9/19/24 – Issue 9.35 – Your weekly news on all things board. 

Rarely do directors resign en masse from public company boards, but all seven independent directors exited the 23andMe board this week after the CEO failed to produce a definitive plan to meet her goal of taking the genetic testing company private. The departures came on the heels of the company’s $30 million settlement agreement following a data breach affecting 6.9 million users. CEO Anne Wojcicki said she would swiftly launch the search for new directors. Meanwhile, labor issues have been front and center for many companies since the pandemic as workers increasingly sought higher pay and better work-life balance in a tight labor market. This week Amazon, presumably reacting to a looser market, announced that workers will be expected to routinely work in the office five days a week, while hundreds of Amazon contract delivery drivers voted to join the Teamsters union as they collectively seek improved work conditions. This week also sees intriguing and valuable perspectives on the ever-evolving role of the board, with increasing oversight demands on topics ranging from human capital to AI, the arrival of new activist investor strategies for gaining an advantage in proxy fights, and more. 

In the Spotlight

23andMe Independent Directors Quit Board Over Unsatisfactory Buyout Plan from CEO

All seven independent directors of 23andMe resigned from the company’s board Tuesday

“The independent directors of genetic testing firm 23andMe said on Tuesday they have resigned from the company's board after not receiving a satisfactory take-private offer from CEO Anne Wojcicki. Wojcicki, who has been trying to take the company private since April, proposed to acquire all outstanding shares of 23andMe not owned by her or her affiliates… A special committee formed by the company rejected Wojcicki's previous proposal, deeming it insufficient and not in the best interest of the non-affiliated shareholders.” REUTERS

CEO Anne Wojcicki ‘Surprised and Disappointed’ by Board Resignations

It is very rare for a publicly traded company to see so many directors resign simultaneously

“Wojcicki, who co-founded 23andMe in 2006, said she remains committed to taking the company private… The directors formed a special committee in late March to explore potential paths forward… Wojcicki wrote in the employee memo, that she still sees taking 23andMe private as its ‘best opportunity for long-term success.’ The company will begin a search for new independent directors to join the board, she added.” CNBC

23andMe Agrees to Settlement Over Data Breach

The genetics testing company is to pay $30 million for the breach that affected 6.9 million users

“The settlement, which is pending a judge's approval, comes after the company confirmed in October that ‘threat actors’ used about 14,000 accounts, approximately 0.1% of the company's user base, to access the ancestry data of 6.9 million connected profiles. Leaked data included users' account information, location, ancestry reports, DNA matches, family names, profile pictures, birthdates and more. While 23andMe confirmed the existence of the breach in October, it did not reveal the full extent of the issue until December.” USA TODAY

From Boardspan this Week:

The 2024 Board Benchmark Report

The power of performance benchmarking is undeniable. For boards, it’s essential to understand how they stack up against peers, identify new trends and lean into the broader governance landscape. The 2024 Board Benchmark Report enables boards to build on successes and identify areas for improvement, ensuring continuous growth and effectiveness. Learn how your board compares and what you can do to achieve excellence.

Across the Board

What Amazon's Strict Return to Office Policy Says About Remote Work
Amazon's change, which starts in January, sets a new standard and may give companies cover to restrict work-from-home a bit more

“Amazon's hard-core move to push employees back into the office five days a week is a signal that — in the tech sector at least — employers have regained some leverage over workers. The labor market has weakened. The rank-and-file mostly don't want to be in the office for a full work week — but in a looser labor market, their opinions matter less. Currently, Amazon employees are expected to go in for three days. The tech sector has been through a lot of layoffs over the past few years. It's not as easy to find a new job, leaving many feeling stuck.” AXIOS

Hundreds of Amazon Delivery Drivers in New York Join Teamsters Union
The Teamsters and other big labor unions have long had their sights set on organizing warehouse and delivery workers at Amazon, the second-largest private employer in the U.S. 

