Monthly Roundup January 2025

• Insights
• Monthly Roundup

US: ISS 2025 US Policy Updates

On December 17, 2024, ISS Governance published updates to its U.S. benchmark proxy voting policies. The new policies are applicable to all U.S. company meetings held on or after February 1, 2025. The 2025 Benchmark Policy Guidelines, including a summary of the 2025 changes are available on ISS’s website. ISS has made few revisions this year.

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US: Georgeson’s Kilian Moote wrote a submission to the Board Leadership journal titled “Considerations for the 2025 Annual Meeting Season”

“Kilian Moote is a managing director within the ESG advisory practice at Georgeson, a provider of strategic shareholder engagement, proxy solicitation, and governance consulting services. In this article, he discusses trends for the coming year relating to environmental, social, and governance-related proposals and other issues facing corporate boards.”

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Europe: Georgeson is hosting an investor panel webinar titled “Investor Insights: Preparing for the 2025 AGM Proxy Season” on 13 February 2025

The investor panel includes AXA Investment Managers’ Corporate Governance & Stewardship Senior Analyst, Héloïse Courault; Janus Henderson’s Corporate Governance Lead, Ruchi Biyani; and Pictet Asset Management’s Senior Corporate Governance Specialist, James Upton. The panel will be chaired by Georgeson’s Kiran Vasantham and will discuss the 2025 proxy season and survey findings.

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US: Georgeson is hosting a webcast with H/Advisors Abernathy, Piper Sandler and Vinson & Elkins on 6 February titled “Proxy Season is Here: What Public Companies Need to Know (And Do)”

Georgeson’s David Farkas and Bill Fiske will be presenting the key considerations and near-term actions for public companies facing the threat of activist nominees.

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US: Georgeson is hosting a webinar with Latham & Watkins on 13 February titled “2025 Proxy Season: Considerations for Your Proxy Statement and Preparing for Your Annual Meeting”

Georgeson’s Chris Hayden and Kilian Moote will be presenting at the second 60-minute program of the three-part proxy season webcast series covers the following topics:

• Executive compensation updates and proxy considerations
• SEC updates and corporate responsibility trends
• Proxy disclosure trends and drafting tips
• Latest proxy advisor and institutional investor policy updates
• Shareholder proposal highlights

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UK: Georgeson’s Daniele Vitale will be speaking at a London Stock Exchange Webinar from their AGM Series titled “Key Takeaways From 2024 AGM Season”

The panellists will discuss:

• Shareholder authorities – in particular take up of the authorities permitted by the Pre-Emption Group Guidelines issued in 2022
• Shareholder dissent – resolutions that received significant votes against in 2024
• Active, activist and disruptive shareholders and shareholder requisitioned resolutions
• Updates to proxy voting guidelines
• Proxy advisor engagement
• Remuneration

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Spain: Georgeson is hosting the 12th edition of the Good Corporate Governance Conference in collaboration with WomenCEO on 12 February

The conference will present a review of the main international trends in the field with top-level speakers and will discuss changes that are to be faced in 2025.

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Italy: Georgeson’s Francesco Surace and Alberto D'Aroma presented at Assonime’s event held on 27 January titled Institutional Investors' Vote and Proxy Advisors' Policies

The hybrid event, held in collaboration with Assonime and the Association of Italian Joint Stock Companies, had speakers and participants split between the Rome and Milan Assonime’s HQs and online. The event will discuss the dynamics of 2024 AGMs and draws useful insights for the upcoming AGM season, based on Georgeson's analysis on the “Alignment between institutional investors and proxy advisors”.

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Shareholder Activism

Activists push Japan Inc to its ‘great tipping point says Suntory head

The Financial Times reports that Japan is experiencing a significant shift in corporate governance due to increased shareholder activism and has seen a record number of foreign and domestic activist funds purchasing Tokyo-listed stocks, leading to a wave of corporate changes. Activist investors have pressured companies to improve efficiency and profitability, with unsolicited takeover bids becoming more common and endorsed by the government. Experts predict continued growth in activism, private equity dealmaking, and domestic consolidation, although some warn that market friction could slow this momentum.

