Investor Relations Week: Icahn Drops Animal Welfare Campaign, Pay Gaps Widen, and Texas Joins Musk in Challenging Twitter Bot Numbers

The Wall Street Journal (paywall) reported that Carl Icahn was abandoning a proxy battle focused on treating pregnant pigs at Kroger Co after determining he stood to lose as he did in a similar battle with McDonald’s Corp. “I congratulate the McDonald’s team on their victory in this proxy assignment and, after careful consideration, given the company’s financial situation, I believe the same outcome will occur at Kroger,” he said. stated in a letter to shareholders.

Icahn wrote that these campaigns were different from his typical fights given that both companies are doing well financially, making it less likely that the campaigns will garner enough shareholder support. But he said he doesn’t believe their boards hold management accountable for the treatment of animals or the welfare of their employees. Icahn wrote that he would continue to focus on issues regarding the treatment of animals and that his work has helped raise awareness.

Kroger said the company is focused on creating sustainable value for its associates, customers, communities and shareholders. He said he would continue to speak with shareholders to inform his policies.

The Guardian reported that, according to a study of 300 large US companies published by the Institute for Policy Studies (IPS), the pay gap between CEOs and workers at some of those companies with the lowest paid staff has widened further. dug last year, with CEOs making an average of $10.6 million while the median worker earned $23,968. The study found that the average gap between CEO and median worker pay fell to 670-1, from 604-1 in 2020. Forty-nine companies had ratios above 1,000-1.

In more than a third of the companies surveyed, IPS found that workers’ median wages were not keeping pace with inflation. The report comes amid a wave of organizing efforts among low-wage workers and growing scrutiny of the massive stock buyback programs that many companies have used to boost their stock prices. shares. Stock-related compensation makes up the largest portion of executive compensation, and since buyouts typically increase a company’s stock price, they also increase executive compensation.

The New York TimesThe DealBook (paywall) newsletter reported that Republican Ken Paxton, Texas Attorney General, is investigating whether Twitter misled users by underreporting the number of bots on its platform. He announced the investigation the same day Elon Musk said in a regulatory filing that he had the right to walk away from his $44 billion acquisition of Twitter due to concerns about the same issue. Musk, who moved Tesla’s headquarters to Texas last year, is increasingly aligning himself with the Republican Party, the newspaper added.

The NYT describes spam accounts as having “become a contentious issue” in Musk’s acquisition of Twitter. Around the same time Twitter and Tesla shares fell, Musk began to publicly question Twitter’s revelations that 5% of users are bots, “indicating he might find a way out. or renegotiate the Twitter deal.” Now, Paxton has also questioned that figure, arguing that Twitter may be in violation of Texas deceptive marketing practices law.

– The FinancialTimes (paywall) reported that Franklin Templeton is revamping four of its oldest equity ETFs, ditching multi-factor smart beta strategies and opting for a focus on dividend-paying stocks or, in one case, “exposure cheap to vanilla stocks”. The funds currently track a FTSE index which weights constituents based on four factors: quality, value, momentum and volatility, according to their prospectuses. From August, however, the paper says international and emerging market ETFs will follow Morningstar benchmarks that lean toward higher-dividend stocks in their respective geographies.

– Hedge funds are “stepping back to let Elliott fight” with the London Metal Exchange (LME) over “its role in the nickel crisis”, when the 145-year-old exchange suspended nickel trading and canceled transactions on March 8, said Bloomberg (pay wall). “Paul Singer is known to be a tough competitor, even by Wall Street standards,” the outlet said, adding that while Singer’s Elliott Investment Management launched a $456 million lawsuit against the LME, many of his hedges the fund’s rivals find themselves in an unknown position: they want him to win.

“It’s not just moral outrage,” Bloomberg noted. If Elliott is successful (only Elliott and Jane Street – which filed a much smaller $15 million claim – have met the judicial review deadline), it could pave the way for others to sue the LME, several said. Hedge fund executives at the point of sale.

-The WSJ said pension plans and other institutional investors support an SEC proposal that would require hedge funds and private equity funds to disclose more to investors. Retirement funds serving teachers and firefighters, university endowments and insurance funds are urging the SEC to move forward with a proposed rule that would ensure private fund investors receive annual audits and statements quarterly.

The rule, which has been criticized by private funds and Republicans, would also bar fund managers from passing on certain legal fees and limit the ability of funds to protect themselves from lawsuits. Critics argue that the proposed disclosure requirements are unnecessary because institutional investors are large and sophisticated enough to demand the information they need from private funds.

– The SECOND reopened the comment period on proposed rules for listing standards for recovering compensation awarded in error. Commission staff also released a memo with additional analysis and data that the regulator said could be helpful in evaluating the proposals. The rules were originally proposed in July 2015 to implement Section 954 of the Dodd-Frank Act.

– In even more SEC-related news, the FT reported that US regulators want to reform Wall Street’s controversial trading practice known as “payment for order flow” (PFOF), whereby retail brokers collectively earn billions of dollars a year selling orders from their clients to the largest trading companies in the country. The filing said the SEC reviewed the inner workings of U.S. equity trading after “pandemic shutdowns caused an explosion of activity among private retail investors,” adding that the PFOF is “deeply entrenched in the day-to-day operation of stock trading in the United States”.

Describing this practice as “controversial”, the FT explained that while brokers claim the system means retail investors get a better overall deal because brokers can charge less or no commission for trading because they are paid to transmit orders, regulators are concerned that this does create a conflict of interest as brokers may have an incentive to sell their clients’ orders to the highest bidder wholesaler.

– The WSJ reported that Microsoft said it would soon begin disclosing salary ranges for all job openings in the United States, becoming one of the first major employers to take such a step amid new local requirements in pay transparency. Microsoft said it will publicly disclose salary ranges for internal and external assignments across the country beginning in January 2023 at the latest.

The company’s home state of Washington passed a law earlier this year requiring such job posting disclosures starting next year. A similar law went into effect in Colorado in 2021, and other states have adopted such requirements. New York City has passed a similar measure that is expected to go into effect in November.

“Companies are very concerned about complying with the growing patchwork of state and local laws,” said Jen Rubin, employment lawyer at the Mintz law firm. “These days, especially in a post-pandemic economy, they can have employees in all 50 states, and it becomes a real administrative challenge to comply with all the laws, so Microsoft is kind of ahead of that wave. pay transparency laws. ‘ Mintz does not represent Microsoft.

South China Morning Post reported that Chinese biotech companies are coming under scrutiny from US authorities ‘amid heightened tensions between the two economic giants’, which an analyst says is hampering their expansion efforts abroad. The risk of their shares being delisted from U.S. capital markets is growing as more Chinese companies see their ADRs threatened by regulators, said Scott Moore, director of strategic programs and initiatives for China at the University of Pennsylvania.

This is a rather dramatic illustration of the tensions and barriers that have arisen in recent years and which, unfortunately, will continue to shape the [biotech] sector in both countries going forward,” Moore reportedly told Nomura Investment Forum Asia 2022.

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