“Hundreds of Amazon delivery drivers at one of the company’s New York facilities joined the International Brotherhood of Teamsters, the union announced Monday, marking the latest escalation of organizing efforts in its logistics network.... Drivers at the facility have called for consistent schedules, properly maintained delivery trucks and reasonable workloads, the union said. The workers are part of Amazon’s network of third-party delivery companies, which ferry packages from its warehouses to shoppers’ doorsteps. Amazon has over the past year faced swelling labor pressure among its ranks of delivery workers, including walkouts, calls for higher wages and safety improvements. Last week, Amazon announced it was hiking wages for contracted delivery workers as part of a $2.1 billion investment into the program.” CNBC

Rewriting the Proxy Playbook: Trian Partners vs. Disney Case Study

The Trian vs. Disney proxy contest showcases a masterclass in creative media use and shareholder engagement on both sides of the fight

“Trian Partners’ campaign to wrest two board seats from The Walt Disney Company already stands as a proxy contest for the ages and will rewrite the playbook for many contested meetings in the years to come… The process effectively involved two simultaneous campaigns: one campaign to sway hundreds of financial institutions, and another to energize the retail base of several million shareholders, which typically remains apathetic toward proxy voting. Examining the retail and institutional campaigns as two pieces of one whole provides important insights into this game-changer of a campaign and teaches practitioners some valuable lessons.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

Why Boards Are Focused on Human Capital Governance and Risk

Effective boards today view addressing people issues as fundamental to strong stewardship – how companies create and preserve long-term value

“More and more, effective boards are prioritizing their role in the oversight and governance of human capital. Their focus includes developments in labor markets, skill shortages, succession planning, retention, employee wellbeing, and costs, as well as in new technologies such as AI and quantum computing, and geopolitical risks. They view these efforts to represent a material component of effective business judgment and aligned with company strategy and creating competitive advantage.” FORBES

Board Oversight of AI
For boards, understanding and overseeing AI is quickly becoming a critical responsibility

“AI presents particular challenges to effective board oversight given the potential breadth of its applications across functions, including finance, legal, product development, marketing and supply chain, as well as the ‘black box’ nature of algorithmic decision-making… This is putting pressure on boards to engage more frequently and deeply with management to understand the opportunities and risks associated with AI for their company. This is also presenting new legal risk for boards as well as directors individually. In this context, boards may unintentionally cross the line from governance to management, violating the heretofore inviolate principle of ‘Noses In, Fingers Out’” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

Lying in Corporate Elections
In recent years, it seems there have been more half-truths and outright lies in proxy contests than perhaps ever before

“During proxy season, hardly a day goes by without a press release, shareholder letter or investor presentation containing questionable statements. Public companies, as securities issuers, face heavy scrutiny of their disclosures under areas of federal securities law beyond the proxy rules… Dissident shareholders like activist funds, on the other hand, generally escape similar levels of scrutiny. There are rules designed to protect the integrity of corporate elections the federal proxy rules under the Securities Exchange Act of 1934. Unfortunately, however, these proxy rules many of which were adopted decades ago and long before the advent of the digital age are increasingly under stress. In fact, many activists repeatedly violate the proxy rules, yet apparently face no repercussions.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

Seat at the Table

• AMC Entertainment Holdings elects to its board Marcus Glover, EVP and CFO of Bally’s Corporation

• JetBlue Airways adds to its board Sean Menke, Executive Chair at travel firm Sabre

• Social media platform Snap welcomes to its board Jim Lanzone, CEO of Yahoo

• Security firm Leidos elects to its board Tina Jonas, former Undersecretary of Defense (Comptroller) for the Department of Defense

• Warner Bros. Discovery adds to its board Daniel Sanchez, former director at Discovery

• Edgewell Personal Care appoints to its board Stephanie Stahl, former Chief Marketing and Strategy Officer at Coach

• Automotive safety firm Autoliv welcomes to its board Adriana Karaboutis, former Group Chief Information and Digital Officer of utility firm National Grid PLC

• Darling Ingredients adds to its board Randy Hill, former Audit Partner-in-Charge at KPMG’s Dallas office

• Education platform Thinkific appoints to its board Russ Mann, Senior Operating Partner at private equity firm Diversis Capital; Lori Ell, President of business consulting firm Growing Ideas; and Paula Boggs, former Corporate Secretary of the Starbucks Foundation

• Sarepta Therapeutics elects to its board Deirdre Connelly, former President of North America Pharmaceuticals at GlaxoSmithKline

• Akari Therapeutics adds to its board Rob Bazemore, former President and CEO of Epizyme

• Food firm SunOpta welcomes to its board David Lemmon, CEO of hotel amenities firm Hunter Amenities International

• Synchrony Financial appoints to its board Dan Colao, former CFO and Executive Advisor at GE Capital

• Security products firm Allegion elects to its board Lauren Peters, former EVP and CFO of Foot Locker

• Electronic marketplace Tradeweb announces to its board Daniel Maguire, CEO of financial infrastructure firm LCH Group

About Boardspan
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