Across the Board
What Would Happen to ESG Without Large Institutional Supporters?
BlackRock, Vanguard, and State Street have a significant impact on shareholder voting
“It’s clear that there would have been many more key resolutions in the 2022 and 2023 proxy years if it weren’t for the damping effect of the Big Three’s voting decisions taken in aggregate. This does indicate that for resolutions with at least 30% adjusted support, perceptions of resolution quality among the Big Three (BlackRock and Vanguard in particular) have fallen below that of other independent shareholders in the U.S. market. Assuming large-cap trends apply to the whole U.S. market, there would have been around 90 key resolutions in 2023 instead of 53, excluding the Big Three’s votes.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
Foe of Nasdaq’s Board-Diversity Rules Seeks New Hearing
The Alliance for Fair Board Recruitment says the rules enforce a racial and gender quota
“A conservative group seeking to throw out Nasdaq's board-diversity rules has appealed for a new hearing of its legal challenge after losing in court last week. The Alliance for Fair Board Recruitment on Wednesday filed a petition for a so-called en banc rehearing by the Fifth U.S. Circuit Court of Appeals. A new hearing would allow the group to make its case before an appeals court dominated by Republican-appointed judges…Last week, a panel of three Fifth Circuit judges—all appointed by Democratic presidents—ruled against the group. The ruling upheld a 2021 decision by the Securities and Exchange Commission to approve Nasdaq's diversity rules.” WALL STREET JOURNAL
Carl Icahn Sues Illumina Board for Violating 'Fiduciary Duties'
Icahn said he has never found it necessary to sue a board of directors until now
“Activist-investor Carl Icahn sued the board of directors at genetic testing company Illumina and accused them of breaching their fiduciary duties, according to a sealed copy of the complaint. The publicly available version of the complaint did not contain further details, but Icahn told the 13D Monitor Active-Passive Investor Summit in New York on Tuesday that the lawsuit pertained to Illumina completing its acquisition of cancer diagnostic test maker Grail…Earlier this month the EU ordered Illumina to sell Grail. The purchase of Grail had been a centerpiece of Icahn's successful proxy fight at Illumina earlier this year, when he pushed the company to unwind the deal, arguing it cost investors billions.” REUTERS
Craig Jelinek CEO Of Costco Retires; COO Takes Over
Handover highlights Costco’s investment in long-term employees and succession planning
“Longtime CEO Craig Jelinek is stepping down at the start of next year, the company said Wednesday. He will hand over the reins to Chief Operating Officer Ron Vachris, another company veteran, as part of what Costco called a longstanding succession plan.’Costco has a very strong culture and a deep bench of management talent,’ Jelinek said. ‘I have total confidence in Ron and feel that we are fortunate as a Company to have an executive of his caliber to succeed me.’ Vachris joined Costco as a forklift driver more than 40 years ago, and has served in every major role related to the company’s business operations and merchandising activities. His trajectory is similar to Jelinek’s, who came on as a Costco warehouse manager in 1984 and subsequently moved through the ranks.” BARRON’S
UBS Overhauls Board of Domestic Business
Roger von Mentlen will become new chairman of Swiss boards
“UBS on Friday said it will overhaul the board of its domestic Swiss business after its takeover of Credit Suisse, including a new chairman to oversee both operations. The lender said Roger von Mentlen will become chairman of the boards of directors of UBS Switzerland and of Credit Suisse Switzerland…The change, effective Nov. 1, will create two parallel supervisory boards with identical members, and the banks' Swiss businesses will still be operationally led by their respective executive boards. The move is designed to ensure ‘closely coordinated supervision’ of the two Swiss banks, which are expected to complete their legal merger next year. UBS said in August it planned to integrate Credit Suisse's domestic business into its existing operations after its emergency takeover of its fallen rival this year.” REUTERS
6 Questions Every Board Should Ask Its CISO
Amazon CSO explains how boards can stress-test companies' security plans
“Like the SEC, Steve Schmidt, chief security officer at Amazon, doesn’t think that all corporate boards need to have a director with deep cyber expertise. The former FBI section chief, who also spent 15 years at AWS, believes that rather than understanding how a security plan works on a technical level the way a CISO does, it’s more important that leaders know how to examine the thinking that went into it...For leaders to think about how robust their cybersecurity preparation is, Schmidt suggests that boards ask CISOs these questions: Who owns security? The correct answer, in Schmidt’s view, is business line and division leaders who report to the CEO. If they aren’t invested in the safety of their department’s data, their staff won't see security as their top responsibility.” FORTUNE
How Much Cybersecurity Expertise Does a Board Need?
