Sidley Austin’s Derek Zaba and Kai Liekefett explore the potential impact of the so-called ‘liberation day’ tariffs on the upcoming proxy season. In their shareholder activism update this week, they discuss how these tariffs, and the resulting economic volatility, could influence shareholder activism. As AGM season approaches in the US, economic uncertainty can present practical challenges for activists who need to remain invested in companies for longer periods and may struggle to exit the stock if they gain board seats, which prompts the authors to ask: ‘Will tariffs be the poison pill for proxy contests this season?’
- Dan Byrne of the Corporate Governance Institute aims to provide practical advice for handling new tariffs, outlining that if Trump does not back down, the trade wars are here to stay. His piece on how to cope with tariffs suggests questions board members need to ask to assess the impact and then discusses how to mitigate the impact in the short, medium and longer term.
- Reuters reports that the SEC and Elon Musk have agreed on a timeline for Musk to respond to the agency’s lawsuit concerning his delayed disclosure of Twitter share purchases in 2022. The filing states that Musk has chosen to waive service and respond to the SEC’s complaint by June 6 ‘in lieu of continuing the dispute over this issue’.
- Reuters also notes that the SEC is beginning to onboard staff from the Department of Government Efficiency (DOGE), an initiative closely associated with Elon Musk. This development follows reports that the SEC is undergoing restructuring under DOGE’s initiatives, which include offering employees voluntary buyouts to reduce federal spending. Democratic Senators Elizabeth Warren and Mark Warner have voiced concerns about these changes, calling for a government audit and stating that limiting the SEC’s functions ‘has the potential to significantly harm investors’.
- In other Warren news, the Massachusetts senator has joined Chuck Grassley, R-Iowa, to reintroduce The SEC Whistleblower Reform Act, as reported by The National Law Review. The bill, which was originally proposed in 2023, aims to restore protections for whistleblowers reporting misconduct internally within their companies. The legislation seeks to strengthen anti-retaliation safeguards and reinforce the SEC Whistleblower Program, which has played a significant role in securities law enforcement.
- The New York Post reported that ISS and Glass Lewis have each recommended that shareholders vote against Goldman Sachs’ proposed retention bonuses for CEO David Solomon and chief operating officer John Waldron. The proxy advisory firms raised concerns over the lack of performance-based vesting criteria and the substantial $160 mn value of the stock awards. While Goldman Sachs argues that these bonuses are necessary to retain top talent amid intense competition, both ISS and Glass Lewis reportedly consider the compensation excessive and not sufficiently tied to measurable performance outcomes. These recommendations underscore the growing scrutiny of executive compensation practices, particularly when performance metrics are not clearly defined.
- Ford has urged shareholders to vote against a proposal from Green Century Capital Management that seeks to compel the company to disclose how its supply chain emissions align with its carbon neutrality goals, according to Supply Chain Dive. The vote is set for Ford's annual meeting on May 10. Ford asserts that its current sustainability reports sufficiently address supply chain emissions and sees no need for additional disclosure. However, Green Century argues that the auto marker’s current approach lacks clear integration of supply chain emissions reduction, potentially putting its 2050 carbon neutrality goal at risk.
