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Jun 25, 2021

The week in GRC: JPMorgan Chase urges staff to get vaccine and court allows challenge to California board law

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

The Wall Street Journal noted that the SEC is planning to require public companies to disclose more information about how they respond to threats linked to climate change, and that companies are preparing for a fight. SEC chair Gary Gensler has said climate-related disclosure is a top priority. The SEC has already sought industry input, much of which arrived last week, for a rule proposal that could be issued by October.

Technology companies such as Apple and Microsoft, which have long proclaimed their efforts to reduce their impact on the environment, say they support the initiative. Energy and transportation companies have told the SEC that climate disclosures could be misunderstood by investors lacking in experience with the data or that put too much weight on one factor, such as a company’s total greenhouse gas emissions.

The challenge, say regulators and corporate officials, is identifying which measurements are necessary to help investors gauge a company’s financial prospects and how to set requirements that are flexible enough to generate specific, and not generic, information about corporate risks.

Reuters reported that Norwegian Air’s board sacked CEO Jacob Schram, who led the company through restructuring, and said it was promoting CFO Geir Karlsen to the top job with immediate effect. The board voted on June 20 to end Schram’s 18-month tenure but the airline said he would support the carrier on a full-time basis during his notice period up to March 31.

‘The board’s decision to fire me came as a big surprise,’ Schram said. The company declined to elaborate on Schram’s departure but said his replacement was the right person for the job.

CNBC reported that French media group Vivendi secured the backing of shareholders for its proposed spin-off of Universal Music Group (UMG). During a shareholder meeting, investors overwhelmingly backed the proposal, which would lead to the world’s largest music label completing its listing on Euronext Amsterdam in late September. The proposal involves distribution of 60 percent of UMG’s share capital to shareholders through the public listing in Amsterdam. Almost three quarters of shareholders also voted in favor of Vivendi’s plan to buy back and cancel up to 50 percent of its stock.

– A federal appeals court ruled that an investor may sue California over a 2018 law requiring publicly traded companies with headquarters in the state to include at least one woman on their board, the WSJ reported. The law obliged boards of public companies to include at least one woman by the end of 2019 and to include at least three by the end of 2021 if the board has at least six members in total.

Creighton Meland, a retired corporate attorney and an investor in electronics company OSI Systems, sued with the help of the legal group Pacific Legal Foundation, arguing the law unconstitutionally required shareholders to discriminate on the basis of sex when electing directors. A three-judge panel of the Ninth US Circuit Court of Appeals ruled that the lawsuit should proceed.

The office of California Attorney General Rob Bonta declined to comment, referring questions to the secretary of state’s office. Representatives for secretary of state Shirley Weber didn’t immediately respond to requests for comment.

– LaSalle Network CEO Tom Gimbel said employees fully vaccinated against Covid-19 should embrace a return to the office rather than run away from it, CNBC reported. ‘The challenge we have is a mindset challenge of the employee,’ said Gimbel, who is also founder of the national staffing and recruiting company. ‘They’re viewing it as a punishment to come back into the office and they should be viewing it as a perk to be back in the office, both for social and emotional issues as well as career growth and income growth.’

As many companies are putting their return-to-work plans together, some employees are pushing back against going back into the office after more than a year of remote work due to the pandemic. Gimbel said he believes bosses should mandate vaccinations in order to keep the majority of their workers safe from the coronavirus.

CNN reported that Morgan Stanley plans to ban employees, guests and clients from its New York headquarters if they have not received a Covid-19 vaccine. According to a person familiar with the matter, Morgan Stanley said in a memo to its employees in the New York metropolitan area that all staff working in buildings with a ‘large employee presence’ are required to confirm their vaccination status by July 1. The person added that ‘vaccine attestation is on an honorary basis for employees, contingent workforce, clients and visitors.’

The company plans to expand the vaccination mandate to employees and guests in other Morgan Stanley locations in New York City and nearby Westchester starting July 12.

– According to the WSJ, GlaxoSmithKline vowed to accelerate growth and gave further details of the long-planned separation of its consumer healthcare business as it aims to ward off a potential clash with activist investor Elliott Management Corp. GlaxoSmithKline’s strategy has come under investor scrutiny lately after Elliott took a stake in the drugmaker. Elliott bought its stake earlier this year, according to a person familiar with the matter, but hasn’t disclosed the size of its position nor publicly discussed its aims.

Elliott declined to comment.

Reuters reported that housebuilding and logistics company St Modwen Properties agreed to an improved £1.25 bn ($1.75 bn) offer from US private equity firm Blackstone to take it private. St Modwen’s top shareholder Aviva said it would back the offer at a shareholder meeting set for July 21, as did Aberdeen Standard Investments. St Modwen’s directors said the latest offer was in the ‘best interests’ of shareholders.

– According to CNBC, JPMorgan Chase is ‘strongly’ urging all of its US employees to get the Covid-19 vaccine, warning that the jab may eventually be mandatory for workers. The bank is now requiring all US workers to log their vaccination status in a software portal by June 30. Those who are vaccinated don’t need to wear masks, socially distance or log their health status on a daily basis when they return to office life; those who aren’t vaccinated need to wear masks and are encouraged to take weekly Covid tests, JPMorgan said.

‘We strongly urge all of our employees to be vaccinated because we think it protects you, your friends and family, your fellow employees and the community at large,’ the bank said in the memo, which was signed by its entire operating committee led by CEO Jamie Dimon.

CNBC reported that Toshiba shareholders voted out the firm’s board chair and one other director. For many, the result at the AGM marks a new watershed moment for corporate governance in Japan. ‘This result is a sign of a paradigm shift in Japan and will only embolden activist investors, whether foreign or domestic,’ said Justin Tang, head of Asian research at United First Partners in Singapore.

– According to the WSJ, although many fund firms say they welcome the efforts to bring order to the ESG investing space under the EU’s new Sustainable Finance Disclosure Regulation, they say the rules leave plenty of room for interpretation on what exactly constitutes a green fund. Regulators are also still discussing what kinds of disclosures will be required from next January.

‘One of the challenges is the fact that asset managers classify funds themselves,’ said Elodie Laugel, chief responsible investment officer at French fund firm Amundi. This leads to differences in practices and approaches, the firm said.

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...