Short answer: More than they have now
“Reporting regulations across the world are shifting and increasing the focus on the board of directors and their knowledge to deal with and respond to cybersecurity threats. To meet such regulations and improve the board's expertise, organizations should look to recruit board directors with relevant cybersecurity and risk management experience or train existing directors. With the financial fallout from security incidents at MGM and Clorox drawing significant attention to the bottom-line impacts wrought by cybersecurity threats, board of director awareness for cybersecurity incidents is at a fever pitch.” CSO
Boards of Directors in Disruptive Times: Improving Corporate Governance Effectiveness
How to govern when disruption becomes the new normal
“Disney’s board of directors fired CEO Bob Chapek on November 20, 2022. He was nominated for that job in February 2020 to replace Bob Iger -Disney CEO between 2005 and 2020-, after several board attempts in previous years to speed up Iger’s succession. The board brought back Iger as Disney CEO to replace Chapek in November 2020. Disney’s board was facing complex strategic challenges that included, among others, the weak performance of Disney+ -the streaming business launched in 2019-, a falling share price, technology disruption threatening its core business, unsustainable debt levels, and the rising geopolitical risk in China…Disney’s board daunting problems show how the combination of technology disruption, growing competition in business models and platforms, activist pressure, geopolitical risks, and the CEO succession process present a formidable challenge for the most competent boards.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
An ESG Framework to Help Companies Avoid Box-Checking
ESG programs must align with the business and its strategic drivers
“ESG is at a crossroads. Stakeholders have varying expectations, priorities, and requests. Standards are changing. Laws attempt to speak a single language but prescribe different activities and disclosures. Definitions of ESG vary among standards bodies, rating organizations, regulators, legislators, and investor stewardship groups. Some people advocate abandoning the term altogether in favor of other concepts such as sustainability, impact, or materiality. And there are those who say ESG is misguided–or even value-destroying. However, ESG isn’t going away.” FORTUNE
Shareholders Pose Growing Risks to Companies’ DEI Initiatives
Trends underscore that shareholders have become key players when it comes to corporate DEI
“Shareholder activism, in the form of proposals, books and records demands, and litigation, is proving to be an increasingly prevalent tool in challenges to diversity, equity, and inclusion (DEI) policies…Activist shareholder groups have begun blanketing public companies with environmental, social, and corporate governance (ESG) proposals, implicating a wide array of issues from forced labor to abortion access to climate change. Initiatives addressing DEI efforts constitute a significant share of these social proposals.” JD SUPRA
Timberland Owner VF Facing Second Activist Push by Legion
Activist investor Legion urges divestiture
“VF Corp. is being targeted by activist investor Legion Partners Asset Management after another firm pushing for changes unveiled a position this month in the owner of The North Face and Vans apparel brands, according to people with knowledge of the matter. Legion has amassed a stake in the Denver-based company and is urging it to divest some brands such as Timberland, the people said, asking not to be identified discussing private information. The size of Legion’s position isn’t clear.” BLOOMBERG
Suit Claims Skechers Board Allowed Personal Use of $4,000-an-Hour Company Jets
Judge expresses skepticism that the board is liable
“VF Corp. is being targeted by activist investor Legion Partners Asset Management after another firm pushing for changes unveiled a position this month in the owner of The North Face and Vans apparel brands, according to people with knowledge of the matter. Legion has amassed a stake in the Denver-based company and is urging it to divest some brands such as Timberland, the people said, asking not to be identified discussing private information. The size of Legion’s position isn’t clear.” BLOOMBERG
