1/25/24 – Issue 8.51 – Your weekly news on all things board. 

On the heels of Apple announcing major board changes last week, two longtime company leaders are in the news this week with another board announcement and a big profile. Sheryl Sandberg announced that she will be stepping down from the Meta board, closing out another chapter in her long and storied career with the company. She will stay on as an advisor to the company, and “would always be there to help the Meta teams.” Disney’s Bob Iger stepped down years ago from his CEO post at Disney, then he came back. And now the myriad challenges he faces as CEO in 2024 mirror many of the changes his predecessor, Michael Eisner, faced 20 years ago–accompanied by new challenges in the era of streaming and AI. The Wall Street Journal takes an in-depth look at Iger’s career at Disney and his battle to prevent history from repeating itself. 

In other news, what do you do when a celebrity CEO demands more power?; Andy Jassy talks about AI at Davos; navigating shareholder ESG fatigue; and addressing climate governance at the board level.

In the Spotlight

Sheryl Sandberg Steps Down from Meta’s Board of Directors

Sandberg will remain as an advisor to the company she’s been with since 2008

“In a comment on her Facebook page, Mark Zuckerberg, Meta’s chief executive and founder, said Ms. Sandberg had been “instrumental” in driving his company’s success. She was elected to Facebook’s board of directors in 2012, when the company was under fire for having too few women on its board…Ms. Sandberg became one of the highest-profile female executives in the business world, eventually writing a best-selling book, “Lean In,” about her experience. But she also faced criticism during one of Facebook’s most tumultuous periods. Russians manipulated the company’s platforms to spread misinformation in the 2016 U.S. presidential election, and its privacy and data-collection practices drew regulatory scrutiny.” THE NEW YORK TIMES

The Disney Sequel Bob Iger Never Wanted

In his second turn as CEO, he is facing many of the same challenges from two decades ago

“Disney’s embattled CEO was under fire from activist investors. Critics said he had botched succession planning. A costly deal with Fox was weighing on Disney’s balance sheet, while the prospect of a corporate battle with rival Comcast loomed large. The movie studio’s Golden Age seemed to have faded into a series of flops. The year was 2004. The CEO in question was Michael Eisner…Two decades later, the man who replaced him—Disney’s current chief, Bob Iger—is starring in a reboot of that drama, with plenty of familiar story lines. Iger, too, rebuilt the company, restored its lost glory and seemed unassailable—but now faces many of the same problems that plagued his predecessor. He is hoping to script a different ending. THE WALL STREET JOURNAL

From Boardspan this Week:

CEO Leadership Redefined

Now more than ever before, CEOs are expected to be the voice of a company

"Society is demanding a different kind of leadership from the C-suite, especially CEOs. People are paying close attention to what they say and what they do. This shift was happening well before 2020, but the COVID-19 pandemic and social and political unrest significantly accelerated the transformation underway…Increasingly, people are turning to the CEO for leadership on issues that go beyond the business-from climate change to social justice to public health. And, it’s not just employees wanting their CEO to speak out. The expectations that investors have of CEOs to take on complex societal issues are also changing. How CEOs address these issues through their words and actions can positively or negatively impact a company’s reputation.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE via BOARDSPAN

Across the Board

Should Elon Musk Get a Raise?

The extreme case of a problematic star performer who wants more

“For Elon Musk’s bosses at Tesla, the board of directors, it can be hard to know which man might show up for work…That’s why the past few weeks might well live on as a business-school case study on the complexity of managing a superstar talent who has succeeded with maverick ways but also, for some, can go too far. Just as it isn’t easy for a manager to course-correct a star performer who gets out of line, a board can struggle to rein in a celebrity CEO, especially if everyone is enjoying the company’s stock performance that papers over troubling signs. At present, Musk directly holds 13% of Tesla shares, or about 21% if including unexercised options…Now, he’s publicly asking for 25%, to give him more voting power in corporate matters.” THE WALL STREET JOURNAL

Andy Jassy: AI is Companies’ Biggest Risk and Opportunity in 2024
The present day is “three steps into a marathon”

“Companies around the world are all facing an interesting dilemma in 2024, according to Amazon CEO Andy Jassy: their biggest problems and solutions might be one and the same. ‘The opportunity and risk is pretty similar in that there is this wildly transformative, disruptive technology in generative AI that you can’t get through any conversation without talking about,’ Jassy says…’I just see companies really battling with prioritization between are they better off continuing with that modernization of their technology platform, or should they spend all their new engineering resources on generative AI,’ Jassy says. But it’s not as simple as picking a single option, he adds. If companies don’t have their technology infrastructure in place, it’s going to be hard for them to be successful in AI.” FORTUNE

Exxon Sues to Block Climate Proposal from Shareholder Voting
Says the proposal to cut emissions faster would not generate shareholder value