Record number of activist investors joined shareholder rebellion in 2024

Reuters reports that in 2024, a record number of activist shareholders mounted campaigns at global companies, leading to significant changes and strong returns. 160 investors, including 45 first-timers, pushed companies for strategic and operational improvements or executive changes, up from 135 investors in 2023. More than 26% of campaign demands focused on strategy and operations, while only 22% asked for mergers and acquisitions, reflecting a shift from previous years.

British activist investor seeks to disrupt Singapore’s Great Eastern takeover

The Financial Times reports that Palliser Capital, a British activist investor, has called on Singapore’s markets regulator to intervene in OCBC Bank's takeover of Great Eastern, citing unfair treatment of minority shareholders. Palliser Capital has appealed to Singapore’s markets regulator to intervene in OCBC Bank's takeover of Great Eastern, calling the deal "gravely unfair" and accusing Great Eastern’s board of being "highly complacent" and criticized the insurer’s corporate governance safeguards as lacking or insufficiently robust.

Environmental & Social

BlackRock quits climate group as Wall Street lowers environmental profile

Reuters reports that BlackRock has decided to leave the Net Zero Asset Managers citing confusion about its practices and legal inquiries from various public officials as reasons for the decision. Despite leaving NZAMI, BlackRock stated that this move would not affect how they develop products and manage client portfolios, with a continued focus on assessing climate-related risks. While BlackRock's exit has not led to other firms following suit, it comes amid Republican-led scrutiny and legal actions against asset managers involved in climate initiatives.

SBTi Passes 10,000 Companies Committing to Science-Based Climate Targets

ESG Today reports that The Science Based Targets initiative (SBTi) announced a significant milestone, surpassing 10,000 businesses that have set or committed to science-based emissions reduction targets. This represents a 29% increase from the previous year despite the resignation of its prior CEO. SBTi has seen growth in companies with validated targets, now over 7,000 with the organization aiming to meet the rising demand for corporate decarbonization standards and target validation services.

Anti-DEI Activists Target Goldman Sachs and JPMorgan Chase

The Wall Street Journal reports that Goldman Sachs and JPMorgan Chase are being targeted by activist groups to reduce their diversity, equity, and inclusion (DEI) efforts, while Bank of America and Citigroup face pressure over alleged discrimination against customers based on religious or political beliefs. Groups have submitted proposals challenging the business practices of major banks, arguing that DEI policies expose them to legal risks. Shareholders may vote on these proposals in the banks' annual meetings this spring, although boards typically recommend voting against such measures. Proposals include calls for racial-discrimination audits of DEI policies at Goldman, and requests for Bank of America and Citigroup to audit customer surveillance based on political or religious beliefs.

Global Developments

BlackRock’s conscience comes with an ever-higher price tag

The Financial Times reports BlackRock is facing criticism for its socially motivated investing, particularly in a lawsuit involving an American Airlines pilot. The court ruled that American Airlines breached its duty by choosing BlackRock funds, which the pilot claimed pursued non-pecuniary goals. Despite not being a formal defendant, BlackRock and its CEO Larry Fink were effectively on trial with the judge citing Fink's past comments on business's role in society. The court has yet to determine damages, but the case could have a chilling effect on socially motivated investing.

European Developments

Continental Europe avoiding London’s listings ‘exodus’, says Euronext chief

The Financial Times reports that Euronext's CEO Stéphane Boujnah asserts that the exodus of listings to the US is primarily a "London problem" and not an issue for the rest of Europe. London has been losing stocks such as Flutter, CRH, and Ashtead to the US, with fewer than 20 companies listed in the UK capital last year, the lowest since the 2009 financial crisis. Boujnah emphasized that Euronext's seven stock exchanges in Europe have greater liquidity than London, making them more attractive for companies considering listings. Later in January, the Executive Vice President of OTC Markets Group wrote a letter arguing that Europe’s stock market exodus is more than a British problem.

UK

The High Pay Centre estimates that FTSE 100 CEOs’ earnings for 2025 will surpass the median UK worker’s full time annual salary

The High Pay Centre estimates that in 2025, FTSE 100 CEOs will have earned more than the median annual salary of a full-time UK worker. This is based on recent CEO pay disclosures and government statistics on UK worker pay. Median FTSE 100 CEO pay is currently £4.22 million, 113 times the median worker's pay of £37,430. This represents a 2.5% increase for CEOs compared to a 7% increase for median workers.

