Welcome to your fortnightly IoD Directors’ Briefing providing an update on developments relating to directorship and corporate governance.
This edition’s Governance Perspective focusses on the way in which the Government’s interventions in the economy have sought to preserve cash in businesses. In this edition, we’re also delighted to be able feature an additional contribution from Anthony Carey CDir.
Preserving cash at a time of crisis - Carum Basra, Corporate Governance Policy Adviser, IoD
25 May | Shareholders urged to remove Zuckerberg as Facebook Chair
Both ISS and Glass Lewis have recommended that investors in the social media firm vote for a motion that would require an independent chair - a move which would force Zuckerberg to stand down. [Telegraph]
22 May | EasyJet shareholders reject proposal to remove management
Sir Stelios Haji-Ioannou, the airline’s founder and largest shareholder, had been seeking to oust four directors in a special shareholder vote. Over 99% of votes cast by independent shareholders – those not held by Haji-Ioannou or related parties – supported the board. [The Guardian]
21 May | Lloyds Bank shareholders rebel against bonus plan
Significant opposition came after ISS, the proxy advisor, recommended investors block Lloyds’ executive pay policy over concerns about a switch to more certain long-term bonuses. Though the policy passed, more than 36 per cent of shareholders who voted opposed the remuneration policy. [The Times]
20 May | Rolls-Royce to axe 9,000 jobs
The engine maker plans to cut at least 9,000 jobs, or more than a sixth of its workforce. The Derby-based firm said it was targeting 1.3 billion pounds of annual cost savings, with about 700 million coming from layoffs plus other cuts that could include factory closures. [BBC]
Policy and Regulation
24 May | Government plan bespoke bailouts of “viable” companies
The Chancellor has authorised a bailout plan named “Project Birch” to save strategically important companies facing acute financial difficulties. Under the plan, the Treasury’s capacity handle bespoke deals will be enhanced. [Financial Times]
24 May | Senate blocks some Chinese firms from listing in US
Senators passed legislation that could prevent some Chinese companies from listing their shares on US exchanges unless they follow standards for U.S. audits and regulations. Beijing has long prohibited the US audit watchdog from inspecting the audit records of companies operating in its territory. [Reuters]
23 May | PM plans to remove Huawei from 5G network
Boris Johnson is planning to reduce Huawei’s involvement in the UK's 5G in the wake of the crisis. The Prime Minister has instructed officials to draw up plans that would see China’s involvement in the UK's 5G network reduced to zero by 2023. [Telegraph]
23 May | Foreign Affairs Committee Chair warns over overseas takeovers
Writing in the Financial Times, Tom Tugendhat called for the UK to enhance its investment screening regime to defend UK firms from takeovers by hostile State-backed actors including Chinese companies. Tugendhat wrote that while the UK has long been an open economy the “rise in state capitalism with deep pockets” presents challenges. [Financial Times]
19 May | Serious Fraud Office abandons ABB case
The SFO has dropped an investigation into the Swiss-Swedish firm after finding insufficient evidence to bring charges. The case joins a number of others that the agency has cleared from its backlog. Last year, the SFO closed ten cases without bringing charges. [Wall Street Journal]
20 May | FRC Chair resigns after less than nine months
Simon Dingemans, a former Goldman Sachs banker, took up the post last October. The FRC said it had been agreed when Dingemans joined that he could take on additional roles that did not conflict with the position.
“This has not proved possible,” the FRC said in a statement, adding that Dingemans expects to return to a more full-time private sector role. [City AM]
18 May | EY appoints Head of UK Audit
EY is introducing a dedicated UK head of auditing . In a statement, the Big Four firm said that the Managing Partner of Assurance and UK Head of Audit had been split “in recognition of the societal importance of these functions and to ensure that audit quality continues to receive dedicated focus”. The move comes after FRC said in March that the ringfencing of audit operations at the Big Four could start this year in a voluntary form. [Daily Mail]
18 May | Hang Seng index overhauled to allow for dual class shares
Hong Kong’s Hang Seng Index has announced it will now include dual class shares and secondary listings. The move opens the way for e-commerce firm Alibaba to join the benchmark. Dual class and secondary listings will each be subject to a 5% weighting cap. [Bloomberg]
Investors and Stakeholders
21 May | BlackRock board wins shareholder approval
The 16-strong board of the world’s largest asset manager was reappointed at its AGM. CEO Larry Fink acknowledged his board may be “a little bigger than other boards” but said it provided a range of perspectives on areas like technology and sustainability. [Reuters]
20 May | Norway’s sovereign wealth fund to be more transparent
The $1tn fund has announced it will make its votes at shareholder meetings more transparent by explaining any opposition to board recommendations. The fund, which invests around 70% of its portfolio in the stock market, has stakes in some 9,200 companies, owning 1.5% of all globally listed shares. [Reuters]
21 May | AstraZeneca to distribute COVID-19 vaccine at cost
The Cambridge based drug maker is working on a potential Covid-19 vaccine, which it plans to sell at cost. It has secured capacity to produce a billion doses by the end of next year. [Financial Times]
20 May | UK supermarkets threaten to boycott Brazil over rainforest
Businesses, including Sainsbury's, Tesco, Morrisons and Marks & Spencer, joined over 40 companies signing an open letter, urging Brazil's national legislature to reject a proposed bill that they believe would speed up destruction of the Amazon. [The Independent]
Thought leadership and research
21 May | Investor questions on COVID-19
The United Nations Principles on Responsible Investment has produced and published a series ESG-related questions to ask companies– at AGMs and in follow-up engagements – about their responses to COVID-19. Key themes relate to business continuity, employee health and long-term value creation. [UNPRI]
IoD in the news and advocacy
18 May | Roger Barker, the IoD’s Head of Corporate Governance called for policymakers to consider ways to transform company debt liabilities into more flexible and sustainable equity or equity-type financing in the Financial Times.
Letters and Comments
Is your board providing genuine leadership? | Anthony Carey CDir shares a comment piece on Board leadership during the pandemic [External Link]
Responding to the Coronavirus Crisis
The leading source of governance principles and recommendations for companies with a premium listing on the London Stock Exchange.
Key governance principles for large private companies.
Supervisory guidance from the Prudential Regulation Authority for the boards of regulated firms.
The European Confederation of Directors Associations (ecoDa)
The umbrella body for directors associations in Europe.
The Global Network of Director Institutes (GNDI)
The umbrella body for directors associations around the world.
IoD Corporate Governance Team