“Exxon Mobil is suing two activist investors to prevent their proposal calling for emissions cuts at the oil giant from going to a vote of shareholders. In a complaint filed in U.S. District Court for the Northern District of Texas on Sunday, Exxon accused the investors, Arjuna Capital and Follow This, of abusing the process for proposing shareholder votes to advance their priorities with votes ‘calculated to diminish the company’s existing business.’ Arjuna filed a proposal in December for a nonbinding resolution that urged Exxon to accelerate its plans to reduce its carbon emissions and expand the scope of the emissions it measures to include its suppliers and customers. Follow This joined in support of the proposal shortly thereafter, according to the complaint. The proposal ‘does not seek to improve ExxonMobil’s economic performance or create shareholder value,’ Exxon said in the complaint, but is instead ‘constraining and micromanaging’ the company’s operations.” THE NEW YORK TIMES

Navigating ESG Fatigue in Shareholder Voting
The 2023 proxy season was marked by a record number of shareholder proposals

“In 2023, the volume of shareholder proposals increased yet again. In the first half of 2023, shareholders filed 836 proposals at Russell 3000 companies, compared to 801 in the first half of 2022. That’s more than the 792 proposals filed in all of 2021. Additionally, a larger percentage of proposals went to a vote in the 2023 proxy season (70% compared to 67% in 2022) and a smaller share was withdrawn (20% in 2023 compared to 24% in 2022), indicating that proponents became less willing to negotiate with companies…The vast majority of governance shareholder proposals (77%) and executive compensation proposals (76%) are filed by individuals. By contrast, only 12% of E&S proposals are filed by individuals.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

Addressing Climate Governance at the Board Level

Managing evolving climate risks requires new forms of thinking and culture

“The evolving business landscape, marked by heightened natural hazard risks causing more frequent interruptions and damage, underscores the imperative for board action. Societal expectations are also aligning more closely with a lower carbon economy, driven by customers, investors, and regulators. The current trajectory suggests an urgent need to transition to a lower carbon state, with the economy facing a trade-off between higher transition risks now or increased future physical risks due to delayed action. In this context, climate is seen as a critical business risk requiring management and navigation by board directors.” INSURANCE BUSINESS

Macy’s Rejects Takeover Bid but Remains Open to Opportunities

Arkhouse Management and Brigade Capital are behind unsolicited $5.8B deal

“Macy’s rejected a $5.8 billion takeover bid late Sunday that valued the struggling department store chain at roughly 20 percent above its closing share price on Friday, but suggested it was “open to opportunities…With a potential hostile bid looming, questions are rising over how Arkhouse and Brigade could pull off a deal and whether additional suitors could appear, potentially setting off a bidding war. In a statement released Sunday night, Macy’s board questioned whether the investment firms had the money to finance the deal, which it said “lacks compelling value.” It noted that the bid had been accompanied by a letter with “numerous” untraditional stipulations.” THE NEW YORK TIMES

Choice Hotels Nominates Board in Hostile Wyndham Bid

Slate includes former Choice director and hospitality, real estate leaders

“Choice Hotels International pressed ahead with its $8 billion hostile bid for Wyndham Hotels & Resorts  on Monday by nominating a slate of directors to replace Wyndham's eight-member board. It is Choice's latest attempt to break a stalemate after trying for most of the last year to negotiate a deal with Wyndham, which has rebuffed the bid as low-premium and fraught with antitrust risk. Wyndham has also raised concerns about the combined company carrying too much debt and a slowdown in Choice's business…Choice said its slate of nominees includes hospitality industry veteran Jay Shah, who currently serves on the board of private equity-backed HHM Hotels; Susan Schnabel, founder of aPriori Capital Partners which advises private equity on leveraged buyouts; James Nelson, CEO of real estate investment trust Global Net Lease; and Fiona Dias, who served on Choice's board from 2004 to 2012.” REUTERS

Seat at the Table

• McCormick & Company welcomes to its board Terry Thomas, Chief Growth Officer of Flower Foods

• First Horizon names to its board John Dietrich, Vice President and CFO of FedEx Corporation

• Sports and entertainment company TKO Group Holdings appoints to its board Dwayne “The Rock” Johnson, entertainer and actor; and Brad Keywell, Co-Founder of Groupon

• Sidus Space elects to its board Richard Berman, former Senior Vice President of Bankers Trust Company

• Navigational firm NextNav appoints to its board John Muleta, CEO of technology transfer firm ATELUM

• Organigram Holdings welcomes to its board Karina Gehring, Global Head of Product Insights and Foresights for British American Tobacco harm reduction subsidiary Nicoventures

• Specialty building products firm GMS announces to its board Brad Southern, CEO of Louisiana-Pacific Corporation

• Community Bank System elects to its board Michele Sullivan, former Partner of accounting firm Crowe LLP

• Northfield Bancorp appoints to its board Dr. Rachana Kulkarni, President and Managing Partner of Medicor Cardiology

• Manitex International welcomes to its board Shinichi Iimura, CEO and President of Tadano America Holdings

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.