9/7/23 – Issue 8.33 – Your weekly news on all things board. 

What does the future of board work look like? We know it will involve AI in some way. This week, new articles cover everything from AI and boardroom decision making to a study on board best practices around AI. Don’t miss Boardspan’s deep dive into AI and Governance in our September 27 webinar. 

AI aside, board composition is beginning to change, not just in board diversity but in the age of candidates looking for non-executive board positions. For the next generation of board members, breaking into a circle that is largely based on who you know isn’t easy. The Financial Times covers some of the ways that aspiring directors are gaining governance experience.

In other news, Walgreens’ CEO is leaving; Elon Musk’s borrowing habits with his companies; Cybersecurity impacts executive pay; and seven ways boards can improve corporate governance.

In the Spotlight

Opinion: On a Board, is AI Better Than the Status Quo?
Board members need to be asking at least as many questions as ChatGPT

“There’s an unspoken, growing and unacceptable crisis in corporate boardrooms — disengaged directors. As they balloon personal fortunes and artificial prestige, their silence fuels risk, abets rogue executives and empowers board cliques. What’s worse is that complicit senior leadership colleagues tolerate it…In today’s tech era, it’s inconceivable and unacceptable that a board member can be so unprepared for meetings as to ask zero questions — in some cases, ever. To the contrary, in mere seconds, ChatGPT, in response to the rudimentary query, ‘what questions should a board member of a public company ask?’ yielded a (free!) ten-point board agenda organizing framework and initial diagnostics” FORBES

Study: Board Practices in Artificial Intelligence

Most boards do not have a committee dedicated to AI oversight 

“As companies continue to explore and invest in AI, they also are tasked with considering numerous business implications, such as ethics, compliance, and regulatory processes; risks (e.g., operational and reputational) and risk appetite; equity; governance; and the role of the board. This post presents findings from a survey of members of the Society for Corporate Governance that focused on aspects of AI, including where in the organization AI resides, use policies/framework, risk mitigation measures, education and training, and board oversight.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

How the Next Generation is Breaking into Company Boardrooms

Apprenticeships and “shadow boards” help aspiring board members gain experience

“After 20 years in investment banking, Rupal Patel joined risk analytics fintech Acin in 2019. Since starting her role, she has met board directors and advisers — typically older people in corporate life who had been on similar trajectories to hers and now have portfolio careers involving multiple board seats. They manage their own time, do varied and interesting work and give strategic advice without the stress of an executive role. ‘This sounded like a good proposition for me longer-term,’ she said. But Patel soon realized getting her first board seat would be difficult.” FINANCIAL TIMES

From Boardspan this Week:

NEW WEBINAR: AI and Governance: What Every Board Needs to Know

Wednesday, September 27, 2023

12pm ET

What is the true impact of AI? What is real, and what is hype? And what is the
board’s role in governing AI as the technology touches every part of the business? Join CEO Abby Adlerman and Dr. Ayesha Khanna, Co-Founder and CEO of Addo.ai, public company board member,  and one of the world’s leading experts and advisors on AI governance, for this webinar focusing on the board and AI. To register, click the button below.

Across the Board

Elon Musk Borrowed $1 Billion From SpaceX Before Twitter Acquisition
Musk often draws on his companies to fund endeavors

“Elon Musk tapped SpaceX, the rocket maker he oversees as chief executive, for a $1 billion loan around the time he was acquiring the social-media company formerly known as Twitter.  The unusual loan is the latest example of how the world’s richest man has drummed up cash from his empire of companies without having to permanently part with shares, enabling him to raise funds for his wide array of endeavors. SpaceX approved the loan, which was backed by some of his SpaceX stock, in October, and Musk drew all of it down the same month…It couldn’t be determined why he took on the debt. He paid the loan back shortly after he borrowed the money, returning $1 billion with interest to SpaceX in November.” THE WALL STREET JOURNAL

Walgreens CEO Roz Brewer is Leaving 

In a tumultuous industry, the company is seeking a chief with deep healthcare experience

"Walgreens Boots Alliance said Friday that Roz Brewer had stepped down as the company’s chief executive as it leans deeper into its strategy to become a health-care company instead of a drugstore. She also left the company’s board, effective Thursday. The decision was mutual… Ginger Graham, the lead independent director and a health-care industry veteran, will work as interim chief while the company searches for a successor. Graham is a veteran of the health-care industry. Brewer has agreed to continue advising the company until it selects a permanent CEO.” CNBC

