1/4/24 – Issue 8.48 – Your weekly news on all things board. 

As we begin 2024, the resignation of Harvard president Claudine Gay and the turmoil surrounding it are a microcosm of all the issues that will continue to challenge boards in the new year: Succession planning, activism, the effect of politics on organizational governance, and DEI, to name a few. The Harvard Law School Forum on Corporate Governance calls it an “Enron moment for university governance.” While maybe not on the level of the Harvard controversy, many boards will face one or more complex issues in 2024; making time for strategic thinking and planning, combined with a review of governance foundations, are solid resolutions for any board.

In other news, Disney faces dueling activist investors; Big Four firms resolve to rethink governance; talent management as an evolving board imperative; and where boards are focusing for 2024.

In the Spotlight

Harvard President Gay Resigns after Testimony, Plagiarism Allegations

In a letter to the Harvard community, Gay announced her decision to step down

“Harvard President Claudine Gay said she would resign from her position on Tuesday, ending a six-month tenure marred by allegations of plagiarism and backlash over her congressional testimony about antisemitism on campus. Gay had come under pressure to resign from Harvard's Jewish community and some members of Congress over her comments at the Dec. 5 congressional hearing, while also facing several allegations of plagiarism for her academic work in recent months…The Harvard Corporation, the university's 11-member governing body, said in an email to the community that its members had accepted Gay's resignation ‘with sorrow,’ and that the school's provost and chief academic officer, Alan Garber, would take over as interim president.” REUTERS

Where Does Harvard Go From Here?

University must find a new president and address rifts among faculty, students and donors

“The governing board and interim leaders will first need to address concern from some faculty and alums that the school has drifted too far to the left, with a growing emphasis on ethnic studies and diversity, while also fielding complaints from others that it hasn’t gone far enough in addressing racial inequities on campus and in society at large. Harvard’s leaders also will have to navigate a fraught and changing admissions landscape, six months removed from a Supreme Court ruling that bars Harvard and other colleges from considering race when deciding who gets a coveted spot on campus. And they will need to do it all under scrutiny, as Harvard is considered by many the leading embodiment of everything wrong with American higher education.” THE WALL STREET JOURNAL

Gay’s Exit Exposes Decade-Spanning Fractures at Harvard

Debates around free speech, diversity, and governance have divided the school for years 

“Harvard University faces increasing pressure to resolve one of the most fractious chapters in its history after the ouster of President Claudine Gay. The school’s first Black leader resigned Tuesday after just six months — a historic elevation cut short by allegations of plagiarism and anger over her handling of antisemitism on campus in the aftermath of Hamas’ Oct. 7 attack on Israel.” BLOOMBERG

Harvard Agitators Turn Their Ire Toward Penny Pritzker

The Dem mega-donor pushes back at Bill Ackman’s call for her to resign

“The leadership turmoil engulfing Harvard University is putting a major Democratic Party figure on the defensive. Penny Pritzker, a former Obama Cabinet official, current Biden appointee and longtime Democratic mega donor, on Wednesday rejected calls to step down from her role at the top of Harvard’s most powerful governing board. It comes a day after the resignation of university president Claudine Gay. She stepped down amid growing controversies over her handling of campus antisemitism in the wake of the Oct. 7 Hamas attack on Israel and allegations of academic plagiarism — and as some civil rights activists accused the concerted far-right campaign to oust Harvard’s first Black leader as being motivated by racism.” POLITICO

A Blueprint for University Governance 

University boards need to engage in candid assessments about their oversight and obligations

“This is an Enron moment for university governance…The consequence of this governance structure is that the forces which influence university governance primarily come from the faculty.  Moreover, like local school boards faculty governance is typically expressed through those who wish to be most active in the faculty senate and administration. We believe the recent travails of elite university presidents are, at least in part, driven by this fundamental governance problem. The key to reforming this governance arrangement is to reform the University board into an effective force.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

From Boardspan this Week:

