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Jul 05, 2024

The week in GRC: Activist campaigns reach record levels and shareholder support for social and environmental proposals continues decline

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

Reuters (paywall) reported that activist investors mounted campaigns at a record number of companies globally during the first six months of 2024 but have been less successful in breaking into boardrooms as companies fought back effectively.

In the first half of the year, Barclays tracked 147 activist campaigns, toppling the previous record of 143 set during the first six months of 2018. In the second quarter, 86 campaigns were launched. Elliott Investment Management was the busiest activist, launching 11 new campaigns this year and committing around $11 bn in capital, the data showed.

In US proxy fights, however, activists won only 11 percent of the seats they sought, down from 65 percent during the same period in 2023.


The Wall Street Journal (paywall) reported that a US appeals court has revived an antitrust lawsuit accusing 10 large banks of overcharging investors by billions of dollars of corporate bonds, saying the trial judge should have been recused because his wife owned stock in one of the banks. The 2nd US Circuit Court of Appeals in Manhattan said that while District Judge Lewis Liman ‘almost certainly unknowingly’ had a conflict of interest, his partiality could reasonably be questioned because his wife’s ownership of Bank of America stock created an ‘appearance of impropriety’.

A spokesperson for the Manhattan federal court, where Liman works, declined to comment.

The decision comes nearly three years after a WSJ investigation found that more than 130 federal judges had since 2010 violated federal law and judicial ethics by overseeing cases involving companies in which they or family members owned stock.


– According to Bloomberg (paywall), Apple is due to secure an observer role on OpenAI’s board as part of a landmark agreement between the two companies made last month, further tightening ties between them. Phil Schiller, head of Apple’s App Store and its former marketing chief, has reportedly been chosen for the position, which will not see him serve as a fully fledged director.

The move follows Apple’s announcement in June that it would offer generative AI platform ChatGPT on the iPhone, iPad and Mac as part of a suite of new technological features. The board arrangement will take effect later this year, with Schiller yet to attend any meetings, Bloomberg reported.


– The office of New York State’s comptroller said it would vote against re-electing Best Buy’s chairman and other key board members next year over questions regarding the retailer’s commitment to the LGBTQ community, according to the WSJ. The comptroller’s office serves as trustee of the New York State Common Retirement Fund, which is a small shareholder in Best Buy with less than 1 percent of its shares. But the statement by the comptroller, Thomas DiNapoli, joins a growing number of efforts by outsiders to pressure companies over their position on social issues.

The Best Buy dispute began when the National Center for Public Policy Research, a conservative activist group, last year submitted a shareholder proposal asking the company to assess whether its work with certain LGBTQ advocacy groups was hurting its business. Best Buy convinced the group to withdraw the proposal after its legal counsel said it would screen future donations by its employee affinity groups to ensure they would not support the causes the group identified as concerning.


– The WSJ reported details of the Biden administration’s long-anticipated proposed rules that would establish the first federal safety standard for protecting workers from extreme heat while working. The Labor Department rules, which apply to indoor and outdoor workplaces, would require employers to provide water when the heat index climbs above 80°F. Employers would also need to provide access to shade or air-conditioned break rooms. If the heat index surpasses 90°F, employers would need to offer 15-minute paid rest breaks every two hours. Companies would have to develop plans to prevent heat-related injuries.


– Shareholder support for environmental and social issues at US companies has fallen for the second year in a row as proxy campaigns brought by investors at ExxonMobil and Starbucks failed to attract votes, the Financial Times (paywall) reported. Following the close of AGM season, data shows median support for environmental and social shareholder proposals at Russell 3000 companies was 21 percent and 18 percent, respectively, according to ISS-Corporate, roughly even with last year and well below record levels of support for these issues in 2021.

This year, only two climate-related shareholder proposals received majority support at Russell 3000 companies. Both pushed companies to publish more information about their efforts to reduce greenhouse gas emissions.