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10/15/2021

BlackRock Votes Against CBA Resolution

Financial Standard (10/15/21) McArthur, Elizabeth

Despite its vocal stance on sustainability and net zero ambition, BlackRock (BLK) voted against a Commonwealth Bank of Australia (CMWAY) shareholder resolution to stop the bank financing fossil fuels. The largest asset manager in the world voted against a CBA shareholder resolution which asked the bank to stop funding fossil fuel projects. "BIS [BlackRock Investment Stewardship] voted AGAINST the resolution as it is overly prescriptive and risks unduly constraining management's ability to make business decisions," BlackRock said. "Further, the company has demonstrated its commitment to integrating climate risks into its long-term strategy, including TCFD-aligned [task force on climate-related financial disclosures] reporting since 2018 and a stated goal of net zero emissions by 2050." Activist group Market Forces supported the shareholder resolution asking CBA to stop funding fossil fuel projects. "Commonwealth Bank's updated climate policy, published in August 2021, was little more than greenwash and a recipe for climate catastrophe. Despite its commitment to net zero emissions by 2050, the bank watered down an existing (albeit ineffective) barrier to funding expansionary fossil fuel projects and gave climate-wrecking companies at least another four years to continue with business as usual," Market Forces said. According to Market Forces, approximately 15% of CBA shareholders indicated support for the proposal ahead of the annual general meeting. However, BlackRock maintained: "In general, BIS does not support shareholder proposals that we believe to be overly prescriptive and as such, would risk unduly constraining management's ability to make business decisions, as is the case with this resolution."

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10/15/2021

BHP Secures Key Investor Support Over Climate Plan

The Australian (10/15/21) Williams, Perry

Investors in BHP's (BHP) London-listed shares voted 83% in favor of the company's climate change road map at its London annual general meeting (AGM). Chris Hohn of the Children's Investment Fund Management has been pressing companies to divulge their carbon exposure and give shareholders a vote on their climate plans through his Say On Climate pledge. BHP Chairman Ken MacKenzie told the AGM that "the purpose of the say on climate is to provide shareholders with an opportunity to provide feedback on our plans, our targets and goals, and our approach to climate disclosure.” CGI Glass Lewis recommended BHP shareholders vote against the company's climate transition plan. The proxy advisor said it was unclear if BHP's targets were science-based or certified by outside organizations, although advisors Institutional Shareholder Services and Australian Council of Superannuation Investors supported the climate scheme. BHP's Australian investors are scheduled to vote on the climate plan on Nov. 11.

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10/14/2021

Facebook Faces Renewed Push to Split CEO, Chairman Roles Amid Controversies

S&P Global Market Intelligence (10/14/21) DiMolfetta, David

Shareholders and regulators are starting to view Mark Zuckerberg's role at Facebook (FB) more as a lighting rod. Recent scandals involving teen mental health and other issues have exacerbated concerns about the company's management structure, says Natasha Lamb, managing partner at Arjuna Capital. Illinois State Treasurer Michael Frerichs says shareholders once again next year will seek to split the roles of CEO and chairman, both currently held by Zuckerberg, to create an independent chair seat at Facebook. That would mark the fourth year in a row for such a proposal, which has received support from investors like Vanguard Group, the second biggest shareholder in Facebook with control of 6.5% of common shares outstanding. The problem is Facebook's two-tiered voting structure gives Zuckerberg almost 58% of voting control over the company. From the end of August to Oct. 12, Facebook shares are down almost 15%.

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10/14/2021

Invesco Tried to Forge Zee-Reliance Merger and Retain Punit Goenka

The Telegraph (India) (10/14/21)

The battle between the founders of Zee Entertainment Enterprises Ltd. (ZEEL) and shareholder Invesco remained in the spotlight on Wednesday after a string of revelations showed that Invesco had tried to mediate a merger with Mukesh Ambani’s Reliance Industries Ltd. (RELIANCE) back in February that promised to retain Punit Goenka as Managing Director and CEO of the merged entity. The Invesco plan offered terms in the proposed merger with Reliance group entities that mirrored provisions worked into the non-binding merger pact reached last month between Sony and Zee. Late in the evening, Reliance distanced itself from the escalating war of words when it admitted that it had been approached by Invesco to discuss a merger but claimed the discussions had broken down over Zee’s demand for the issue of preferential warrants to raise its stake in the merged entity. In his letter to the Zee board, Goenka said he had been approached by Aroon Balani and Bhavtosh Vajpayee, representatives of Invesco Developing Markets Fund and OFI Global China Fund LLC, with the offer of a merger with a “large strategic group.” On Wednesday, Invesco disclosed the strategic group was none other than Reliance. The fund said that its role was only to “facilitate” a possible deal between Reliance and Zee. Invesco, however, rejected claims it had pushed for the transaction at a lower valuation. “We wish to make clear that the potential transaction proposed by Reliance (the strategic group referenced but not disclosed in the 12 October 2021 communication by Zee) was negotiated by and between Reliance and Goenka and others associated with Zee's promoter family. The role of Invesco, as Zee's single largest shareholder, was to help facilitate that potential transaction and nothing more,” the fund said. It added that various sincere efforts were made over the last two years to bring Zee back to good health and that discussions around strategic alignments have been just one part of this effort.

