May 23, 2018

“Dual Class” Companies: CII Supports 7-Year Sunsetting

Recently, CII responded to MSCI’s proposal to weight companies in its indexes based on whether they have unequal voting structures – i.e. “dual class” companies. Since CII wants alignment between economic & voting rights, it’s not surprising that they support the proposal. But – consistent with these letters that CII recently sent to two IPO candidates – they suggest exemptive relief for companies that adopt a 7-year sunset provision.

CII also thinks that it would be reasonable for a sunset structure to be renewable for additional 7-year terms if approved by a majority of the shares with inferior voting rights – and that existing index constituents should have 3 years to adopt a sunset provision before getting dinged by MSCI’s weighting feature. CII’s response differs from BlackRock’s. As I recently described on “The Mentor Blog,” BlackRock wants indexes to reflect the entire investable marketplace.

Sustainability: More Talk Than Action?

This Ceres report finds that few companies are taking a “systemic approach” to sustainability. Sure, lots of proxy statements make reference to sustainability as a board responsibility, but just 13% of large companies have formalized that in committee charters and/or disclosed board-management engagement – and 83% of boards don’t have a director with sustainability expertise. Similarly, a third say they link executive pay to sustainability – but most don’t describe the specific goals that are incentivized.

Ceres found that companies that are more precise in these areas are at least twice as likely to have strong sustainability commitments. On each topic, the report highlights disclosure from companies with leading practices – a good starting point if you’re looking to bolster your own systems.

Ceres & “The B Team” also released this “Climate Smart Primer” to help directors understand the potential material impact of sustainability issues…

“Bipartisan Banking Act” Will Soon Become Law

Here’s a nice infographic from Davis Polk about the “Bipartisan Banking Act” – which the House passed yesterday – that makes big changes to the regulation of banking organizations. It’s expected to be signed by the President shortly. Also see this MoFo memo

Liz Dunshee