any securities regulations in its appointment, observers say it does raise questions about investor safeguards and board independence. Tyson’s father, John H. Tyson, has been chairman since 1998 and served as chief executive from 2000 until 2006. The elder Mr. Tyson’s aunt, Barbara Tyson, has been on the board since 1988. The main issue facing the company’s board is ensuring it can terminate the younger Mr. Tyson’s role should he not perform, despite the father-son relationship, said Joseph Grundfest, a senior faculty member in the corporate governance center at Stanford University’s law and business schools. “The core question is whether he is competent to perform the CFO function,” Grundfest said. There is no conflict of interest, a spokesman for the company said of the appointment. Chief Executive Donnie King, together with a 13-person board of mostly independent directors, has oversight of the performance of the company’s executives, including the CFO, the spokesman said. The company has two classes of stock, each with different voting rights on matters such as elections of directors. Most investors are entitled to one vote per share, but the Tyson Limited Partnership — the entity that represents the family’s holding — owns nearly all of the shares that come with 10 votes for each share. The Tyson family had nearly 71% of total voting rights as of December 2021, according to a securities filing.

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10/5/2022

Analysis: Why Activists' Boardroom Blues Might Brighten in Q4

Bloomberg Law (10/05/22) Gampher, Abigail

Activist campaigns with objectives that target board and management changes did not succeed in the 2022 proxy season at the same rate as in 2020 and previous years. But that may not be the end of the story for the performance of activist efforts in 2022, writes Bloomberg Law legal analyst Abigail Gampher. As pending objectives launched in 2022 get resolved, the ultimate success of activist efforts to make board and management changes may make up for activists' bleak proxy season, she says. So far this year, there have been 72 successful board and management objectives, roughly 50 fewer than there were in 2021 (125) and 2020 (121). But despite the lower number of successful objectives in 2022 so far, the more compelling figure may be the number of board and management objectives launched this year that remain pending, says Gampher. The number of successful objectives in 2022, as well as 2021, are likely to grow, as there are still 162 pending objectives targeting board and management changes that have been launched in 2022 so far, and another 67 pending from 2021. (There are only 14 objectives from 2020 still outstanding). Successful objectives targeting board representation, board control, board declassification, and management change, meanwhile, are reaching success quicker in 2022 than in 2021 or 2020, according to Bloomberg data. The longer durations in 2021 and 2020 show that objectives started in those years remained unresolved for a longer amount of time than many of those in 2022 so far, says Gampher. Nearly 60% of resolved board representation objectives launched in 2022 were successful, and this is the most common type of pending objective. "By the time most of the pending objectives are resolved, 2022 is likely to closely mirror 2020 and 2021 in the number of board and management change objectives that end in success for activists," says Gampher.

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10/5/2022

PwC Survey Finds Shareholder and Board Communication Up, but Priorities Diverge

Pensions & Investments (10/05/22) Bradford, Hazel

PwC's 2022 Annual Corporate Directors Survey finds increased communication and collaboration between investors and corporate directors, yet boards are not devoting enough attention to shareholders' ESG concerns. The 704 polled corporate directors hailed from over a dozen industries, and 72% of their companies have upwards of $1 billion in annual revenues. Seventy-three percent of director respondents were men and 27% were women, while 64% have been on their boards for more than five years. The segment of boards directly engaging with shareholders gained over the past year to 60% and has doubled since the 2017 PwC survey. However, although 90% of directors said their board understands the company's diversity and inclusion initiatives and data privacy and cybersecurity policies and practices, emerging areas like climate risk and related regulation were not as well understood, especially in terms of contending with climate risk and related data collection; just 56% of directors said they were familiar with their company's carbon emissions. Meanwhile, only 45% of directors see ESG issues impacting corporate performance, even though 65% said ESG is part of the board's enterprise risk management discussions. Furthermore, 57% of directors cited a connection between ESG issues and company strategy, compared to 64% in 2021. The number of directors seeing an impact on company performance also contracted from the previous year. Two-thirds of female directors considered climate change a priority, even if it affects short-term performance, versus 45% of male directors. "This is a troubling trend when we're seeing record-breaking numbers of shareholder proposals on climate change and could lead to difficult discussions on what businesses must prioritize," the report noted. The poll indicated that companies are accommodating investors' board diversity push, with new independent directors joining S&P 500 boards last year. Nearly all directors (96%) said the boards addressed diversity in the past two years, typically with increased disclosure, while 67% said their boards replaced a retiring director with one who boosts diversity; 36% said they added a director who increases the board's diversity. Last year 78 boards in the S&P 500 added one or more female directors, and 88 enlarged to add racial/ethnic diversity. Director respondents also felt boards could do more to increase investor trust, with 71% urging direct engagement, 70% calling for enhanced disclosure or reporting, and 64% recommending a diversity boost.

