The week in GRC: Starboard Value takes on Box and Gensler eyes expanded employee data disclosure

– Reuters reported that activist investor Starboard Value launched a proxy contest to take greater control of cloud services provider Box as it nominated four directors for election to the company’s board. Starboard earlier said the company had failed to capitalize on the work-from-home trend during the Covid-19 pandemic. In response, Box said it does not believe changes proposed by Starboard to its board were ‘warranted or in the best interests of all stockholders.’

‘The Box board has been consistently responsive to feedback from all of its stockholders, including suggestions from Starboard... Furthermore, Starboard’s statements do not accurately depict the progress Box has made,’ the company said.

‘While last year we were pleased to reach agreement on the appointment of two new independent director candidates, it is now clear that those appointments have not created enough change,’ Starboard said in a letter to Box’s shareholders.

– The SEC announced awards totaling roughly $22 mn to two whistleblowers whose information and assistance were key to successful SEC enforcement actions. The first whistleblower received an award of $18 mn, while the second received a $4 mn award. The larger award was in recognition of the fact that, among other things, the first whistleblower was the initial source of the investigation and the second whistleblower submitted information much later, after the investigation was already underway. The SEC has awarded around $838 mn to 156 individuals since issuing its first award in 2012. 

– The Guardian reported that, according to a report from the Institute for Policy Studies, the CEOs of some of the US companies with the lowest-paid workers saw an average pay raise of 29 percent last year while their workers saw a 2 percent decrease. The institute calculated that the average CEO compensation in 2020 was $15.3 mn when looking at the 100 companies with the lowest median wage for workers in the S&P 500 index. The median worker pay was $28,187.

The authors of the report urge support for a bill introduced by Bernie Sanders that would incentivize companies to narrow the pay gap between workers and top executives by imposing a tax rate on companies with high gaps. Public companies are required to report the ratio between their CEO and median worker pay to the SEC.

– CNBC noted that large oil and gas companies in Europe and the US are preparing to hold their AGMs in the coming weeks amid immense pressure to set short, medium and long-term emissions targets that are consistent with the Paris climate change agreement. In a first for the industry, Royal Dutch Shell will put its own net-zero transition plan to its shareholders on May 18.

– L Brands is spinning off Victoria’s Secret to become its own publicly traded company, CNN reported. As a result, L Brands will consist of two publicly traded companies – Bath & Body Works and Victoria’s Secret – with the transaction expected to be completed in August. The company said doing this will ‘enable each company to maximize management focus and financial flexibility to thrive in an evolving retail environment and deliver profitable growth.’ Sarah Nash, chair of L Brands’ board, said Victoria’s Secret had made ‘significant progress’ in its turnaround process, which includes store closures and refreshed merchandise.

– The US Department of the Treasury last month started the process of establishing a long-awaited corporate ownership registry, but the WSJ said the agency is already facing diverging views on how it should work. A key issue for financial institutions and other stakeholders is how ownership information that is submitted to the Treasury’s Financial Crimes Enforcement Network (FinCEN) will be collected and verified, and who will have access to it.

The registry is supposed to help the US clamp down on the illicit use of anonymous shell companies. Congress outlined the parameters for the new database in a law passed in January, but FinCEN must work out the specifics. That includes defining who qualifies as an owner and which companies will be exempt from submitting information.

– CNBC reported that AstraZeneca shareholders approved CEO Pascal Soriot’s pay package proposal by a narrow margin after advisory groups said the rewards were excessive. At the company’s AGM, 60.19 percent of votes were cast by shareholders in favor of approving Soriot’s pay proposal.

The company said it recognized that a ‘meaningful proportion of shareholders’ were against the change to directors’ pay and would continue to engage with them. ‘The board’s approach... still continued to position executive remuneration well below market levels in the global pharmaceuticals industry and did not accurately reflect AstraZeneca’s improved position in the European market,’ it said.    

– According to Reuters, Cineworld shareholders approved all the resolutions put forth at the company’s AGM, but support for management pay shrank after major advisory groups recommended voting against it for being excessive. The world’s second-largest cinema chain, which saw its first ever loss last year due to the Covid-19 pandemic, said 74 percent of the votes cast were in favor of a resolution to approve the remuneration policy. ‘Following this, the board will continue its dialogue with shareholders on remuneration matters,’ the UK-listed company said.

– New SEC chair Gary Gensler made rulemaking around human capital management an early priority, Reuters reported. Speaking to an audience of agency and academic researchers on Thursday, Gensler said: ‘Investors increasingly want to understand information about…. one of the most critical components of companies: their workforce.’ He added that staff will propose a new rule that could require disclosure of workforce diversity data, information about part-time versus full-time workers, and employee turnover data. The move highlights Gensler’s prioritization of ESG, with the SEC still open for comment letters about climate-related disclosures.

– Kroger drew criticism for awarding its CEO, Rodney McMullan, a $22.4 mn pay packet this year – his biggest pay day since he became CEO in 2014 – while median employee pay fell, noted Bloomberg. McMullan’s compensation rose by 6 percent, while median employee pay fell by 8 percent to $24,617.

Kroger also drew criticism last year for ending its $2 per hour bonus for frontline workers – dubbed ‘hero pay’ – in May, when it was clear the pandemic was not yet over.

‘Kroger continues to reward and recognize our associates for their incredible work during this historic time,’ a spokesperson said in an emailed statement to Bloomberg. The spokesperson also said the company is offering $100 to every associate who receives a Covid-19 vaccine.