UK Audit firms to comply or explain own governance

From Polly Peck to Satyam, recurring audit failures have undermined investor confidence in corporate governance. The Institute of Chartered Accountants in England and Wales and the Financial Reporting Council hope to address those concerns through its newly published “Audit Firm Governance Code”.… Read the rest

Exec pay and ESG – missing links?

European companies fail to link executive pay to environmental, social, and governance (ESG) performance according to new research published by Eurosif (European Sustainable Investment Forum).

The report, produced in association with an investor-led steering committee including Groupama Asset Management, Henderson Global Investors, MACIF Gestion, PhiTrust Active Investors, Robeco and Société Générale Gestion, highlights what EUROSIF sees as “critical challenges and opportunities for companies in relation to remuneration, incentives and long-term sustainability.”

Research highlights and recommendations for shareholders and regulators include:

  • 29% of FTSE Eurofirst300 listed companies have some commitment to linking remuneration to ESG performance – although concerns exists around the extent to which performance targets are set as ‘soft targets’ thereby guaranteeing a minimum level of bonus.
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Shell faces Tar Sands quiz

Shell will be asked to justify its involvement in the controversial Tar Sands oil extraction project later this year following the involvement of 142 investors who have co-filed a shareholder resolution for the company’s AGM in May.

The oil sands are the second largest oil resource in the world comprising some 173Bn barrels in reserves.… Read the rest

Inspector concludes breaches of insider trading laws were unintentional

The report of the High Court Inspector into the affairs of DCC plc, S&L Investments Limited and Lotus Green Limited was published by order of the Court this week.

The main events (previously covered in Manifest’s Agenda newsletter) preceding the initiation of this High Court Inquiry were as follows:

  • August 1995: DCC and S&L entered agreements to sell their combined 10.5% stake in the ordinary shares of Fyffes plc to Lotus Green;
  • February 2000: DCC, S&L and Lotus Green sold their entire holding of 31.2 million ordinary shares in Fyffes in three tranches on 3, 8 and 14 February realising some €106 million for the Group.
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Norway excludes tobacco producers from pension fund

The Norwegian Ministry of Finance has completed the disposal of 17 companies that produce tobacco from the Government Pension Fund Global (GPFG). The divestment was based on a recommendation from the Fund’s Council on Ethics.

“When the Graver Committee proposed the current ethical guidelines, there was debate on whether to exclude tobacco producers from the Fund.… Read the rest

US funds assert minority rights in European companies

Two US pension funds, the City of Westland Police & Fire Retirement System and the Massachusetts Bricklayers and Masons pension fund have filed a class action lawsuit against Alcon, Novartis and Nestlé, alleging that Novartis’ recent offer for Alcon discriminates against minority shareholders.… Read the rest

When in Helsinki … or the true meaning of ‘Abstain’

When is an abstention not an abstention? A possible party-time trivia question for lawyers maybe, but a question with real consequences for shareholders which highlights yet again the importance of ensuring local knowledge is applied to voting decisions.

Most company law regimes have special provisions for dealing with ‘qualified majority’ issues. … Read the rest

CEO turnover – the hidden costs

Changes in the Executive Suite Lead to Expensive Consulting Deals

Widely seen by analysts as one of the weaker performers in the U.S. meat sector, Tyson Foods, Inc. has its third CEO in as many years. In early 2009, Richard Bond quit after less than three years on the job, and was replaced by former CEO Leland Tollett, who returned to the company to serve on an interim-basis.… Read the rest

Infineon proxy contest opens new chapter in German corporate governance

Hermes, the fund manager owned by British Telecom Pension Scheme, has filed a shareholder countermotion in which it calls for shareholders not to elect Klaus Wucherer as the Chairman of the Supervisory Board but to appoint Willi Berchtold instead.

Mr. Wucherer has served on the Supervisory Board since 1999 and hence contributed to its work and decisions, which, according to Hermes are one of the main cause of the company’s difficult situation and the destruction of shareholder value.… Read the rest

FRC consults on Stewardship Code

The Financial Reporting Council (FRC), the UK’s corporate governance regulator, wants to hear from institutional investors in the UK and overseas about its proposals for a new “Stewardship Code” aimed at creating best practice principles for investors when engaging with the UK listed companies.… Read the rest

SOP Vote for TARP

The Securities and Exchange Commission has published its final rules which require a “say on pay” (SOP) for companies which have received financial assistance under the Troubled Asset Relief Program (TARP).

The key points are that:

  • The proxy will have to disclose that the company is providing a SOP vote
  • Whether the vote is binding or not
  • Smaller companies will not be required to provide a “Compensation Discussion & Analysis” to achieve compliance
  • Issuers will be required to make accelerated disclosures of the voting results
  • The obligation for a SOP vote remains in force for as long as any TARP obligation remains outstanding


SEC TARP SOP Final Rule >>

Proxy Disclosure Final Rules >>

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German companies engage on pay ahead of first say-on-pay votes

In a move highlighting the changing landscape of shareholder-company relations in Germany, two DAX 30 constituents are meeting with investors in advance of the first shareholder votes on executive pay. Top executives from Siemens AG and Thyssen-Krupp AG — which will convene AGMs on 26 January 2010 — will huddle with several key investors today, with executive remuneration likely to be a point of emphasis in the discussion.… Read the rest