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Nov 22, 2023

The week in GRC: Wall Street seeks legal pushback against regulations and Altman to return as CEO of OpenAI

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

The Wall Street Journal (paywall) reported that more than 500 employees of OpenAI threatened to leave the company if the board doesn’t resign and reinstate former CEO Sam Altman and former president Greg Brockman. ‘Your actions have made it obvious that you are incapable of overseeing OpenAI,’ the employees wrote. ‘We are unable to work for or with people [who] lack competence, judgement and care for our mission and employees.’ The employee letter also demanded the addition of two independent board members

Microsoft said late on Sunday that it hired Altman and Brockman to lead a new advanced artificial intelligence research team. The employees said they may leave the company and join Altman and Brockman at Microsoft if their demands aren’t met. Representatives from Microsoft weren’t immediately available to comment.

– Later in the week, CNBC reported that Altman will return as CEO of OpenAI following pressure from employees and investors on the board. Former Salesforce co-CEO Bret Taylor and former Treasury secretary Larry Summers will join OpenAI’s board, the Microsoft-backed start-up said, with Taylor holding the chair position.

Adam D’Angelo, co-founder and CEO of question-and-answer start-up Quora, will remain on the board. Concurrent with Altman’s return, Helen Toner, Tasha McCauley and co-founder Ilya Sutskever were removed as board members. All had been involved in removing Altman, although Sutskever later walked back his support for that move.

‘We are collaborating to figure out the details. Thank you so much for your patience through this,’ OpenAI said in a message on X (formerly Twitter). Unlike most Silicon Valley start-ups, OpenAI was part of a nonprofit started in 2015. The board oversees the nonprofit.

– According to the WSJ, employees at two Wells Fargo bank branches launched unionization efforts on Monday, shifting the attention on the resurgent labor movement to an industry that has historically been cool to it. Employees in Albuquerque, New Mexico, and Bethel, Alaska, notified the National Labor Relations Board that they plan to hold elections to decide whether to unionize. If they get enough votes, they could start the first union at a major bank in decades.

Labor organizers and unions have gained victories lately: Amazon warehouse workers voted to unionize in New York last year, and hundreds of Starbucks stores have done the same. The United Auto Workers recently negotiated generous new contracts for employees at large US car makers.

Saul Van Beurden, CEO of Wells Fargo’s consumer-banking division, said the company has ‘a deep commitment to invest in and support everyone who works at Wells Fargo.’ He said the bank has improved compensation and benefits for lower-paid employees in recent years, with some changes made because of workers’ feedback.

– The Financial Times (paywall) reported that NRG Energy parted ways with its CEO and agreed to overhaul its board following a campaign by activist investor Elliott Investment Management over the strategic direction of the company. The utility group said Mauricio Gutierrez had left his role, while it had appointed four new directors as part of a ‘co-operation agreement’ with Elliott, which in June demanded Gutierrez step down as part of a management overhaul.

In a statement on Monday, Elliott executives John Pike and Bobby Xu said the changes represented ‘a key milestone’ that would ‘strengthen NRG and enable it to deliver significant upside for shareholders.’ As part of the deal announced with Elliott, NRG said it would carry out a ‘comprehensive review of its operations and cost structure to identify additional opportunities to become more efficient.’ NRG also said it had hired a recruitment company to search for a new permanent CEO.

– According to Reuters, US financial firms and their trade groups are becoming more willing to fight Democratic President Joe Biden’s regulators in court. Over the past 18 months, more than 30 companies and trade groups representing banks, funds and other firms have brought at least 15 lawsuits against financial regulators over major rules, policies and supervision issues, according to a Reuters tally. Biden’s regulatory appointees were given a mandate to take on perceived corporate profiteering, toughen up rules relaxed under the Trump administration and address Democratic priorities, such as income inequality and climate change.

‘These rules are incredibly important to protecting consumers, investors and financial stability,’ said Dennis Kelleher, CEO of nonprofit Better Markets. ‘Knowing their every action is under a litigation microscope, the regulators are being very careful to follow the letter and spirit of the laws.’

– Shareholders rejected the pay and bonus policy at Fortescue, the Australian iron ore-to-green hydrogen company, following executive departures over the group’s direction, the FT reported. Investors objected to special one-off payments to former Fortescue executives, with 52.4 percent of shareholders voting against its remuneration proposal at the company’s AGM.

The vote is not binding, but a second vote of more than 25 percent against its pay policy at next year’s AGM could trigger a shareholder vote to dissolve the board. It is the second significant vote against a major Australian company’s pay proposal in recent weeks after 83 percent of investors in Qantas rejected the airline’s pay policy.

Penny Bingham-Hall, chair of Fortescue’s remuneration committee, said shareholders had expressed ‘strong feelings’ about the plan to give one-off bonus payments to some long-term executives.

Reuters reported that Wyndham Hotels & Resorts said a new letter from Choice Hotels ‘represents a step backwards’ and the terms outlined are not in the best interests of Wyndham or its shareholders. After months of negotiation between the companies, Wyndham’s board received a letter from Choice CEO Patrick Pacious seeking to restart talks.

‘Choice continues to ignore our major concerns around value, consideration mix and asymmetrical risk to our shareholders given the uncertainty around regulatory timeline and outcome,’ said Stephen Holmes, chair of Wyndham’s board. Wyndham said Choice’s latest proposal would create ‘a prolonged period of limbo’ for its employees and shareholders.