– The BBC quoted UK Prime Minister Theresa May as saying companies that pay excessive salaries to senior executives represent the ‘unacceptable face of capitalism’. Firms that face shareholder revolts over salaries and bonuses will be named on a new public register, May said. She also said companies could decide how workers are represented in boardrooms.
– Business Insider noted that Dara Khosrowshahi accepted the position of Uber CEO after he was selected by the company’s board. The former Expedia CEO’s appointment came after co-founder Travis Kalanick was removed as chief executive in June.
‘I am excited to welcome Dara Khosrowshahi as Uber’s next CEO,’ Kalanick said in a statement on Tuesday. ‘With a deep passion for team building, Dara grew Expedia into one of the world’s most successful travel and technology platforms. Casting a vote for the next chief executive of Uber was a big moment for me and I couldn’t be happier to pass the torch to such an inspiring leader.’ Expedia couldn’t immediately be reached for comment.
– Danske Bank CEO Thomas Borgen urged regulators in Scandinavia to fix what he called ‘quite substantial’ differences across the region, according to Bloomberg. ‘I have an understanding of why there are differences, because of culture, history and starting point,’ Borgen said. ‘But the more we can work together, the regulators can work together, the better it is for all of us.’
Regulatory gaps between Denmark, Sweden, Norway and Finland have driven Nordea Bank to look at moving its headquarters away from Stockholm. Nordea CEO Casper von Koskull has argued that the bank would be better off inside the banking union of the European Union, of which Finland is the only Nordic member.
– Reuters reported that a homeowner filed a lawsuit accusing Wells Fargo of improperly charging thousands of customers to lock in interest rates when their mortgage applications were delayed. The lawsuit alleges that Wells Fargo managers pressured employees to blame homeowners for the delays, sometimes by falsely stating that paperwork was missing, so homeowners could be stuck with extra fees. A Wells Fargo spokesperson said the bank is reviewing past practices on rate-lock extensions and will take steps for customers as appropriate.
– The Financial Times looked at the UK government’s final package of measures designed to tackle unwarranted executive pay deals and to improve corporate governance, describing it as failing to match the radicalism of the original vision.
The package includes elements such as: plans to pass a law that would require a listed company to publish annually the pay ratio between its CEO and its average UK worker, creating a new public register that will in effect name and shame all listed companies that have encountered significant investor opposition to their executive pay packages, giving workers more of a voice in the boardroom via one of three mechanisms from which companies can choose, and asking the Financial Reporting Council to develop a voluntary set of corporate governance principles that will apply to larger private companies.
– The Wall Street Journal said companies across the US are turning to military generals for help on numerous fronts, from corporate governance to grappling with cyber-warfare. Discipline is only one of the traits companies say military leaders bring to boards and management teams. In war, and in peacetime, generals are trained to anticipate unknown risks, build high-functioning teams and make quick, strategic decisions in high-pressure situations.
– The SEC said it is closely monitoring the impact of Hurricane Harvey on investors and capital markets. The regulator’s divisions and offices that oversee companies, accountants, investment advisers, mutual funds, broker-dealers, transfer agents and other regulated entities and investment professionals will continue to track developments. They will also evaluate the possibility of granting relief from filing deadlines and other regulatory requirements for those affected by the storm.
– Boards of UK companies will have to consider moving their heads of risk management and governance every seven years as a way to avoid so-called ‘groupthink’ under new measures, according to the FT. The change is part of a revamped code for internal auditors. The overhaul of the code, which first appeared in 2013, is intended to strengthen further the role of internal auditors, who are on the payroll of large companies and yet are expected to keep a critical and independent eye on how their employers manage risk – not just financial risk but also reputational and legal problems on the horizon, with an internal audit acting as a board’s eyes and ears.
– The Equal Employment Opportunity Commission (EEOC) sued Estée Lauder Companies, accusing it of violating federal law when it awarded male employees fewer weeks of parental leave than female workers receive, according to the WSJ. The EEOC said it brought the suit when a male stock worker was denied the six weeks of paid parental leave for child bonding that new mothers receive, receiving two weeks instead. The EEOC claimed the policy violates the Equal Pay Act and Title VII of the Civil Rights Act. A spokesperson for Estée Lauder Companies said the company doesn’t comment on pending litigation.
– The National Labor Relations Board filed a complaint against Tesla based on allegations of unfair labor practices from workers at the company’s Fremont, California factory, the WSJ reported. The employees accuse Tesla of requiring them to sign overly broad non-disclosure agreements that prohibit them from raising safety concerns. They also allege the company harassed them during unionizing efforts. Tesla said the accusations in the complaint are without merit and accused the United Automobile Workers union – which has sought to organize employees in Fremont – of filing complaints ‘only to generate headlines.'
– The Financial Industry Regulatory Authority (Finra) issued an alert warning investors about the potential risks of participating in initial coin offerings (ICOs), which involve the creation and distribution of virtual coins or tokens by a company to raise capital. Depending on the circumstances of each ICO, the virtual coins or tokens offered and sold to investors may be securities. If so, the offer and sale of these tokens are subject to federal securities laws, according to a recent investor bulletin issued by the SEC.
– Bloomberg said the SEC has hired Alan Cohen, who spent 13 years as head of compliance at Goldman Sachs to help the agency deal with two of the most daunting issues confronting Wall Street: Brexit and Mifid II, new EU rules that will upend banks’ research businesses. Cohen will be a senior policy adviser to SEC chair Jay Clayton. A spokesperson for Clayton declined to comment on Cohen’s appointment.
– The WSJ reported that Nasdaq wants to make it easier for blank-check companies to go public, as such firms account for an increasing portion of the initial public offering (IPO) market. In a blank-check listing, a company with no assets has an IPO to raise cash for acquisitions. The approach has become a popular way for well-known executives to launch companies, particularly in the energy sector.
But it also means investors are buying shares in companies with no track record, based on the credentials of their management team. Exchanges have adopted measures to protect investors from such IPOs, but some critics worry that the companies are risky, due to their lack of an operating history.
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...