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10/5/2022

High Satisfaction With IR Websites From Both IROs and Institutional Investors

IR Magazine (10/05/22) Bevan, Lloyd

Approximately four in five investor relations officers see IR websites as an effective tool in engaging with institutional investors, according to a report by IR Magazine. This compares with only 8% who see websites as ineffective for institutional engagement and is a bigger proportion than the 62% of IROs who view them as effective in dealing with retail investors. Among IROs at small-cap companies, 72% view websites as effective for institutional engagement, with 6% viewing them as very effective. These figures increase with every cap size to mega-cap, where 86% of IROs see them as effective and 19% very effective. The report also identifies how institutional investors feel about the utility of IR sections on corporate websites; 65% of institutional investors say they are very useful when seeking to invest in a company, and 63% find them very useful for companies they already invest in. Appreciation among institutional investors for website utility is greatest among North American investors, with three quarters viewing them as very useful when seeking to invest in a company. This number declines to 56% among Asian investors. The report found the typical content included by IROs on their websites widely matches the information institutional investors want to see there. The most common features on an IR website are press releases, event and report schedules, and a named IR contact, all of which are in the top three requested features by institutional investors. However, there are some differences between what institutional investors want to see and what generally appears on an IR website. Products and services and equity research analyst estimates do not feature as commonly as institutional investor interest in them.

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10/3/2022

Hedge Funds May Steer Clear of ESG Designations Over EU Rules

Bloomberg (10/03/22) Schwartzkopff, Frances; Brogger, Tasneem Hanfi

Hedge fund managers and private equity firms may attempt to avoid EU environmental, social, and governance (ESG) fund designations in order to bypass potential legal pitfalls associated with misinterpreting the rules. "There are certainly concerns," said Anna Maleva-Otto at Schulte, Roth & Zabel LLP, whose clients are mainly U.S.- and U.K.-based alternative investment managers. "U.S. managers in particular—because the United States tends to be such a litigious jurisdiction—are concerned about future investor claims for misselling." The rules are included in the EU's Sustainable Finance Disclosure Regulation, which concerns all investment managers focused on EU clients. The regulation's two main ESG disclosure categories are Article 8, in which a fund manager claims to "promote" ESG factors, and Article 9, where the "objective" is sustainability. The EU still has not adequately defined what constitutes a "sustainable" investment, with potentially hundreds of fund reclassifications as asset managers are caught off-balance by unclear provisions. Abrupt changes in a fund's designation could potentially incense investment clients and court regulatory disapproval. "It's put off some managers from pursuing either designation," Maleva-Otto said. A joint letter to the EU Commission from the bloc's three supervisory authorities sought a clear definition of fundamental ESG concepts such as what a "sustainable" investment is. The Commission has not replied yet. "It's a bigger problem on the retail distribution side, but of course it does trickle up to alternative managers," Maleva-Otto said. She noted, for instance, "we have the new requirements for EU distributors to take sustainability preferences into account when recommending an investment to their investors. So when alternative funds ultimately get distributed in the EU through private wealth management networks, then I think it will be very difficult."

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9/29/2022

50/50 Women on Boards Annual Gender Diversity Index Study Reveals the Pace is Slowing for Women Joining Boards, However When Women Lead, Boards are More Diverse

PR Newswire (09/29/22)

The nonprofit 50/50 Women on Boards (50/50WOB) education and advocacy campaign for gender balance and diversity on corporate boards reported that as of June 30, women own 28% of the Russell 3000 (R3K) company board seats, up from 25.6% last year and 22.6% the year before. Yet the growth rate has decelerated in comparison to that seen from 2020 to 2021, while new board seats that went to women declined by 8% in the first six months of 2022 compared to the last six months of 2021. The 50/50WOB Gender Diversity Index indicates that boards have more diversity with female CEOs, board chairs, or Nominating Committee Chairs. When women hold all three positions their board representation is 48.6%; yet female CEOs and board chairs are few. The study also found the combined number of R3K companies that have gender-balanced (GB) or more than three women directors surpassed 50% for the first time. Eleven percent of companies have GB boards, versus 7% in Q2 2021, and 41% of companies have more than three women, up from 33% in 2021. Meanwhile, companies without any women or only one woman fell to 2% from more than 50% in 2017. Women of color comprise just 6% of board directors, and boards' percentages of race & ethnicity are lower than the percentages within the population. Nearly three-quarters of directors (73%) must still self-identify their race and ethnicity in order to accurately monitor and help enlarge the representation of people of color on boards; 55% of the men and 18% of the women have yet to self-identify. Of the 25 states with more than 20 R3K companies, all but two (Florida and Tennessee) have over a quarter of women board members. California tops the list with 34% of women-held seats, an almost 5% year-over-year gain, and 20% of California R3K company boards are GB. "At this critical juncture, it's vital that we continue to collaborate with corporations to advance women and women of color through sponsorship of their board journey," said 50/50WOB CEO Betsy Berkhemer-Credaire. "We will also intensify the need for our board-readiness educational programs for individuals and corporations to drive the movement, while reporting on the advancement of diversity and gender balance on boards."