Boardspan 2024 Outlook: The Year of the Strategic Board

Our insight on thinking strategically in 2024

“There’s a strong sense among board members that while further change is on the horizon—at the company, industry, and global levels—this is the moment to get out ahead of risks and take advantage of new opportunities through a renewed focus on strategy. Adding value at the strategic level is the ultimate goal for boards. The enthusiasm and commitment we see from boards to deliver on this goal leads us to declare 2024 The Year of the Strategic Board. To help ensure your board is prepared to add its highest value this year, we offer some insights on the year ahead.” BOARDSPAN INSIGHTS

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Across the Board

The Fight Over D.E.I. in the C-suite

Gay’s resignation puts the spotlight on a broader culture war

“Even though Claudine Gay’s resignation as president of Harvard was tied to plagiarism allegations, debate on a broader culture war’s role in the move is grabbing lots of attention…D.E.I. detractors are feeling emboldened. The billionaire financier Bill Ackman, one of Gay’s most tenacious critics, writes in a lengthy essay for The Free Press that D.E.I. is “inherently a racist and illegal movement” that effectively discriminates against white people. Such policies, he writes, should be wiped out of decision-making at Harvard and elsewhere…Others are pushing back. The billionaire entrepreneur Mark Cuban challenged Musk in a series of posts on X, defending the three principles of D.E.I. as good for business…” THE NEW YORK TIMES

Blackwells to Nominate Board Directors at Disney, Rivaling Trian
The activist hedge fund is a supporter of CEO Bob Iger

“Activist hedge fund Blackwells Capital will nominate three directors at Walt Disney Co rivaling Trian Fund Management which is seeking two seats on the entertainment giant's board…While board challenges typically represent attempts to change a company's strategy, Blackwells is supportive of Disney CEO Bob Iger's work, the sources said. Blackwells is offering a choice of nominees to Disney shareholders who agree that new blood on the board could help Iger but object to electing Trian's nominees, who are critical of the company's strategy…The unusual twist in the battle for Disney's board underscores the high stakes in the company's attempted turnaround under Iger.” REUTERS

Activist ValueAct Backs Disney Board Slate With Deal
Agreement comes as Disney fights off proxy battle from Nelson Peltz’s Trian Fund

“Activist investor ValueAct reached a deal to back Walt Disney’s DIS -0.19%decrease; red down pointing triangle slate of board nominees at the coming 2024 shareholder meeting, bolstering the company’s position as it looks to fight off a proxy battle with rival activist Nelson Peltz. Disney signed a confidentiality agreement allowing it to share company information with shareholder ValueAct Capital Management and consult with the firm on strategic matters. The entertainment giant said Wednesday that the arrangement allows the activist investment firm, which has been building up a stake in Disney, to consult the company through meetings with the board and management.” THE WALL STREET JOURNAL

Big Four Firms Rethink Governance after Year of Mis-Steps
Auditors and regulators hope to strengthen oversight and hold management accountable

“A series of scandals and strategic mis-steps exposed shortcomings in the governance of Big Four accounting and consulting firms in 2023, prompting a rethink about how best to hold management to account. EY’s US partners voted before Christmas to introduce a new governance system that includes a board to oversee management and approve strategy…The revamp, which will come into force in July, was proposed after EY’s current US management team vetoed a plan to spin off the firm’s global consulting business, prompting anger from many partners. PwC’s global boss Bob Moritz told the Financial Times that governance reforms in Australia, where it was hiring a chair from outside the firm for the first time, could become a blueprint for other countries in its global network.” FINANCIAL TIMES

Talent Management: An Evolving Board Imperative

Talent management, driven by a well-developed talent strategy, is at the core of success today

“Today’s increasingly unpredictable business environment can make management decisions more consequential. Companies face pressure to control costs and innovate amid uncertain economic conditions, a competitive talent landscape and a business environment that likely requires significant digital transformation. Talent management — having the right people in place to make those decisions — is increasingly important. And boards can play a critical role in achieving success on that front…Overseeing a company’s top talent has long been a core responsibility of a corporate board. Directors are responsible for hiring and firing the CEO, evaluating top executives’ performance, approving leadership succession plans and supporting a pipeline of talent to execute company strategy.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