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10/14/2021

FSC Baulks at Contentious Proxy Rule

Australian Financial Review (10/14/21) Roddan, Michael

The Financial Services Council (FSC) has rejected an Australian government proposal that would force proxy advisers to give listed companies their analysis and share voting recommendations before they provide the information to clients that purchase it. The FSC said the proposal "could have a significant impact on the current proxy voting processes of funds" such as institutional managers and superannuation funds. The FSC represents institutions that rely on proxy advisers CGI Glass Lewis, Institutional Shareholder Services, and Ownership Matters. In the U.S., the Securities and Exchange Commission has changed course on a similar proposal that was initiated during the Trump administration. The proposal was the most contentious part of the Treasury's push to rein in the proxy advice sector. Australia's big businesses have supported Treasurer Josh Frydenberg's proposal to toughen the rules. However, most institutional investors, superannuation funds, and related investment governance organizations have criticized the proposals.

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10/14/2021

Glaxo Board and Bluebell Spar in New Letters

Bloomberg (10/14/21) Paton, James; Kumar, Nishant

GlaxoSmithKline's (GSK) board has responded to Bluebell Capital Partners' letter calling for the replacement of Chairman Jonathan Symonds and CEO Emma Walmsley. In a missive to Bluebell's partners on Wednesday, Symonds said the U.K. drugmaker was "disappointed" in their account of an investor meeting designed to update shareholders on progress toward the spinoff of GSK's consumer unit. He claimed that remarks made at the forum were taken out of context, and also supported moves by Walmsley and her team to improve corporate performance. Bluebell submitted another letter Thursday, describing GSK's version of events as "simply untrue" and repeating demands for a "radical reshuffle" of the board. In September the hedge fund invested some 10 million pounds ($14 million) in GSK, a company with a market capitalization of over 70 billion pounds. "We have said all we are going to say on the matter," a GSK spokesman stated.

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10/14/2021

Group of CytoDyn Stockholders Comments on Delaware Court Decision

Business Wire (10/14/21)

A group of long-time stockholders of CytoDyn Inc. (CYDY) that has nominated five director candidates to serve on the company's board of directors has commented on the decision made by the Delaware Court of Chancery to deny the investor group's request to force the company to allow stockholders the opportunity to vote for the investor group's nominees. The investor group stated: "We believe strongly that the Court's ruling is fundamentally flawed and, as such, we are evaluating all possible alternatives. CYDY is very poorly managed—in addition to its complete failure to secure FDA approval for Leronlimab, it is currently being investigated by both the SEC and DOJ, and recently issued a going concern disclosure, all while the management team awards itself outsized pay packages. This company is in desperate need of new leadership and oversight to enact sorely needed change." Paul Rosenbaum, Jeffrey Beaty, Arthur Wilmes, Thomas Errico, M.D., Bruce Patterson, M.D., Peter Staats, M.D., Melissa Yeager, and CCTV Proxy Group LLC have filed a definitive proxy statement and accompanying white proxy card with the Securities and Exchange Commission to be used in connection with the solicitation of proxies from the stockholders of CytoDyn Inc. All stockholders are advised to read the definitive proxy statement and other documents related to the solicitation of proxies.

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10/14/2021

Jana Partners Takes Stake in Macy’s, Urges Spin Off of E-Commerce Business

Wall Street Journal (10/14/21) Cimilluca, Dana; Lombardo, Cara

Jana Partners has taken a stake in Macy's Inc. (M) and is calling for the company to spin off its fast-growing e-commerce business, according to sources. Jana Partners on Oct. 13 sent a letter to the retailer's board urging it to separate the online division, which has approximately $8 billion in annual revenue, the sources said. The retailer's e-commerce business has already drawn interest from firms that could invest in it in conjunction with a spinoff, some of the sources said. Jana thinks that a stand-alone e-commerce business would be worth a multiple of Macy's current market value, which stood at about $7 billion on Oct. 14 after a recent rally. Macy's shares have dropped significantly in the past several years, while the valuations of online-only retailers like Farfetch Ltd. (FTCH) and MyTheresa have climbed. Jana hinted at its interest in Macy's at the 13D Monitor Active-Passive Investor Summit in New York last week, suggesting the company should separate out its e-commerce business. Macy's, which also owns the more upscale Bloomingdale's brand, was hit hard last year by the Covid-19 pandemic, which forced the temporary closure of physical stores. Online sales, however, have spiked as more customers shop from home. This is at least the third time Macy's has been engaged in recent years. But in a sign of how much the retail world has changed due to online shopping and the pandemic, investors such as Starboard Value previously urged the company to unlock the value of its real-estate holdings.

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10/14/2021

California Board Diversity Requirements Face Legal Challenge

Roll Call (10/14/21) Meyers, Ellen

A Los Angeles judge has rejected a request for summary judgment on California's board diversity law, allowing a lawsuit to go to trial. The date of the trial is set for Oct. 25. Plaintiffs, three California taxpayers, are challenging SB 826, claiming that it is an unconstitutional gender-based quota and taxpayer money should not be used to implement it. Signed into law in 2018, the mandate requires public companies with principal executive offices in the state to have specified numbers of women on their boards of directors. Washington state adopted similar legislation last year, and 10 other states have passed similar rules. In addition to action taken by state governments, companies are facing pressure from institutional investors to diversify their boards. Asset managers and funds are being pushed to view board diversity as a material factor to consider in investment decisions.

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