The week in investor relations: EU-UK tensions and higher bars for shareholder proposals
– British asset managers are pushing back against EU proposals that they think could be used to shift business from the UK to Europe, reported the Financial Times (paywall). The European markets watchdog has suggested the EU ‘set out in law a list of core functions that must always be performed inside the bloc,’ explained the article. Critics argue this could be used to prevent EU funds from outsourcing portfolio management to the UK, which is currently allowed under delegation rules.
– The SEC voted to adopt new rules making it harder for shareholders to submit proposals, noted Reuters. ‘Previously, an investor had to hold at least $2,000 of a company’s stock for one year to file a proposal – a threshold the SEC raised to three years on Wednesday,’ said the article. ‘It also raised the proportion of the vote a proposal must win in order to be resubmitted to the ballot year on year.’
– Trevor Milton, the executive chairman of electric truck company Nikola, stepped down following allegations that the company misled investors, reported the Wall Street Journal (paywall). In September, Hindenburg Research, a short-seller, released a report that claimed the company and Milton had made ‘exaggerated claims about the readiness of Nikola’s technology and how much of it is proprietary,’ noted the article. Milton said he would defend himself against ‘false allegations leveled against me by outside detractors’.
– The WSJ noted that travel companies are struggling to make financial forecasts in the current environment. ‘We’re basically prevented from saying the word ‘forecast’ right now because whatever we forecast… it’s wrong. So we’ve started using the phrase ‘planning scenarios’ or ‘planning assumptions’ [instead],’ commented Shannon Okinaka, CFO at Hawaiian Airlines, in the article.
– The shares of HSBC in Hong Kong fell to their lowest level since 1995 following ‘allegations of money laundering,’ reported the BBC. The bank was already under pressure due to the impact of Covid-19 and its stance on a new security law in Hong Kong. ‘HSBC says it has always met its legal duties on reporting such activity,’ noted the BBC in a separate article on the subject.
– A study called into question the commitment of major businesses to stakeholder capitalism, reported the New York Times. The research comes one year after the Business Roundtable released a statement saying corporations should deliver value for all stakeholders, shifting away from a focus on shareholder value above all else. The Business Roundtable statement has ‘failed to deliver fundamental shifts in corporate purpose in a moment of grave crisis when enlightened purpose should be paramount,’ concluded the report.