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Hershey Media Report 7/15/16
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Mid-Day ETF Update: ETFs, Stocks Continue Gains, Drive S&P and Dow Fresh Record Highs on Upbeat Earnings, Economic Data
Jul 14, 2016 | Nasdaq
The possible takeover bid for Hershey and Trust related issues are discussed in the Mid-Day Update. Relevant portion pasted below. -
United States: Corporate Law & Governance Update - July 2016
Jul 15, 2016 | Mondaq
By Michael W. Peregrine
The possible takeover bid for Hershey and Trust related issues are discussed in the July Corporate Law & Governance Update, written by the firm of McDermott Will & Emery and published in the Mondaq, Relevant portion pasted below.
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Jul 14, 2016 | Nasdaq
The trust that controls Hershey Company (HSY) may face legal action if it doesn't make governance reforms by the end of the month, The Wall Street Journal said, citing people familiar. The report notes that the legal action may not directly affect the company, but will be a distraction as the chocolate maker seeks to fight a $23 billion takeover from Mondelez International (MDLZ). Mondelez hasn't dropped its pursuit of Hershey, and could raise the offer if it sees an opening, said two of the people familiar with the matter.
Meanwhile, because of pressure from state regulators, the trust could lose three longstanding board members, after losing four members since December, including one last weekend. HSY shares were up 0.4% and MDLZ shares were up 0.3%.
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United States: Corporate Law & Governance Update - July 2016
Jul 15, 2016 | Mondaq
By Michael W. Peregrine
Conflicts of Interest
The controversy surrounding the board of the Hershey Trust continues to offer a duty of loyalty tutorial of sorts for the health system board. This is particularly the case with respect to the regulatory and reputational risks that can arise from the perception (not just the reality) of conflict of interest.
As mentioned in our June Newsletter, the current controversy arose earlier this year when the Pennsylvania Attorney General expressed concern that the Hershey board had violated certain provisions of a 2013 conflicts of interest settlement. Hershey is one of the largest U.S. charitable entities, with approximately $12 billion in assets. The June issue arose from a series of published reports that in 2015, the then-Chairman of the board worked through the Trust's CEO to obtain a summer internship for the Chairman's son with one of the Trust's money management funds.
According to the media reports, it was the effort to obtain the internship (in the context of the conflicts guidelines set forth in the 2013 settlement) that prompted the Attorney General to seek the removal of three trustees (including the Chairman) and to direct the Trustees to personally reimburse the trust for the reported $650,000 cost of an internal review of the internship issue conducted by outside counsel.
[The media reports provide that while the Chairman did ultimately disclose the internship (through an email to the Vice Chairman), that disclosure occurred well after the internship was arranged, and did not make reference to the role of the Trust's CEO in helping to arrange for the internship.] While the outside counsel review concluded that the Chairman's conduct complied with the Trust's governance policies, the Trust and its board were subsequently subjected to substantial public criticism for the arrangement.
This controversy—which has yet to be brought to conclusion—helps to underscore the need for board members to try to avoid even the appearance of conflict of interest in their corporation-related relationships and arrangements. In many instances, the "perception" of conflict can be as damaging to a corporation's reputation as can be an actual conflict; and, when a corporation is already under regulatory scrutiny, "perception" can serve to "lengthen the ethical shadow" over the organization and its board.
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