‘Political will’ on money laundering
As the invasion of Ukraine continues, law enforcement agencies around the world may refocus their attention on money laundering as part of sanction efforts against Russian individuals and businesses. The International Corporate Governance Network (ICGN) has issued a paper helping money managers engage with boards on money laundering.
ICGN says action on money-laundering programmes is an “opportunity to restore trust and reassert the value of a peaceful economic order”. It adds 2022 will be a test for anti-money-laundering programmes because they are “often viewed as an obstacle to making money”.
ICGN says: “We can imagine that given the war in Ukraine seizure of criminal assets this year may break records. If true, we can surmise that what has been lacking is not policies, programmes or staff; rather, it has been political will.”
CFO overconfidence ‘averts activist investors’
Could an executive’s behaviour prompt action by shareholder activists? A team of researchers looking at how activists target companies conclude that chief financial officer “overconfidence” may be key.
Using long-held executives stock options as a proxy for overconfidence, a research team from Germany and Canada looked at filings made by CFOs and found that “having an overconfident CFO significantly decreases the likelihood of a shareholder activist investment”.
Companies that hired “non-confident” CFOs “are more likely to be targeted by shareholder activists than their peers that remained with an overconfident CFO”.
SEC climate proposals provoke debate
Last week’s publication of proposals by SEC regulators for mandatory climate risk reporting in the US has added to a debate that was well under way. One opposition voice was that of SEC commissioner Hester Peirce who claimed the measures would “turn the disclosure regime on its head” and would mean the SEC “doing the bidding of an barrage of non-investor stakeholders”.
A response came from George Georgiev, a professor at Emory University, who picks apart Peirce’s argument for the Oxford University governance blog and concludes that the proposals are “fairly standard” and would “bring to light the effects of climate change on firm valuations in the real economy”.
He adds: “As for the considerable amounts of energy being expended in opposing the climate disclosure proposals… this energy would be better directed at solving real economic problems—or simply conserved.”
Intel CEO pay ratio revealed
Intel Corp chief executive Pat Gelsinger made headlines across the world this week for earning 1,711 times the average US salary. The information was contained in a regulatory filing and will shock many when compared with the ratio of 217:1 for the pay of Bob Swan, Intel’s previous CEO.
Gelsinger also trumps the pay ratio of Tim Cook, CEO at Apple, who earns 1,447 times the average US salary.