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9/28/2022

Bed Bath & Beyond's Turnaround Plan Leaves 'Questions that Have Really Not Been Answered to Any Degree'

Morningstar (09/28/22) Peters, Bill

When Bed Bath & Beyond Inc. (BBBY) reports fiscal second-quarter earnings on Thursday, analysts will have one big question on their minds: When will turnaround efforts pay off? The results for the home-goods retailer will arrive after a rise and fall for the "meme stock" amid moves by investor Ryan Cohen, aggressive cutbacks, and the death of an executive that was ruled a suicide. Bed Bath & Beyond's turnaround efforts will be the focus of this report, and analysts already have their doubts about executives' plans coming to fruition anytime soon. Morningstar analyst Jaime Katz said she would be looking for more specifics on the second half of the company's fiscal year on Thursday, as well as what executives' efforts to right the ship mean longer term for operating margins. Bed Bath & Beyond has pruned executives, slashed jobs, product offerings and spending, and announced plans to close dozens of stores. The company last month said it secured $500 million in new financing. It ended its fiscal first quarter with cash and equivalents of around $108 million, down from around $1.1 billion in the year-earlier period. While those cuts seem like a start to the plan, the full course is still in question, Katz said, and the end appears to be nowhere in sight. Executives will attempt to give more clarity in a conference call Thursday morning following the release of the results. Bed Bath & Beyond stock finished 4.5% lower on Monday, and is down 56% so far this year. By comparison, the S&P 500 is down 23% in 2022. Earlier in the year, Cohen disclosed a large stake in Bed Bath & Beyond. But Cohen last month unloaded that position, selling off what amounted to 11.8% of the company's shares outstanding.

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9/28/2022

Is Your Board Inclusive — or Just Diverse?

Harvard Business Review (09/28/22) Peterson, Randall S.; Gardner, Heidi K.

Research from Randall S. Peterson, a professor of organizational behavior at London Business School, and Heidi K. Gardner, a distinguished fellow at Harvard Law School, explores how boardroom behaviors change when boards become more diverse, and what boards can do to ensure that increasing diversity actually has a positive impact on both the board and the organization at large. Specifically, they analyzed data regarding the link between director diversity and financial performance for the entire FTSE 350. They then conducted a series of in-depth interviews with nearly 100 global board directors in which they shared qualitative descriptions of their boardroom dynamics and completed a structured, 40-question survey designed to quantify their board's inclusivity and behavioral patterns. Through these analyses, they found that diversity can substantially benefit boards, but only when directors' input is heard, valued, and truly incorporated. The research identified two main benefits of inclusion. First, when directors from underrepresented groups are effectively integrated, boards exhibit a more collaborative decision-making process. Second, this more collaborative decision-making process drives better firm performance and shareholder relations. Specifically, companies whose boards had well-integrated female directors experienced 10% higher stock returns, and their shareholders were 8% less likely to formally dissent to board decisions, than those that diversified without prioritizing real inclusion — even if the board only had one woman. The researchers identified several common challenges that kept women and people of color from becoming integrated into their boards. First, it takes time to build credibility in the boardroom. Second, directors from underrepresented groups often have resumes that cause them to be viewed as lower status than their white male counterparts. Finally, many new directors who were from underrepresented groups also came from relatively high socioeconomic class backgrounds, making it easier for them to build trust with existing directors. The research found that while boards have been appointing a lot more women, those women are almost exclusively white and from high social class backgrounds. These higher-class, white female directors tend to bring fairly similar perspectives as existing directors, meaning that even boards that have become more gender inclusive often still have a lot of work to do when it comes to recruiting and embedding people with multiple compounding disadvantages. To gain access to truly diverse perspectives, it's critical to acknowledge the importance of social class and other intersectional identities beyond just gender and race. Across the interviews, the researchers consistently heard that the single most important ingredient for a diverse and inclusive board was a chair who was considered to be a good listener. As a board diversifies, it becomes all the more critical for the chair to actively seek out and understand different directors' perspectives, and help the whole board appreciate contributions from all their peers.

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9/28/2022

Shareholder Activism Highlights Need for Increased DE&I Standardization

DiversityQ (09/28/22) Pritchett, David

Increased standardization in the field of Diversity, Equity, and Inclusion (DE&I) would help shareholders further hold organizations accountable for their commitment to that area. Institutional investors have perhaps three main avenues to advance progress: by channeling capital into environment, social, and governance (ESG) investments and DE&I-focused funds; ensuring they have their own clearly defined DE&I tactics and externally verifying their own DE&I performance; and investment stewardship. Investment stewardship and fiduciary duty are valuable concepts where an institutional investor must incorporate all value drivers in investment decision-making and facilitate direct engagement and proxy voting with companies on issues with a perceived material impact on financial performance. The number of DE&I-related workforce resolutions has tripled, taking it to the second highest spot after climate change, according to the UN Principles for Responsible Investment. Voluntary ESG and DE&I disclosure still lacks harmonized standardization to help companies identify, oversee, and communicate material issues to investors and wider stakeholders. The craftiest investors are actively implementing these Standards and Certification schemes in-house to better comprehend the different impacts of ESG and DE&I-related topics and to better serve investment beneficiaries.

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