Monthly Archives: October 2020

Weekly Roundup: September 25–October 1, 2020

More from:

This roundup contains a collection of the posts published on the Forum during the week of September 25–October 1, 2020.

Letter to House Subcommittee by SEC Chairman Jay Clayton

Statement by Commissioner Caroline Crenshaw on Whistleblower Program Rule Amendments

Statement by Chairman Clayton on Strengthening the SEC’s Whistleblower Program

Sharing the Pain: How Did Boards Adjust CEO Pay in Response to COVID-19

Shareholder Proposal No-Action Requests in the 2020 Proxy Season

Taming the Corporate Leviathan: Codetermination and the Democratic State

The Broadening Basis for Business Judgment

No Damages in Dispute Over Failed Anthem/Cigna Merger

2020 AGM Season Review

The Enduring Wisdom of Milton Friedman

Investment Stewardship 2020 Annual Report

Managing Climate Risk in the U.S. Financial System

2020 Annual Corporate Governance Review

How Great Companies Deliver Both Purpose and Profit

Alex Edmans is professor of finance at London Business School. This post is based on his recently published book Grow the Pie. Related research from the Program on Corporate Governance includes The Illusory Promise of Stakeholder Governance by Lucian A. Bebchuk and Roberto Tallarita (discussed on the Forum here); For Whom Corporate Leaders Bargain by Lucian A. Bebchuk, Kobi Kastiel, and Roberto Tallarita (discussed on the Forum here); and Toward Fair and Sustainable Capitalism by Leo E. Strine, Jr (discussed on the Forum here).

Capitalism is in crisis. The consensus among politicians, citizens, and even executives themselves—on both sides of the political spectrum and throughout the world—is that business just isn’t working for ordinary people. It enriches the elites, playing scant attention to worker wages, customer welfare, or climate change.

Citizens, and the politicians that represent them, are fighting back. The precise reaction varies—Occupy movements, Brexit, electing populist leaders, restricting trade and immigration, and revolting against CEO pay. But the sentiment’s the same. “They” are benefiting at the expense of “us”.

In turn, companies were responding—or at least appearing to. Sustainability became the corporate buzzword of the day. It was the theme of this year’s World Economic Forum in Davos. Last August, the US Business Roundtable radically redefined its statement of the “purpose of a corporation” to include stakeholders, rather than just shareholders. BlackRock chief Larry Fink, in his annual letter to CEOs the last few Januarys, has stressed that their companies must serve wider society.


2020 Annual Corporate Governance Review

Donald W. Cassidy is executive vice president of business development and corporate strategy; Hannah Orowitz is managing director of corporate governance; and Brigid Rosati is director of business development at Georgeson. This post is based on their Georgeson memorandum.

The Impact of COVID-19 on the 2020 Proxy Season

The COVID-19 global pandemic fundamentally altered the 2020 U.S. proxy season by changing the logistics of annual meetings, introducing regulatory changes, influencing voting decisions and shaping future shareholder proposal trends.

Changing Meeting Logistics and Investor Perceptions

Restriction on travel and large gatherings combined with growing global health and safety concerns forced companies worldwide to quickly modify meeting logistics late in the planning stages of their 2020 annual shareholder meetings. In the U.S., while COVID-19 caused some companies to postpone or cancel their meetings, the majority of companies shifted to a virtual-only or hybrid format.

Most U.S. companies with mid-March 2020 and later meeting dates quickly opted to transition to a virtual meeting format—over 1,900 companies in the Russell 3000, which includes the S&P 1500, as of July 2020 according to ISS. Recognizing the need to prioritize health and safety, most investors were understanding of a company’s choice to hold a virtual meeting in 2020.


Managing Climate Risk in the U.S. Financial System

Bob Litterman is Chairman of the Climate-Related Market Risk Subcommittee of the Commodity Futures Trading Commission (CFTC). This post is based on his CFTC report.

Climate change poses a major risk to the stability of the U.S. financial system and to its ability to sustain the American economy. Climate change is already impacting or is anticipated to impact nearly every facet of the economy, including infrastructure, agriculture, residential and commercial property, as well as human health and labor productivity. Over time, if significant action is not taken to check rising global average temperatures, climate change impacts could impair the productive capacity of the economy and undermine its ability to generate employment, income, and opportunity. Even under optimistic emissions-reduction scenarios, the United States, along with countries around the world, will have to continue to cope with some measure of climate change-related impacts.

This reality poses complex risks for the U.S. financial system. Risks include disorderly price adjustments in various asset classes, with possible spillovers into different parts of the financial system, as well as potential disruption of the proper functioning of financial markets. In addition, the process of combating climate change itself—which demands a large-scale transition to a net-zero emissions economy—will pose risks to the financial system if markets and market participants prove unable to adapt to rapid changes in policy, technology, and consumer preferences. Financial system stress, in turn, may further exacerbate disruptions in economic activity, for example, by limiting the availability of credit or reducing access to certain financial products, such as hedging instruments and insurance.


Page 9 of 9
1 2 3 4 5 6 7 8 9