Across the Board
Toyota Shareholder Support for Chairman Akio Toyoda Falls Sharply
Automaker’s longtime leader gets less than three quarters of vote after proxy firms oppose his re-election
“More than a quarter of Toyota Motor’s shareholders opposed the reappointment of Chairman Akio Toyoda to the board, suggesting rising dissatisfaction with corporate governance at the automaker a year after Toyoda gave up the chief executive’s role. Toyoda was re-elected to the board with just under 72% support, according to results released Wednesday, down from nearly 85% last year and more than 95% in 2022. Proxy advisers Institutional Shareholder Services and Glass Lewis had called on investors to reject Toyoda. They cited recent cases in which Toyota and group companies acknowledged they didn’t follow correct procedures in obtaining Japanese government certification for some vehicle models.” THE WALL STREET JOURNAL
Cohen’s Bed Bath & Beyond Investment Gain Questioned
Some Bed Bath & Beyond board members worried secrets were passed to Ryan Cohen before his $60 Million gain
“A board member of Bed Bath & Beyond was concerned that some of her fellow directors shared inside information with Ryan Cohen before the investor abruptly dumped his stake in the company two years ago, according to newly revealed excerpts of testimony provided for a lawsuit…. [Sue] Gove, the board member who worried about information leaks, didn’t trust Cohen and doubted the credibility of three directors Cohen backed to join the board.... One of the directors, Ben Rosenzweig, had been in private contact with Cohen, talking about other board members, which Gove deemed inappropriate…. The suit accuses Cohen of insider trading and misleading investors about his trading plans. It doesn’t allege specific pieces of nonpublic information Cohen received, but says his allies on the board pushed to give him more information about strategy and critical-financing options.” THE WALL STREET JOURNAL
ESG Engagements in 2024
As global regulators look to increase corporate ESG accountability, an increasing number of companies are identifying climate change as a risk in their corporate disclosures
“2024 marks a new frontier for climate reporting, with many companies facing their first calls for regulated disclosure. For companies already confident in their reporting, these developments serve as an opportunity to focus on oversight and materiality. After two years in the making, the Securities and Exchange Commission’s (SEC) Climate Rule was approved in March, while 2024 marks the first data collection year for the European Commission’s Corporate Sustainable Reporting Directive (CSRD). The past year also saw California call on companies doing business in the state to report on climate risks and opportunities, starting in 2026. In 2023, 76.2% of the 3,000 largest U.S. companies mentioned ‘climate change’ as a risk in the risk factor section of their 10-K filings, up from 68.2% a year prior. The number of companies to disclose ‘ESG,’ ‘ESG reporting’ or ‘environmental regulations’ as a risk increased to 72.7% in 2023, up from 71.1% in 2022, according to Diligent Market Intelligence (DMI) data.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
Corporate Governance: Do You Need a Sustainability Officer?
