Welcome back, and we hope you had a great August.
Heading into the summer, the view was that activist campaigns may see a spike this fall, driven by pent-up demand after a quiet proxy season. Indeed, the end-of-summer activism cycle is picking up and being led by – who else – Elliott Management. Elliott is seeking to break up Chevron’s $5 billion deal to purchase Noble Energy, a story that broke via an early termination HSR filing by the Federal Trade Commission. Elliott is arguing that Noble Energy shareholders aren’t getting fair value in the deal and that the company would benefit from a rebound in oil and subsequent spinoff of its Mediterranean assets as a standalone company.
In corporate governance news, Institutional Shareholder Services (ISS) hit out at the U.S. Department of Labor this week over proposals that would impact how pension funds vote at annual meetings, the Financial Times reported. The proposals would prohibit pension funds from voting on matters that aren’t explicitly linked to company performance. The announcement follows a string of proposals from the Labor Department aimed at requiring funds to prove they aren’t sacrificing financial returns by making ESG investments. Lorraine Kelly, governance business head at ISS, said that the proposals are a campaign to “disenfranchise investors” and that it would “weaken company oversight.”
In the Harvard Law School Forum on Corporate Governance, Brian Tomlinson, of Chief Executives for Corporate Purpose, argued the proposed rules are disproportionately impacting ESG investments and questioned why short-term metrics such as earnings per share aren’t being targeted by the government. Tomlinson argues for the long-term value creation of incorporating ESG information into investment decisions, and that financial performance and ESG factors are inextricably linked – a view that will continue to be debated by both proponents and opponents of stakeholder capitalism.
Have a good weekend,
Joel
