The week in GRC: SEC’s Gensler to step down on January 20 and CVS reaches deal with activist for four board seats

– CNBC reported that CVS Health reached a deal with investor Glenview Capital for four board seats. Glenview CEO Larry Robbins will join the CVS board effective immediately, alongside three other directors, which CVS said emerged from a ‘productive discussion’ with Glenview. CVS’ board will expand to 16 members.

‘In our discussions with the leadership at Glenview, we agreed that we can deliver greater value from our integrated businesses to all of our stakeholders,’ CVS chair Roger Farah said in a release. The other new directors are Leslie Norwalk, Guy Sansone and Doug Shulman.

‘We appreciate the board engaging with us on a cooperative basis that allows all energies to be productively dedicated towards further strengthening this iconic company,’ Glenview’s Robbins said.

– Reuters (paywall) reported that, according to people familiar with the matter, activist investor Ananym Capital Management is urging healthcare products distributor Henry Schein to refresh its board, cut costs, address succession planning and consider selling its medical distribution business.

Ananym, a newly launched firm run by Charlie Penner and Alex Silver, argues that Schein needs new board members and ultimately a new CEO to tackle rising spending, integrate recent acquisitions and nurture and hold onto new talent, the people said.

‘Henry Schein regularly engages in dialogue with its shareholders with the goal of enhancing shareholder value. We analyze any shareholder input in that context,’ a company representative said.

– The Wall Street Journal (paywall) reported that the EU has moved closer to completing a ban on the sale of products made with forced labor. The Council of the EU on Tuesday approved legislation that would forbid the sale of goods made with forced labor – within or outside Europe – throughout the bloc’s 27 member states. The regulation will now go to the presidents of the European Parliament and the council for signatures.

The move comes more than two years after the European Commission first proposed a regulation and as the US government undertakes a sustained push to block the import of goods made under forced labor conditions. The US crackdown focuses particularly on goods made in China’s Xinjiang region, the home to the Uyghur people and other minority ethnic groups. US lawmakers from both parties have said that the EU should take a harder line on forced labor linked to Xinjiang.

– Activist investor Starboard Value had challenged the ownership structure of News Corp but the company announced the proposal had been defeated at its AGM, according to The Guardian. The Murdoch family controls 41 percent of company votes despite having a 14 percent stake in the firm.

Even if the proposal had passed, the company’s board could have chosen not to take it up. But the proposal itself sends ‘a clear and direct message’ to the board about concerns over the company’s voting structure, said Jeffrey Smith, Starboard’s chief executive, in a letter to shareholders earlier this year.

‘Multi-class capital structure with unequal voting rights create a misalignment between economic interest and voting rights, which can disenfranchise shareholders holding stock with inferior voting rights,’ ISS had said in a statement supporting the proposal.

In September, News Corp said in a statement that it ‘believes that the company’s dual-class capital structure promotes stability and has facilitated the successful implementation of News Corp’s transformational strategy and long-term outperformance for all [of the company’s] stockholders.’

– The US Department of Justice (DoJ) said Google should have to sell off its Chrome browser as part of a court-ordered fix to its monopolization of the online search market, the WSJ reported. The request follows the government’s victory this year in an antitrust case against Google. Government lawyers said competition can only be restored if Google separates its search engine from products it has built to access the internet, such as Chrome and its Android mobile operating system.

‘The remedy must enable and encourage the development of an unfettered search ecosystem that induces entry, competition and innovation as rivals vie to win the business of consumers and advertisers,’ the DoJ and over two dozen state plaintiffs wrote.

The department also wants the court to compel Google to allow website publishers to opt out of having their data used to train its AI models. Alternatively, it could pay publishers to use their data.

Kent Walker, Google president of global affairs, described the DoJ suggested remedy as a ‘wildly overbroad proposal’ that would ‘harm Americans and America’s global technology leadership.’ He said Google would file its own proposed remedy to the court in December.

– The SEC announced that chair Gary Gensler will step down from the commission effective on January 20, 2025. Gensler began his tenure on April 17, 2021. In the corporate governance field, the SEC under Gensler adopted changes such as updating the rules for when corporate insiders can sell their shares, for when executives must give back compensation based on erroneously reported financials and for disclosure of executive pay versus performance. The agency also adopted new rules to allow shareholders to vote their preferred mix of board candidates on universal proxy cards in contested director elections. In addition, it adopted rules requiring more timely disclosure by those who are seeking control and buy more than a 5 percent stake in a company.

Gensler said in a statement: ‘The [SEC] is a remarkable agency. The staff and the commission are deeply mission-driven, focused on protecting investors, facilitating capital formation and ensuring that the markets work for investors and issuers alike. The staff comprises true public servants. It has been an honor of a lifetime to serve with them on behalf of everyday Americans and ensure that our capital markets remain the best in the world.