–US officials are reviewing an executive order that could reshape shareholder voting power by imposing curbs on major proxy advisory firms and index fund managers.
As reported by the Wall Street Journal (paywall), the planned measures would target firms such as ISS and Glass Lewis, limiting their ability to issue vote recommendations for companies to which they also provide consulting services.
According to people familiar with the discussions, the government would also place constraints on large asset managers like BlackRock, Vanguard Group and State Street – which collectively control substantial stakes in major US companies – to ensure client voting aligns more closely with individual preferences.
The proposed order stems from growing concern among corporate leaders that proxy advisers wield excessive influence over governance decisions. The details of the order remain under discussion and no formal action has been announced.
–The FTC has opened an antitrust investigation into proxy advisory firms ISS and Glass Lewis, according to people familiar with the matter.
As reported by the Financial Times (paywall), the probe focuses on whether the firms’ dominant role in shaping shareholder votes, from board elections to executive pay, may be restricting competition or disadvantaging investors.
The two advisers control an outsized share of the US proxy-recommendation market and are widely relied upon by institutional investors. Glass Lewis said the existence of the non-public inquiry does not suggest wrongdoing and that it is complying with the FTC’s document request. ISS declined to comment.
Critics of the firms, including several prominent executives and investors, have long argued that their influence can concentrate voting power and reduce diversity in corporate governance outcomes.
–Danish healthcare companyNovo Nordisk is facing a rare shareholder showdown after its main shareholder Novo Nordisk Foundation – which holds around 77 percent of voting rights – pushed through a sweeping board overhaul.
As reported by Reuters (paywall) the move, aimed at reviving the company’s standing after a roughly 70 percent drop in share price and falling behind rival Eli Lilly in the obesity drug race, has stirred unease among minority investors citing weak governance.
While some back the changes as vital for agility, others say the process has ‘not been pretty’ and warn it could tarnish the firm’s reputation. The outcome of the extraordinary general meeting could set a significant precedent for how majority owners manage board transitions.
–Elliott Investment Management has quietly built a significant stake, close to 5 percent, in Toyota Industries Corporation, according to people familiar with the matter.
According to Reuters, the activist investor says that Toyota Industries’ proposed buy-out by Toyota Motor Corporation and related group firms is undervaluing the company and suffering from a lack of transparency.
Elliott disclosed a 3.26 percent stake as of September 30 in a filing, but its holdings are reportedly much higher now, increasing pressure on Toyota Industries’ board and management. The challenge comes amid a ¥4.7 trn ($30 bn) privatization plan unveiled in June, which activists say limits independent shareholder value.
As a major shareholder now raising governance concerns, Elliott is expected to push for improved terms or alternative strategies at Toyota Industries.
–Tesla shareholders have approved a historic pay package for CEO Elon Musk that could be worth up to $1 trn, contingent on him hitting a series of 12 performance milestones.
As reported by the Financial Times, the vote passed with over 75 percent of shares in favor at Tesla’s annual meeting in Austin, Texas.
The plan ties Musk’s future compensation to achieving ambitious targets: increasing Tesla’s market cap to $8.5 trn, delivering 20 million vehicles, operating 1 million robotaxis, launching 1 million humanoid robots and posting $400 bn in adjusted profit.
If successful, the award could boost Musk’s stake in Tesla from roughly 12 percent to nearly 25 percent