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Jun 24, 2022

The week in GRC: DoJ corporate enforcement unit expands and Chipotle restaurant is company’s first to file for union election

This week’s governance, compliance and risk-management stories from around the web

CNN reported that President Joe Biden said he was ‘proud’ of Apple’s retail workers in Towson, Maryland, who voted to form the first labor union at one of the company’s US stores. ‘I’m proud of them,’ Biden said. ‘Workers have a right to determine under what conditions they’re going to work or not work.’ Biden, who has also recently met with union organizers from Amazon and Starbucks, added that ‘everybody is better off, including the final product’ because of labor unions.

An Apple spokesperson did not immediately respond to a request for comment. ‘We are fortunate to have incredible retail team members and we deeply value everything they bring to Apple,’ the company said in a previous statement. ‘We are pleased to offer very strong compensation and benefits for full-time and part-time employees, including healthcare, tuition reimbursement, new parental leave, paid family leave, annual stock grants and many other benefits.’

– The board of Kellogg Co approved a plan under which the company is splitting off its slower-growing North American cereal business and smaller plant-based food brands into two separate companies, leaving a faster-growing food company focused on selling snacks around the world, The Wall Street Journal (paywall) reported. The plan would shift brands such as Corn Flakes, Rice Krispies, Pop-Tarts and Pringles to new homes.

‘These businesses all have significant stand-alone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities,’ said CEO Steve Cahillane in a statement. Kellogg has yet to name the three stand-alone businesses. The split-up is expected to be completed by the end of 2023.

CNBC reported that Mars CEO Grant Reid is retiring after more than eight years in the position and will be replaced by the head of the company’s pet-care business. Poul Weihrauch, global president of Mars Petcare, will succeed Reid in September. Mars said Reid informed the board of his decision 18 months ago and will remain at the company until the end of the year.

Mars is privately held and has a portfolio of brands that includes Snickers, Kind bars, Pedigree and Whiskas. The company said Reid plans to devote more time to his work on climate action and sustainability after he retires.

– In other retirement news, Warner Music Group Corp CEO Steve Cooper will leave the company next year, the WSJ reported. He has spent 11 years at the helm of the world’s third-largest music company by sales. Cooper steered a turnaround at the company by embracing streaming, which led to it doubling its revenue and taking market share from larger competitors.

Cooper said he has instructed the board to begin the search for his successor, and that he and the board expect the transition to take place by the end of 2023, according to an email viewed by the WSJ. Any successor will also need to win the approval of Len Blavatnik, whose Access Industries controls Warner Music.

– According to CNBC, a Chipotle Mexican Grill location in Augusta, Maine, filed a petition for a union election, becoming the first of the company’s restaurants to join the recent organizing push across the US. The employees are seeking to unionize as Chipotle United, an independent union, according to the AFL-CIO.

‘We received notice today that a petition was filed. We respect our employees’ rights under the National Labor Relations Act and are committed to ensuring a fair, just and humane work environment that provides opportunities for all,’ a Chipotle spokesperson said in a statement. The company said it does not have any unionized locations and that the Maine store is the first to file a petition.

Employees at airlines, retailers and tech companies have been organizing, fueled by a desire for better working conditions during the pandemic and the increased power gained in a tight labor market.

– The WSJ reported that, according to an official, a revamped unit in the US Department of Justice’s (DoJ) fraud section is expanding with new staff as it takes on an enhanced role in corporate settlements. Now known as the corporate enforcement, compliance and policy unit, the division previously focused on internal strategy and policy, including providing specialized training to prosecutors who handle some of the DoJ’s biggest investigations into companies and their executives.

But over time it has evolved to provide more support to the prosecutors who negotiate settlements with companies, according to Lauren Kootman, an assistant chief in the unit. ‘It has taken on over the last several years more responsibilities for overseeing corporate resolutions, ensuring consistency and also specifically looking at compliance and how compliance factors into our resolutions,’ she said.

The unit will soon be adding more lawyers with compliance expertise, including from law firms or companies, to help assess corporate compliance programs, Kootman added.

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...