Where Boards Should Put Their Focus in 2024

The economy and AI are top concerns for boards in the coming year

“According to NACD’s survey of more than 500 U.S. corporate directors, 80 percent of respondents say that “oversight of strategy execution” and “oversight of strategy development” is important or very important—the most popular improvements surfaced by the survey. Moreover, those leaders are confident that they’ll have the financial wherewithal to manage through those improvements. Though respondents are still concerned about a looming recession, the percentage of those anticipating one has dropped substantially, from 65 percent in 2022 to 29 percent now; similarly, 62 percent of respondents say they anticipate the U.S. economy will experience a “soft landing” in the coming year, compared to 29 percent last year.” ASSOCIATIONS NOW

Businesses Eye Possible Political Protests as Looming 2024 Risk

Business leaders rank polarization as second most important emerging risk after AI

“U.S. business leaders right now rank escalating political polarization generally as their second most important emerging risk worry after generative artificial intelligence, according to a report published recently by Gartner, a research firm that surveyed senior executives and risk managers. The polarization those executives referred to in that survey isn’t necessarily among just the public—the definition used in the question included risks of polarization in government itself. More than a third of board members said that U.S. election and political uncertainties pose the greatest risk to their company’s operations or outlook, according to a survey released in December by risk and compliance software company Diligent and information provider Corporate Board Member.” WALL STREET JOURNAL

Making The Leap From Executive Leader To Board Member

Five strategies for a smooth transition

“The transition from C-suite to boardroom is an exciting milestone in an executive's career. Executives have a wealth of diverse experiences and skills to draw from that can be valuable assets on a board of directors—but the two roles are distinct…Some executives struggle with this evolution from individual decision maker to collaborative board member.” FORBES

PGA Tour and LIV Golf Extend Deadline to Solidify Deal 

Too many questions remain to reach a deal by December 31 

“When the PGA Tour and the upstart LIV Golf league, which is bankrolled by Saudi Arabia’s sovereign wealth fund, announced their groundbreaking deal in June for the men’s golf circuits to join forces, they left most details unanswered and set a Dec. 31 deadline to figure them out. Now, it is clear that the two sides will need more time. The PGA Tour commissioner, Jay Monahan, said in a memo to players Sunday evening that the PGA Tour and Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, were ‘working to extend’ the negotiations into the new year…Those negotiations continue as the PGA Tour progresses on simultaneous talks to raise additional money from Strategic Sports Group, an investment group led by Fenway Sports Group — the parent company of the Boston Red Sox, the Pittsburgh Penguins and the English soccer club Liverpool.” THE NEW YORK TIMES

Seat at the Table

• The Procter & Gamble Company elects to its board Ashley McEvoy, former EVP and Worldwide Chairman of MedTech at Johnson & Johnson

• Union Pacific adds to its board John Tien, former Deputy Secretary of the Department of Homeland Security

• Energy firm Gevo welcomes to its board Katie Ellet, President of Hydrogen Energy and Mobility for North America at Air Liquide

• Surgical treatment firm AtriCure appoints to its board Shlomi Nachman, former Group Chairman of Cardiovascular and Vision Groups with Johnson & Johnson

• Biopharmaceutical firm Chimerix welcomes to its board Lisa Decker, Chief Business Officer at IGM Biosciences

• Concrete systems firm Smith-Midland Corporation appoints to its board Read Van de Water, SVP of External Affairs at aerospace and defense company Safran USA; and Matthew Smith, VP of Sales and Marketing and President of Concrete Safety Systems at Smith-Midland

• Interactive Brokers elects to its board Rich Repetto, former Principal at capital market firm Sandler O’Neill

• American Strategic Investment adds to its board Nicholas Radesca, former CFO of AR Global Companies

About Boardspan
Boardspan is the leading provider of digital governance solutions for boards across all sectors. Our cloud-based assessments, benchmarking analytics and governance education programs complement our board search and advisory services to deliver a holistic approach to governance. Boards of all sizes and stages rely on Boardspan to deliver analytics, insights and outcomes that improve their effectiveness and performance. Clients include KKR, The Kellogg Foundation, Ingersoll Rand, Farfetch, McAfee, Beyond Meat, Box, e.l.f. Beauty, Satellite Healthcare and the U.S. Olympic & Paralympic Committee.