UK companies outpace US businesses in share buybacks

The Financial Times reports that British companies are increasingly engaging in share buybacks, surpassing US companies for the first time. FTSE 100 companies committed to buy back at least £56.9bn of shares last year, with significant buybacks also planned for 2023 and 2022. This shift marks a move away from the traditional preference for dividends, with major companies like Shell, HSBC, and Centrica participating in substantial buyback programs.

UK ministers explore shelving stricter audit rules for private companies

The Financial Times reports UK ministers are considering scrapping stricter audit rules for private companies to boost economic growth. Business secretary Jonathan Reynolds and employment minister Justin Madders have discussed the possibility of watering down or eliminating reforms that would classify about 600 companies as “public interest entities”. The government views tighter auditing requirements as a barrier to growth, with concerns that companies might reduce their size or relocate to avoid stricter regulations.

Germany

Germany Embraces CSRD Delay Strengthening ESG Reporting

Seneca ESG reports that Germany’s Chancellor Scholz has proposed delaying the EU’s Corporate Sustainability Reporting Directive (CSRD) due to concerns over business readiness. The directive, aimed at requiring companies to disclose ESG data, faces criticism for possibly delaying progress on sustainability but is seen as essential for achieving long-term carbon-neutral goals. Compliance with the CSRD is crucial for companies to enhance their ESG credentials and contribute to the EU’s carbon-neutral strategy.

France

Francophone companies split on sustainability reporting rule changes

Euractiv reports that the French Association of Large Companies (AFEP) has requested significant changes to EU sustainability reporting rules, including making the EU’s green taxonomy voluntary and postponing the EU Corporate Sustainability Due Diligence Directive (CSDDD). However, some AFEP members oppose these changes, arguing that companies have already invested in compliance and that the rules address important societal concerns. The debate was influenced by EU Commission President Ursula von der Leyen's promise to simplify the sustainability reporting framework.

Netherlands

Implementation of the CSRD in Dutch law

Pont reports that the Dutch government has introduced a proposal to implement the European Corporate Sustainability Reporting Directive (CSRD) to the Tweede Kamer, mandating large companies to report on their sustainability efforts. The proposed Dutch legislation aligns with the CSRD and aims to minimize the burden on businesses by integrating existing legal frameworks and control rules, involving external accountants. The government, along with various organizations, is launching initiatives to support businesses, especially small and medium-sized enterprises, which are part of larger companies' value chains.

Italy

Falling rates and multiples creates Italian M&A race

Repubblica reports that lower interest rates and the search for higher yields amid high valuations of traditional asset classes are expected to accelerate mergers and acquisitions in the new year, according to a report by A&O Shearman, which includes the 2024 summary based on Refinitiv's data and institutional investors' sentiment.

Rome vs Milan: how Mediobanca turned prey for Monte dei Paschi

The Financial Times reports that Mediobanca found itself a takeover target by Monte dei Paschi di Siena (MPS), a bank partially owned by the government. This unexpected move has implications for Italy's banking system. MPS launched a €13.3bn all-share bid for Mediobanca at a 5% premium to its closing price, surprising investors and signalling a potential shift in Italy's banking landscape. The Italian government, under Giorgia Meloni, has been involved in several financial sector interventions, including a failed attempt to merge MPS with Banco BPM, and now seems to support MPS's bid for Mediobanca.

Spain

Indra appoints Mr. Ángel Escribano as executive chairman with the same power and salary as Mr. Marc Murtra

El País reports that Indra has appointed Ángel Escribano as the new executive chairman, replacing Marc Murtra, who will now preside over Telefónica. The appointment was approved by Indra's board of directors, who convened to discuss the transition and ensure continuity in leadership. Escribano's leadership comes at a critical time for Indra, which is undergoing significant changes and considering strategic moves, including the potential sale of its technology division Minsait.

