Across the Board
More Wall Street Firms are Flip-Flopping on Climate. Here’s Why.
A turning tide accelerated quickly this week
“Wall Street’s retreat from earlier environmental pledges has been on a slow, steady glide path for months, particularly as Republicans began withering political attacks, saying the investment firms were engaging in “woke capitalism.” But in the past few weeks, things accelerated significantly. BlackRock, the world’s largest asset manager, scaled back its involvement in the group. Bank of America reneged on a commitment to stop financing new coal mines, coal-burning power plants and Arctic drilling projects. And Republican politicians, sensing momentum, called on other firms to follow suit…The reasons behind the burst of activity reveal how difficult it is proving to be for the business world to make good on its promises to become more environmentally responsible. While many companies say they are committed to combating climate change, the devil is in the details.” THE NEW YORK TIMES
Distilling ESG Drivers of Enterprise Value
Boards influence how much enterprise value creation comes from non-financial resources
“The traditional view in the finance and accounting professions and among some corporate boards, is that only explicit drivers recorded in financial statements are crucial for shareholder value creation. However, this outdated perspective overlooks the significance of non-financial resources, such as human, social, and natural capital. These sources of capital are key inputs of sustainability impacts, but are not classified as assets in conventional accounting, despite their dramatic impact on enterprise value creation. Indeed, this understanding — and the apparent devaluing of these intangible assets — has been acknowledged by the Financial Accounting Standards Board (FASB) for many years.” REUTERS
How to Hold Inclusive Board Meetings
It takes skill and thoughtfulness to make the most of a diverse experience at a board table
“In our interviews, we found that leaders who succeeded in the hard work of changing their boardroom culture and growing engagement for all members started with honest conversations, with each board member and senior staff, about why inclusion matters and how it reflects the organization’s values. They talked about what could get in the way of creating a shared commitment and how to overcome those barriers and work through dissention as counter-insights arose from diverse experience.” STANFORD SOCIAL INNOVATION REVIEW
Arkhouse Seeks Majority on Macy’s Board After Rejected Bid
Macy’s says Arkhouse and Brigade have yet to provide key financing details
“Macy’s Inc. said it received nine nominations to its board from Arkhouse Management Co., the activist investor leading an effort to acquire the department-store company. Macy’s said it would consider the directors but noted that it had previously rejected a $5.8 billion offer from Arkhouse and Brigade Capital Management. The retailer said Arkhouse and Brigade ‘have yet to provide any financing details that would enhance the actionability of their proposal despite multiple opportunities to do so.’” BLOOMBERG
NVidia Projects Continued Growth with AI “Tipping Point”
Profits increased ninefold in the fourth quarter of 2023
“The Silicon Valley chip maker has been on an extraordinary rise over the past 18 months, driven by demand for its specialized and costly semiconductors, which are used for training popular A.I. services like OpenAI’s ChatGPT chatbot. Nvidia has become known as one of the “Magnificent Seven” tech stocks, which, including others like Amazon, Apple and Microsoft, have helped power the stock market. Nvidia’s valuation has surged more than 40 percent to $1.7 trillion since the start of the year, turning it into one of the world’s most valuable public companies.” THE NEW YORK TIMES
Capital One-Discover Card Merger to Challenge Visa, Mastercard
$35B deal could have a profound effect on consumers
“For decades, Capital One Financial Corp. Chief Executive Officer Richard Fairbank watched as Discover Financial Services built one of the most coveted assets in the world of finance—a global payment network facilitating tens of millions of credit card transactions each day. On Feb. 19 he announced plans to buy it…A successful merger would be the culmination of a growth strategy hatched by Fairbank when he helped found Capital One in the late 1980s to offer credit cards to consumers overlooked by the industry. Since then, he’s steadily transformed the company into a full-fledged bank providing services such as auto loans and savings accounts to more than 100 million customers.” BLOOMBERG BUSINESSWEEK
S&P 500 CEO Compensation Increase Trends
Performance-based shares will likely continue in 2024
“In 2022, most CEOs navigated an economic slowdown compared to the strong year of 2021. Median S&P 500 CEO actual TDC remained flat driven by lower actual bonus incentive payments offsetting the increase in salary and long-term incentive (LTI) awards. Compared to the previous year, 2022 median and actual bonus incentive payments decreased -15%, while base salary and actual LTI increased +4% and +9%, respectively…However, 2023 financial performance has recovered, and unemployment rate continues to be low, though several high growth industries like technology and life sciences experienced substantial layoffs in 2023. Although inflation has subsided since the 2022 peak of ~9%, there are continued supply chain issues, geopolitical influences, layoffs, and business uncertainty into 2024.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
