Across the Board
Judge Sides With Twitter, Grants Early Court Date For Suit Against Musk
“A US judge has ordered that Twitter's lawsuit against Elon Musk go to trial in October, a blow to the world's richest man who had asked for a delay…Musk walked away from his $44bn bid to buy Twitter earlier in July, prompting the company to sue him. Twitter hopes that the court will order Musk to complete the takeover at the agreed price of $54.20 per share. The tech billionaire has accused Twitter of withholding information about fake accounts. His legal team has called for the trial to be held early next year due to its complexities, but Twitter asked for a September date. On Tuesday, a judge in the state of Delaware agreed with the company and said a delay to the trial would cast a ‘cloud of uncertainty’.” BBC
Two Tesla Directors Called Out By ISS For Pledging Their Company Stock
“Proxy advisory firm Institutional Shareholder Services (ISS) recommended on Monday that Tesla Inc investors vote against the re-election of two of its board members, Ira Ehrenpreis and Kathleen Wilson-Thompson. ISS cited concerns about ‘the board's risk oversight in light of the pledging (as collateral) of a significant amount of the company's stock by certain directors’ as one of the reasons for the recommendation. Ehrenpreis and Wilson-Thompson are both members of the Nominating and Corporate Governance committee at Tesla…Pledging of company stock by directors or executive officers can pose a risk to the investments of outside shareholders, ISS said, adding that directors and executives with a pledged position may be forced to sell company stock, for example to meet a margin call.” US NEWS
Activist Investor Reveals Stake In Pinterest
“Activist investor Elliott Management Corp. has taken a big stake in Pinterest Inc according to people familiar with the matter, as the once-hot social-media company grapples with a decline in users and other challenges. Elliott has told the company that it is the biggest investor in Pinterest, having built a stake of more than 9% in recent months—partly in common stock, one of the people said. The activist has been in discussions with Pinterest over the past several weeks. It couldn’t be learned what they have been discussing. It has been a time of turmoil for Pinterest, which operates a free online platform for sharing images that inspire projects such as planning weddings, completing home renovations and creating recipes. In June, Ben Silbermann stepped down as chief executive, becoming executive chairman. The company named Bill Ready, who had been president of commerce at Alphabet Inc.’s Google since 2020, as his replacement.” WALL STREET JOURNAL
A Startup Founder Fires Execs For Raising Red Flags - Where Was The Board?
“A Forbes investigation found that Chris Kirchner, of the $240 million Goldman Sachs-backed startup Slync.io, fired executives after they asked questions about the company’s funds. Now, he’s facing a lawsuit for wrongful termination and claims of ‘fraudulent behavior.’ … A review of court filings, documents and video files obtained by Forbes, and interviews with 13 current and former employees, suggests some investors and board members overlooked Slync’s lack of transparency around financial figures. Investors like Goldman Sachs and Blumberg Capital—which had board seats and led funding rounds into Slync totaling $80 million, valuing the company at $240 million—appear to have taken no action when, on three occasions, executives were fired after approaching the board with concerns.” FORBES
SEC Scraps Rule That Gave Corporations Influence In Proxy Firms’ Advice
“The SEC has voted to undo rules that handed companies more involvement in the creation of proxy advice. Under the changes, proxy advisory firms will no longer need to make available to companies any research about them or share with investors any written responses by companies to voting advice. The rules had been adopted in 2020. The ruling, while expected, is a blow to corporate groups that have long campaigned for ways to address perceived issues with proxy voting advice, such as accuracy and conflicts of interest. The US regulator also voted to delete a 2020 change to liability requirements for proxy advice, which provides examples of material misstatements or omissions, as it ‘created a risk of confusion regarding the application of this provision’.” CORPORATE SECRETARY
Boards Increase Focus On Sustainability, Climate Risk
“As pressure mounts from stakeholders, sustainability has never been a bigger focus for boards. Investors, lawmakers, regulators, employees, and customers are all focused on sustainability, and often wonder if the board is doing enough to set up the company for long-term success in an increasingly sustainability-minded environment. Around the world…. governments are actively considering new standards for consistent disclosure on sustainability related topics. Our research shows that 73% of boards are discussing sustainability strategy at least once per year, and 65% of directors say their board is making a genuine commitment to sustainability …. investors have been clear that sustainability and climate risk is the responsibility of the full board. Rather than having a sole ‘ESG director’ or ‘sustainability director’ expectations are increasing for the entire board to bring a minimum level of sustainability awareness—if not expertise—to their work, using it to identify both risks and new opportunities for value creation.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
From the Boardspan Library
The 3 Essential Things Your Board Must Get Right
“Today’s boards operate amid the pressures of ever-increasing business complexity, technological disruptions, fluid regulatory environments, shareholder activism, cybersecurity threats, and more. Through these choppy seas, a board is charged with keeping the ship pointed toward success in both the short and long term, while scouting risks and opportunities, steering the organization to respond appropriately…The three essential activities of all boards are Strategy, Performance, and Governance. While every productive board will, of course, interpret and enact these activities as they see fit, it helps to have a common understanding of the tasks themselves.” BOARDSPAN
