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Dec 23, 2021

The week in GRC: Companies eye vaccine booster mandates and more buybacks expected in 2022 amid regulatory scrutiny

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

The Week in GRC will not publish next week due to the holidays and will return in the New Year. In the meantime, Happy Holidays to all our readers!

The Wall Street Journal reported that SEC member Elad Roisman plans to leave the agency by the end of January. Roisman joined the five-member SEC as a Republican commissioner in September 2018, having previously served as chief counsel for Republicans on the Senate Banking Committee. He briefly served as the SEC’s acting chair at the end of the Trump administration.

Following Roisman’s departure, the SEC will have three Democrats, including chair Gary Gensler, and one Republican member. The move isn’t expected to change Gensler’s ability to advance his policy priorities, as Democrats already have the majority. Roisman has increasingly opposed Gensler’s policy moves, including several recent measures proposing changes to money-market mutual funds, companies’ stock buybacks and derivatives that are used by hedge funds and some other investors.

– The SEC announced that James Grimes has been named the agency’s chief administrative law judge. Judge Grimes will lead the SEC’s office of administrative law judges, which conducts hearings, issues initial decisions and adjudicates matters in administrative proceedings before the agency. He succeeds Brenda Murray, who retired after 25 years in the role. Judge Grimes became an SEC administrative law judge in 2014 after spending 13 years in the civil division at the US Department of Justice.

CNN reported that global M&A activity broke all-time records in 2021, comfortably exceeding the high-water mark set nearly 15 years ago. The value of M&A globally topped $5 tn for the first time, with volumes rising 63 percent to $5.63 tn by December 16, according to Dealogic data. ‘Corporate balance sheets are incredibly healthy, sitting on $2 tn of cash in the US alone – and access to capital remains widely available at historically low costs,’ said Chris Roop, who co-heads North America M&A at JPMorgan.

Facing pressure to make their businesses more climate-friendly, company executives have been hunting for targets with the right climate credentials. ‘Along with technology and digital transformation, sustainability is here to stay and is a key focus for most boardrooms,’ said Luigi de Vecchi, chair of EMEA banking capital markets advisory at Citigroup.

– According to the Financial Times, UK company JD Wetherspoon appointed four employees as directors to add ‘more pub experience’. The pub group said it had received more than 100 applications and had appointed two employees to full director status as well as two ‘associate directors’ from among its pub managers.

Appointing staff members to the board is rare among UK-listed companies but Wetherspoons’ chair and founder Tim Martin said ‘a successful pub company depends primarily on gradual improvements, based on suggestions from employees’ and the new directors ‘will extend this approach to board meetings and will help to preserve the culture of the company for the future.’

Reuters reported that more US law firms are delaying large-scale returns to working in the office and are taking other steps to confront the rising Omicron coronavirus variant, with one large company telling its employees to work from home and another now explicitly requiring Covid-19 booster shots.

Law firms in recent months have been grappling with when and how to bring lawyers back into their offices, even part-time, as the pandemic has evolved. Several have changed course more than once, with the rise of the Delta variant upending earlier return-to-office plans over the summer.

– Millions of US employees are already required to show proof of a Covid-19 vaccine to their employer but soon many could be forced to show proof that they also got a booster shot, according to CNN. With the rise of the Omicron variant, public health officials are stressing that a booster shot is more important than ever.

A survey of 200 major companies conducted by consulting firm Gartner found that 8 percent are changing their definition of what constitutes ‘fully vaccinated’ and requiring workers to get booster shots. The percentage requiring boosters is expected to increase as Omicron cases spread and companies try to work out how to reopen offices, said Brian Kropp, chief of research at Gartner's HR practice.

New York City, which is requiring all businesses to mandate a vaccine for employees, is considering a booster mandate for city workers. The Pentagon has also confirmed it is considering a booster mandate for members of the US military.

– The WSJ reported that companies are planning to spend even more in 2022 on share buybacks and dividends. Many companies have recovered from the blow dealt by the pandemic and are in a period of healthy growth, giving them room to reward their shareholders, said Howard Silverblatt, a senior index analyst at S&P Dow Jones Indices.

But buybacks face growing skepticism from regulators and lawmakers, with some critics saying they allow executives paid in equity or options to lift their compensation at the expense of workers’ wages. In mid-December, the SEC proposed greater disclosure requirements on buybacks, which would force companies to detail the rationale for them and the criteria used to determine the amount of shares to be repurchased.