NEWSLETTER of September 3, 2021

The following content has been added at finexpert:

Alix Partners
AUFSICHTSRATS-RADAR 2021: DISRUPTION WIRD KONTINUITÄT
Permanent disruption and a high degree of uncertainty have a fundamental impact on the work of supervisory boards. The current "Supervisory Board Radar" by AlixPartners therefore addresses, among other things, the question of how a supervisory board must be positioned against the backdrop of permanent technological, societal or geopolitical disruptions in order to best deal with the resulting entrepreneurial challenges. >more

Lazard
H1 2021 REVIEW OF SHAREHOLDER ACTIVISM
94 new campaigns were initiated globally in H1 2021, in line with H1 2020 levels. H1 was distinguished by several high-profile activist successes at global mega-cap companies, including ExxonMobil (Engine No.1), Danone (Bluebell and Artisan Partners) and Toshiba (Effissimo, Farallon, et al.). U.S. share of H1 global activity (59% of all campaigns) remains elevated relative to 2020 levels (44% of all campaigns) and in line with historical levels. >more

KfW Research
GERMAN PRIVATE EQUITY BAROMETER - Q2 2021
The development of the business climate on the German private equity market maintained its positive momentum in Q2 2021 and is above the long-term average again for the first time after the Corona shock. The business climate indicator for the late-stage segment rose by 25.7 points to 13.4 balance points. The assessment of business expectations increased by half as much as that of the current business situation. It is also encouraging to see that the climate components largely show positive values, with fundraising leading the way. >more

Clifford Chance
LATEST TRENDS IN ECONOMIC SANCTIONS AND TRADE CONTROLS
In this extract from a recent Clifford Chance webinar, we explore the latest trends in US, EU and UK policy on economic sanctions and trade controls, including compliance and enforcement risks and potential changes under the Biden Administration. We examine the status of the Joint Comprehensive Plan of Action with Iran; current US trade controls on China and China's response; US, EU and UK sanctions on Russia; Europe’s new human rights sanctions; and post-Brexit UK sanctions. >more

J.P. Morgan
GUIDE TO THE MARKETS EUROPE: Q3 2021
In the industrialized countries, the easing of virus-related restrictions is leading to higher demand. Supply is struggling to keep pace, with the result that inflation in many regions has recently been well above expectations. Looking ahead to the second half of the year, the question is whether the boost to growth and inflation will prove temporary. We expect growth to remain strong, as considerable pent-up savings are likely to be released. At the same time, we expect inflation concerns to persist. The question of what all this means for monetary policy could result in some volatility. Our core scenario is that monetary policy will only be tightened gradually. Gradual interest rate hikes will increase yields on longer-term bonds, but should not hamper economic expansion. >more

CEO COMPENSATION: EVIDENCE FROM THE FIELD
Alex Edmans, Tom Gosling, and Dirk Jenter
2021
We survey directors and investors on the objectives, constraints, and determinants of CEO pay. 67% of directors would sacrifice shareholder value to avoid controversy on CEO pay, implying they face significant constraints other than participation and incentive compatibility. These constraints lead to lower pay levels and more one-size-fits-all structures. Shareholders are the main source of constraints, suggesting directors and investors disagree on how to maximize value. Respondents view intrinsic motivation and reputation as stronger motivators than incentive pay. They believe pay matters to CEOs not to finance consumption, but because it affects perceptions of fairness. The need to fairly recognize the CEO’s contribution explains why flow pay responds to performance, even though CEOs’ equity holdings already provide substantial consumption incentives, and why peer firm pay matters beyond retention concerns. Fairness also matters to investors, with shareholder returns an important reference point. This causes CEO pay to be affected by external risks, in contrast to optimal risk sharing. >more

WHAT IS THE IMPACT OF MUTUAL FUNDS' ESG PREFERENCES ON PORTFOLIO FIRMS?
Maxime Couvert
2021
Mutual funds must publish policies announcing how they generally vote on the different ballot items at the shareholder meetings of their portfolio firms. I manually collect 17,000 of these policies for a sample of 29 of the largest U.S. mutual fund families over 2006-2018. I find that voting policies are a major predictor of funds' voting behavior. Exploiting staggered changes in funds' voting policies, I show that investee companies adopt their mutual fund shareholders' preferred governance provisions. This adoption is the result of mutual fund shareholders' active voting. Announced voting policies also stimulate strategic proposal submissions by non-mutual fund shareholders. >more