Boards must do more to embed sustainability into their governance structure
“The question of who does – and should – own sustainability at board level dogs the most future-thinking companies. The Chief Sustainability Officer is rarely on the board and sustainability, in its simplest form, means merely that the company is ‘future fit’.... What is more, a survey conducted by BCG and the INSEAD Corporate Governance Centre says that 91% of directors think their boards should devote more time to strategic aspects of ESG issues. So, if experts across numerous organizations that consult daily on stewarding companies in the direction of growth agree that integrating sustainability into corporate strategy and governing it well from the top is necessary, surely we have an intention/action gap across boardrooms worldwide.” ICAEW
A Structured Approach to CEO Succession Planning
A good old-fashioned task force can help boards depersonalize the process of picking new leaders
“One of a board’s most important tasks is to ensure the successful transition of power from one CEO to the next. Yet McKinsey analysis has shown that between 27 and 46 percent of executive transitions are viewed as failures or disappointments after two years. To succeed with succession planning, boards must recognize and address their—and potentially, the outgoing CEO’s—tendencies toward ‘similarity bias’. This occurs when individuals are inclined to evaluate more favorably or behave in a more positive manner toward people they perceive as sharing their own identities or other characteristics.” MCKINSEY & COMPANY
Keys to Successful Board Orientation
Boards are encouraged to think bigger on training new board members
“Few association leaders need to be told about the importance of board orientation. But that doesn’t mean there’s clarity on what that orientation looks like. Videos or binders? Half-day or full-day? Hybrid, remote, or in-person? All board members or just new members? The specific modalities of board orientation may matter less than remembering what board orientation is for: To build a coherent governance culture where board members can hit the ground running the moment their tenures begin.” ASSOCIATIONS NOW
Redbox Owner Chicken Soup For The Soul Entertainment Removes Entire Board Of Directors
All directors removed except for Chairman and CEO Bill Rouhana
“Chicken Soup for the Soul Entertainment, the ailing parent of video kiosk operator Redbox and streaming services like Crackle and Popcornflix, has gotten rid of its entire board of directors. The only remaining board member, the company said in an SEC filing late Monday, is chairman and CEO Bill Rouhana. The company’s investor relations website lists eight other board members including Rouhana’s wife, Amy Newmark. In addition to having been on the entertainment company’s board, Newmark is Publisher, Editor in Chief and Author at Chicken Soup for the Soul Holdings. In the filing, the company revealed the move was made on June 11, in accordance with Delaware General Corporation Law. The law allows for ‘any director or the entire board may be removed, with or without cause, by the holders of a majority of the shares,’ according to the filing.” DEADLINE
Redbox Missed a Multimillion-Dollar Payment It Couldn’t Afford to Miss
The DVD rental kiosk company was supposed to pay $16.7 million in three installments
“Redbox’s financial situation continues to spiral out of its control…a Los Angeles court entered a $16.7 million judgment against the company in favor of NBCUniversal, after Redbox failed to pay a scheduled installment of a settlement the parties reached earlier in May. The missed payment bodes ill for the DVD kiosk company, which now owes the remaining balance in full. More importantly, the missed payment suggests the company simply did not have the requisite money on hand, and the prospect of bankruptcy may be looming for Redbox and its deeply indebted corporate parent, Chicken Soup for the Soul Entertainment. NBCUniversal sued Redbox over unpaid DVD and online rental royalties in February. The studio alleged in its complaint that Redbox had stopped paying royalties ‘around the summer of 2022’ and that it was owed around $16.7 million altogether.” THE VERGE
People Are Guided by the “Tone from the Top”
An Interview with Dr. Isabell Welpe on how change can create more diverse executive ranks
“Corporate culture provides the basis for fair selection and evaluation processes based on actual behavior and performance. And corporate culture is reflected in images and words – and evolves further through their use. The aim should be to make all employees feel part of the company. Since companies are managed on the basis of targets, they should set performance or process goals, like various longlists, or should ask employees each year for their contributions to a topic. Another key step companies should take is to examine their own data on career longevity, performance reviews and salary trends.” EGON ZEHNDER
Should Universities Take a Stand on Public Issues?
Harvard’s governance is “insular and secretive”, making it difficult to evaluate from an external perspective
“Harvard and many of our most respected universities are going through a period of unprecedented turmoil. In a recent Harvard Magazine article entitled ‘Why Americans Love to Hate Harvard,’ former Harvard President Derek Bok described the ‘rising tide of antagonism to higher education.’ Why is this happening? Public hostility and mistrust of higher education undoubtedly reflects escalating social and political divisions within the U.S., but some of the fault rests within the universities themselves.… Harvard and other universities need to address problems of ineffective governance, opaque decision-making and poor communication…. Recent events at Harvard reveal significant governance disfunction. The administration, the Faculty of Arts and Sciences and the Harvard Corporation disagreed publicly as to whether 13 students should be denied graduation privileges following campus protests. This embarrassing public squabble could have been avoided if competing views had been discussed internally before the Corporation made public its final decision.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