Cybersecurity Figures into Executive Pay

EY research: Executives have seen bonuses reduced after damaging hacks

“The practice is inching up among the biggest U.S. companies, with nine of the Fortune 100 companies linking a portion of short-term bonuses for named executive officers to a cyber goal in 2022, according to new research from accounting and consulting firm EY. That is up from zero in 2018, EY said. ISS ESG, the data arm of proxy-advisory firm Institutional Shareholder Services, found 86 of the more than 15,000 public companies it tracks globally did so last year. Among them are U.S. pharmaceutical company Johnson & Johnson, London Stock Exchange Group and Paragon Banking Group in the U.K. The companies didn’t immediately respond to a request for comment…Accountability for cybersecurity often lies with the technology and security departments, said William Guenther, executive chairman of the Advanced Cyber Security Center, a governance consulting firm. But, he said, cybersecurity objectives should go higher up the chain and be tied to the compensation packages for senior executives. This can help push security factors into a company’s strategic decisions, he said, adding, ‘It’s one step, and a valuable one.’” THE WALL STREET JOURNAL

Is an Auto Strike on the Horizon? 

As contract expires on September 14, the UAW president hints at action 

“A strike against one of the (Big Three), especially a prolonged stoppage, could send an economic jolt through several Midwestern states and crimp the profits of General Motors, Ford Motor or Stellantis. G.M. workers walked out for 40 days in 2019 before reaching an agreement. A strike against all three — a step the union has never taken but one (UAW President Shawn) Fain has said he is willing to call for this year — could have a noticeable impact on the broader U.S. economy…The talks are playing out as automakers are spending tens of billions of dollars to transition to electric vehicles, which require fewer workers to assemble than traditional gasoline-powered cars and trucks. The terms of the new contract will determine how both autoworkers and the companies fare in an E.V.-centric industry. At the same time, significant wage and benefit gains could provide a tailwind for a union movement that has been gaining strength across several industries.” THE NEW YORK TIMES

Opinion: Seven Areas For Boards To Focus On To Improve Corporate Governance

It is essential that boards zoom in on their "G" to respond to new requirements and demands

“Environmental, social and governance factors have increasingly been gaining importance in business due to growing awareness among consumers, investors, regulators and society in general about companies’ impact on the world. I've found the ‘G’, governance, is often overlooked in business discourse. However, this can lead to a board of directors and senior management that is not truly committed to sustainability. In these instances, companies can be seen as greenwashing, which can have severe financial and reputational consequences.” FORBES

Reid Hoffman Scaling Back Involvement with Greylock Partners 

LinkedIn founder wants to focus more on AI efforts

“Hoffman won’t be a general partner for the $1 billion fund Greylock is currently raising, the firm told prospective investors, meaning that he won’t be required to make new investments for the fund or vote on the firm’s other deals. The fund is smaller than the $1.5 billion fund it raised in 2020 and 2021, reflecting the more modest ambitions of venture firms as they deal with plummeting startup valuations and slowing deal-making…In recent years, Hoffman has emerged as one of Silicon Valley’s most influential proponents of artificial intelligence. He was a founding investor in OpenAI, the creator of viral chatbot ChatGPT, and last year co-founded another startup called Inflection AI that is also creating a personal chatbot. In March, he released a book called ‘Impromptu,’ co-written by the AI language model powering ChatGPT, and stepped down from the OpenAI board to avoid potential conflicts with other investments.” THE WALL STREET JOURNAL

Seat at the Table

• Energy supply company Nikola Corporation welcomes to its board John Vesco, former Executive Vice President of transportation firm Hub Group

• New Mountain Finance Corporation appoints to its board Barbara Daniel, Senior Vice President and Head of Corporate Strategy at SiriusXM

• Eterna Therapeutics elects to its board Dorothy Clarke, Vice President & Chief Compliance Officer of Johnson & Johnson

• Mining acquisition firm Metals Acquisition Limited adds to its board Patrice Merrin, former Executive Vice President and Chief Operating Officer of mining company Sherritt International

• Water utility firm SJW Group welcomes to its board Denise Kruger, Senior Vice President of Regulated Utilities at Golden State Water Company

• Modular residential developer Safe & Green Holdings elects to its board Jill Anderson, Chief Legal Officer of cancer research firm miR Scientific

• Motion control firm Parker Hannifin Corporation appoints to its board Denise Fleming, EVP of Technology and Global Services and Chief Information Officer of medical technology company BD

• Consumer connection company AppLovin adds to its board Todd Morgenfeld, former Chief Financial Officer and Head of Business Operations at Pinterest

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.