– The Wall Street Journal (paywall) reported that a California judge is allowing the state’s carbon emissions disclosure requirements to move forward as planned – for now. US District Otis Wright said he needs more information before he can decide whether the reporting regime California intends to install violates companies’ First Amendment rights against compelled speech.
The US Chamber of Commerce and other trade groups sued the state of California aiming to overturn two laws that will require large businesses to disclose detailed information on their carbon emissions and climate-related risks. The chamber said it is reviewing the decision and will decide on its next steps.
The judge said he might still decide to throw out the climate disclosure requirements on First Amendment grounds but that he wants more information on how they might work in practice.
– Reuters (paywall) reported that Glass Lewis urged News Corp shareholders to support a hedge fund firm’s campaign to change the company’s dual-class share structure, saying no investor should have voting rights that are different from others. Glass Lewis recommended investors back a recapitalization plan at the company’s November 20 AGM where all stock would have one vote for one share.
‘The economic stake of each shareholder should match their voting power and... no small group of shareholders, family or otherwise, should have voting rights different from those of other shareholders,’ Glass Lewis wrote in its report seen by Reuters. Its recommendation came just days after rival ISS threw its weight behind Starboard Value. The activist investment firm has submitted a non-binding proposal to eliminate the dual-class share structure.
– CNBC reported that, according to people familiar with the matter, activist investor Engine Capital has nominated a slate of directors at Canadian legal software company Dye & Durham after the company fielded takeover interest and moved to launch a sale process Engine has described as ‘reactionary’. Engine is seeking to install a fresh management team and reduce Dye & Durham’s leverage should it gain control of the company’s board, the people said. Dye & Durham’s annual meeting is scheduled for December 17.
Dye & Durham has described Engine’s campaign as an effort to ‘gain control,’ a stance it reiterated in a statement on Monday, and said it is operating under the assumption it will remain a standalone company. ‘Engine has repeatedly levelled baseless assertions and continues to display a bewildering lack of understanding of the business,’ a company spokesperson said in the statement. ‘Dye & Durham has substantially refreshed its board and has a focused and aligned management team.’
– CBS reported that Southwest Airlines has named Rakesh Gangwal as the independent chair of its board. Gangwal, an airline executive and entrepreneur, has been a member of the company’s board since July 8. He has previously sat on the boards of US Airways Group, CarMax, Office Depot, OfficeMax and PetSmart. ‘We are embarking on the next era of change at Southwest as we build upon its many successes and storied past,’ Gangwal said. ‘Our critical priority as a newly constituted board is to come together to work closely with [CEO] Bob Jordan and the rest of the management team to return the carrier to superior financial performance.’
The company last month announced six new members of the board, the same day it announced former executive chair Gary Kelly was accelerating his retirement, which went into effect on November 1. The new directors’ appointments also went into effect on November 1.
– Reuters via MSN reported that, according to a new report, US companies with lagging stock prices are now quicker to blame management and fire their CEO – but the process of finding a replacement has remained largely unchanged for the last decade. Over the last seven years, financial performance and, most notably a company’s stock price, have become a stronger predictor of a CEO’s ability to hold onto the job, The Conference Board found.
The latest figures show that 42 percent of S&P 500 companies that replaced their top executive this year had stock returns in the bottom quartile of their industry. The number is even higher among Russell 3000 companies, among which 45 percent of companies that replaced CEOs this year were posting shareholder returns within the 25th percentile. In 2017, only 30 percent of S&P 500 companies that replaced CEOs had a shareholder return in the bottom quartile, while it was 29 percent at Russell 3000 companies.
‘Corporate boards are clearly becoming less patient with underperformers,’ said Blair Jones, managing director at executive compensation consulting firm Semler Brossy, who co-authored the report. A board’s sense of urgency for making sure the right person is leading a company has increased since the pandemic as external factors such as supply-chain disruptions and geopolitical drama are no longer seen as excuses for poor returns, the report’s authors said.
– According to CNBC, retail companies are bracing for blowback related to policies around diversity, equity and inclusion (DE&I) and are hoping to avoid alienating customers who may deem the brands too woke – or not woke enough. Some are turning to outside advisers for advice on how to avoid criticism, while others are opting out of public events on the topic as backlash against DEI& programs grew in the lead-up to the 2024 presidential election.
‘Retailers left to their own devices would like to be very proactive on [DE&I],’ a retail industry official said. ‘But now they don’t want any of their views to be public because they want to be able to sell stuff to everybody, and it’s become such a stupid political issue.’ The retail industry’s concerns over DE&I come after some high-profile, consumer-facing companies walked back policies in recent months.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