EU Set to Cut ESG Red Tape as France Adds to Mounting Pressure

Bloomberg reports that the European Union is under pressure to reduce its ESG reporting requirements, with France proposing to limit the scope of the regulations. Both France and Germany are pressuring the European Commission to scale back the CSRD directive, citing concerns over competitiveness and economic impact. The European Commission may consider significant limits to the CSRD scope, with ongoing discussions and potential adoption of omnibus legislation by February 26.

North American Developments

United States

Accounting firms try to block new US disclosure rules about auditors

The Financial Times reports that accounting firms are opposing new rules by the PCAOB that would require disclosure of auditors' work hours, training, and experience, arguing it could mislead investors. New rules approved by the PCAOB would require auditors to disclose the distribution of work between senior and junior staff, their experience, and training metrics. The new rules face opposition from audit firms, especially under the Biden administration, with concerns about increased costs and potential withdrawal from auditing public companies.

US chief executives are leaving the corner office in record numbers

The Financial Times reports that Chief executives of publicly traded US companies are leaving in record numbers despite historic pay bonuses, driven by factors such as a booming stock market, fear of future turmoil, and more lucrative opportunities in private companies. In the year to November, 327 chief executives at US public companies announced their departure, surpassing the previous record of 312 in 2019, with notable exits from Boeing, Intel, and Nike amid sinking share prices. The exits have led to shorter tenures for CEOs, with some leaving after less than three years, and boards facing more pressure to take action sooner when performance suffers.

Apple’s board recommends shareholders vote against proposal to eliminate diversity programs

Reuters reports that Apple's board of directors recommended investors vote against a proposal to abolish the company's Diversity, Equity, and Inclusion (DEI) programs, submitted by the National Center for Public Policy. The proposal argued that DEI poses litigation, reputational, and financial risks, citing recent Supreme Court decisions. Apple responded that it has a well-established compliance program and that the proposal was an attempt to micromanage its business strategy.

Why the Lawsuit Over Musk’s Pay Went Too Far

City Journal argues that a Tesla shareholder's lawsuit against Elon Musk's $56 billion compensation package has led to a controversial court ruling with significant economic and political implications. A Delaware judge sided with a lone Tesla shareholder challenging Elon Musk’s $56 billion compensation package, despite 72% of shareholders previously approving it.

APAC Developments

Japan

KKR urges Fuji Soft to take legal action against Bain in $4bn takeover fight

The Financial Times reports that KKR has urged Fuji Soft's board to take legal action against Bain Capital's rival bid for the company, accusing Bain of violating a non-disclosure agreement. KKR's call for legal action against Bain Capital escalates a public battle over the $4bn Japanese software company, Fuji Soft, potentially harming the buyout industry's reputation in Japan. Fuji Soft's board supports KKR's lower bid due to its existing control of more than a third of the company, which could block Bain's full takeover.

South Korea

Korean activist investors to routinize campaigns throughout year

Korea Daily reports that South Korea's activist investors plan to maintain campaigns throughout the year rather than just before annual general meetings. Many domestic activist funds will continue existing campaigns launched in 2024. Activist investors traditionally launched campaigns before general shareholder meetings to pursue higher shareholder value and better corporate governance. Activist investors aim to sustain their efforts year-round, prompting companies to stay alert beyond the typical three-month period before annual general meetings.

India

Promoters disregard investor dissent while voting their own salary

Institutional Investor Advisory Services (IiAS) reports that there has been a steady increase in compensation for promoters and their families, evident in both absolute remuneration and the ratio to median pay. Analysis of 893 remuneration resolutions from January 2023 to September 2024 shows only 10 were rejected, but a majority of minority vote would have rejected an additional 216. Despite regulatory thresholds, promoters often exceed limits due to substantial shareholding. This conflict of interest is not addressed by current regulations, which should require a majority of minority vote for promoter compensation.

Australia

Corporate climate action was sidelined in 2024

The Australian Financial Review (AFR) reports that corporate climate action was sidelined in 2024. This year may be worse 'For the corporate world there is a very real risk that – except for a few companies that many businesses and the advisers and advocates that support them are contributing to the problem by creating the impression that we are making good progress, and thereby delaying required radical changes to markets and the policies that frame them.

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