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Oct 13, 2023

The week in GRC: Peltz makes fresh bid for Disney board seats and SEC adopts beneficial ownership reporting amendments

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

The Wall Street Journal (paywall) reported that activist investor Nelson Peltz is planning a new effort to gain board seats at The Walt Disney Company. Peltz’s Trian Fund Management, now one of Disney’s largest shareholders, is expected to request multiple seats including one for Peltz, according to people familiar with the matter. If the company declines, Trian could nominate directors that would be voted on at Disney’s AGM next spring. Peltz launched a run for a seat on Disney’s board earlier this year but withdrew his nomination in February after Disney unveiled a broad reorganization and cost-cutting plan. Trian thinks Disney shares are significantly undervalued and that the company needs a board that is more focused, aligned with shareholders and accountable, people familiar with the matter said.

Reuters (paywall) reported that the Financial Stability Board (FSB) played down the rescue of Credit Suisse, saying there was no need for an overhaul of international rules written after the financial crash 15 years ago to prevent such a situation. The FSB examined why Swiss authorities had chosen to back a takeover of Credit Suisse by UBS instead of winding up the bank under a ‘resolution’ mechanism designed after the 2008 financial crisis. The officials said the resolution rules for shutting a collapsing bank without panicking markets could have worked for Credit Suisse, although public money would likely still have been needed.

‘This review reaches the conclusion that recent events demonstrate the soundness of the international resolution framework in that it provided the Swiss authorities with an executable alternative to the solution they deemed preferable,’ the FSB said. Only enhancements to how the rules are applied might be needed, rather than changes to their substance, it added.

– The WSJ noted that companies are under increasing pressure from investors, financial institutions, customers and other stakeholders to provide climate transition plans. Some companies, such as Mars and Allianz, have recently published such plans and more are expected to do so ahead of this year’s United Nations climate summit in Dubai, as happened with net-zero pledges in the run-up to the UN climate summit two years ago. ‘[This] is the year of the transition plan,’ said Mary Schapiro, vice chair of the Glasgow Financial Alliance for Net Zero (GFANZ) and former chair of the SEC.

The UK’s Transition Plan Taskforce (TPT) published its framework on Monday, providing a template for companies looking to create their own transition plans. The TPT sets out best practices for disclosure and offers implementation and sector guidance that aligns with the recently published International Sustainability Standards Board climate standards and builds on GFANZ’s guidance for financial companies published last summer.

– According to Reuters, anti-affirmative action activist Edward Blum's American Alliance for Equal Rights has agreed to dismiss its case against Perkins Coie in Dallas federal court after the law firm said it would allow all law students to apply to its diversity fellowship program, not just members of ‘historically underrepresented’ groups.

‘There are many other law firms with similar racially discriminatory programs,’ Blum said in a statement. ‘It is to be hoped that these firms proactively open their programs to all law students before they are sued in federal court.’

Bill Malley, managing partner of Perkins Coie, welcomed the resolution of the case, adding its commitment to building a more diverse and inclusive workplace ‘remains steadfast.’ Last year, people of color comprised 11.4 percent of all partners in major US law firms, according to the National Association for Law Placement.

– Citigroup said its board of directors will meet in Singapore for the first time since 2011 as a show of commitment to the city state, Reuters reported. The meeting will be held next week, and Citi's board and executive management team will meet with clients, staff and regulators during their visit to Singapore. Singapore has been one of Citi's largest markets globally and is home to one of the bank's four wealth hubs.

– The cryptocurrency industry has been shaken by events such as the collapse of crypto exchange FTX, and the remaining firms face growing regulatory pressure creating a stronger need for compliance officials, the WSJ reported. Attracting legal and compliance workers to work for crypto firms is challenging given the reputational and financial hits to the industry over the past year, say those hiring for positions in the industry.

– According to The Guardian, California Governor Gavin Newsom signed a bill that would enable residents to request that their personal information be deleted from the coffers of all data brokers in the state. The bill, SB 362, known as the Delete Act, was introduced by state Senator Josh Becker in an attempt to give Californians more control over their privacy. Residents already have a right to request their data be deleted under current state privacy laws, but it requires filing a request with each individual company. The new bill reinforces that all data brokers must register with the California Privacy Protection Agency (CPPA). It also requires the CPPA to establish an easy and free way for residents to request that all data brokers in the state delete their data through a single page, regardless of how they acquired that information.

The SEC adopted rule amendments governing beneficial ownership reporting under Sections 13(d) and 13(g) of the Securities Exchange Act of 1934. The amendments update Regulation 13D-G to require market participants to provide more timely information on their positions. SEC chair Gary Gensler said in a statement: ‘In our fast-paced markets, it shouldn’t take 10 days for the public to learn about an attempt to change or influence control of a public company. I am pleased to support this adoption because it updates Schedules 13D and 13G reporting requirements for modern markets, ensures investors receive material information in a timely way, and reduces information asymmetries.’

Sections 13(d) and 13(g), along with Regulation 13D-G, require an investor who beneficially owns more than 5 percent of a covered class of equity securities to publicly file either a Schedule 13D or a Schedule 13G, as applicable. An investor with control intent files Schedule 13D, while exempt investors and investors without a control intent, such as qualified institutional investors and passive investors, file Schedule 13G.

Among other things, the amendments shorten the deadline for initial Schedule 13D filings from 10 days to five business days and require that Schedule 13D amendments be filed within two business days, generally accelerate the filing deadlines for Schedule 13G beneficial ownership reports, clarify the Schedule 13D disclosure requirements with respect to derivative securities and require that Schedule 13D and 13G filings be made using a structured, machine-readable data language.

– The WSJ reported that, according to new research conducted by Gallup and Bentley University, consumers’ desire for companies to weigh in on current events and sociopolitical topics has fallen. Forty-one percent of Americans say businesses in general should take stances on current events, down from 48 percent last year, with declines found across age and ethnic groups, according to the survey.

But the survey’s findings also illustrate the increasing complexity marketers face in navigating a divided society. They suggest opportunities for businesses to meet consumers’ growing demands in other areas, experts say. For example, Gallup also found that most young, black and Asian consumers still want brands to speak out on issues that matter to them. Overall, most respondents said businesses should speak out on the specific issues of climate change and mental health.

– According to CNBC, Walgreens Boots Alliance has chosen Tim Wentworth as the company’s new CEO. Wentworth is the former CEO of the country’s largest pharmacy benefits management company, Express Scripts, which was acquired by Cigna in 2018. He stayed on as chief of Cigna’s health services before retiring at the of 2021. ‘What made me decide to come back was a chance to lead this iconic brand and company at a time when it’s not in a steady state,’ Wentworth said. ‘It’s a massive platform... [touching] almost 10 mn people a day.’ Wentworth will start on October 23, almost two months after Roz Brewer stepped down as CEO.

Reuters reported that Humana CEO Bruce Broussard will step down in the second half of 2024 after more than a decade in the role. The insurer named Jim Rechtin as his successor. Broussard led Humana to become the second-largest provider of Medicare Advantage in the US by tripling its membership for the government-backed program to more than 5 mn customers. Rechtin will join Humana from Envision Healthcare, a US provider of physicians, where he is CEO and president. As part of a long-planned transition, Rechtin will first be appointed as president and COO from January 8 next year, before taking over as CEO from Broussard.

‘The board of directors has worked diligently to find the right leader who can take Humana into the next phase of growth and transformation,’ said Humana chair Kurt Hilzinger in a statement.

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...