The week in GRC: BlackRock’s support for directors decreases due to climate concerns and changes on AMC Entertainment’s board

– The Wall Street Journal reported that Robert Zink, the former prosecutor who conceived and oversaw the US Department of Justice’s effort to clamp down on market manipulation in commodities and derivatives, has joined the litigation firm Quinn Emanuel Urquhart & Sullivan. Zink will now represent companies and individuals facing government investigations. He joined the Justice Department in 2010 as a trial attorney. After serving as fraud-section chief, he became the criminal division’s acting deputy assistant attorney general, a role he held until early July.

– According to CNBC, Bill Ackman’s blank-check company Pershing Square Tontine Holdings (PSTH) said it had dropped a deal to buy 10 percent of Vivendi’s Universal Music Group. Now his Pershing Square Holdings hedge fund will take the stake instead of the special purpose acquisition company (Spac).

Vivendi shareholders recently backed the spin-off of Universal. Pershing’s Spac said its board had unanimously decided not to proceed with the purchase after discussions with the SEC. ‘Our decision to seek an alternative initial business combination (IBC) was driven by issues raised by the SEC with several elements of the proposed transaction – in particular, whether the structure of our IBC qualified under the NYSE rules,’ Ackman said in a letter to shareholders.

‘While we are disappointed with this outcome, we continue to believe that the unique scale and favorable structure of PSTH will enable us to find a transaction that meets our standards for business quality, durable growth and a fair price.’

– Bloomberg reported that BlackRock voted against more than four times the number of board directors during the recent proxy season than it did in 2020, on the grounds that they failed to act on climate issues. The firm rejected 255 directors in the period ending June 30, up from 55 a year earlier, according to its latest stewardship report. It also did not support the management of 319 companies for climate-related reasons, compared with 53 in 2020.

BlackRock said it supported 35 percent of 843 shareholder proposals it voted on in the recent proxy season, compared with 17 percent in the previous year. Of those, it backed about two thirds of the environmental resolutions, and about a third of the social and governance proposals, according to the report. Last year, BlackRock said it supported 11 percent of environmental proposals, 7 percent of social resolutions and 20 percent of those on governance matters.

The asset manager said it held more than 2,300 conversations with company executives on climate and natural capital in the year ending June 30. The report did not give a corresponding number for the previous year.

BlackRock also said it voted against the re-election of 1,862 directors at 975 companies because of a lack of board diversity. The firm said it voted against management on 33 percent of say-on-pay measures compared with 26 percent in the previous year.

– According to the WSJ, Nasdaq is teaming up with a group of banks including Goldman Sachs and Morgan Stanley to spin out its marketplace for shares of private companies. The deal could help drive more transactions to Nasdaq Private Market, the exchange operator’s trading platform for shares of companies that haven’t yet had an IPO.

Trading in pre-IPO shares has increased in recent years as start-ups have waited longer to go public. Employees of such companies often seek to cash out of their shares, while investors may want to get in on a fast-growing technology start-up.

– The SEC announced an award of almost $3 mn to a whistleblower whose information and assistance led to a successful SEC enforcement action. ‘The whistleblower alerted the SEC to previously unknown conduct and then provided substantial additional assistance, which conserved a considerable amount of SEC resources,’ said Emily Pasquinelli, acting chief of the SEC’s office of the whistleblower, in a statement. ‘We have recently given awards to a significant number of whistleblowers, like the one awarded today, who played an important role in our enforcement program’s success.’ 

The SEC has awarded roughly $942 mn to 186 individuals since issuing its first award in 2012.

– Royal Dutch Shell confirmed that it will appeal against the landmark Dutch court ruling calling for the oil company to cut its carbon emissions faster, The Guardian reported. A court in The Hague reached the verdict in May after Friends of the Earth and more than 17,000 co-plaintiffs successfully argued that Shell had been aware of the dangerous consequences of carbon dioxide emissions for decades, and that its climate targets did not go far enough.

Shell CEO Ben van Beurden said the company agrees ‘urgent action is needed’ to reduce carbon emissions and vowed to accelerate its progress toward becoming a net-zero carbon company but said Shell would still appeal against the ruling ‘because a court judgment, against a single company, is not effective’.

‘What is needed is clear, ambitious policies that will drive fundamental change across the whole energy system,’ he said. ‘Climate change is a challenge that requires both urgent action and an approach that is global, collaborative and encourages co-ordination between all parties.’

Friends of the Earth Netherlands said the appeal would send ‘the wrong signal’ and confirm Shell’s ‘lack of commitment’ to tackling the global climate crisis.

– CNBC reported that JPMorgan Chase granted CEO Jamie Dimon new stock options as a retention bonus to incentivize him to keep leading the bank. ‘This special award reflects the board’s desire for Mr Dimon to continue to lead the firm for a further significant number of years,’ the bank said in a regulatory filing. ‘In making the special award, the board considered the importance of Mr Dimon’s continuing, long-term stewardship of the firm, leadership continuity and management succession planning amid a highly competitive landscape for executive leadership talent.’

– Adam Aron, CEO of AMC Entertainment Holdings, will also serve as its chair, according to the WSJ. Aron takes over as chair from Lin Zhang, a senior executive at the Chinese company Dalian Wanda Group Co, which until recently was AMC’s largest shareholder. Wanda Group sold most of its AMC shares two months ago after trading by individual investors contributed to a recovery in AMC’s share price. Aron has leaned in to AMC’s central role in the meme-stock trade this year. AMC also named Philip Lader, a board member since 2019, as its lead independent director.

– Reuters reported that an environmental group said companies looking to offset their climate-warming emissions can have a bigger impact backing governments’ initiatives to halt forest destruction rather than planting new trees. Demand is growing for carbon-offset credits, leading some of the world’s biggest corporations to announce tree-planting initiatives. But a policy paper authored by Emergent, a US-based non-profit partnered with organizations including the United Nations Environment Program, argued that those efforts fall far short of what is needed.

Emergent said that, with an area of tropical forest the size of New York’s Central Park cleared every 15 minutes, there is much greater value in helping under-resourced governments preserve existing forest. ‘Are we trying to solve climate change here or have some nice local impacts we can put in a brochure?’ Emergent’s executive director Eron Bloomgarden said.