Across the Board
Patagonia Founder’s Succession Plan: Give the Company Away
"Since Patagonia’s founding in 1973, Yvon Chouinard and his family have been its owners. Now, almost 50 years later, the company is announcing that the Chouinards are transferring all ownership to two newly created entities...All voting stock (about 2% of the total) is now controlled by the Patagonia Purpose Trust, while the other 98% is under what’s called the Holdfast Collective. The goal behind the Patagonia Purpose Trust is to create a permanent legal structure to enshrine the company’s purpose and values, so that there is never deviation from Chouinard’s intent...the company says that all annual profits that are not reinvested back into the business—which they estimate to be about $100 million per year—will be distributed by Patagonia as a dividend to the Holdfast Collective (which is designated as a 501(c)(4) organization)...So, as with so many other things Patagonia has done over the decades, the company decided to create its own option. 'Instead of ‘going public,’ you could say we’re ‘going purpose,’ ' Chouinard wrote." FAST COMPANY
Investors Back Musk’s Twitter Takeover Bid, As Whistleblower Gets Hearing
“Twitter shareholders approved the $44 billion takeover that Elon Musk is trying to abandon on the same day that a whistleblower alleged at a hearing on Capitol Hill that the social-media company misled regulators about security failures. Former Twitter security executive Peiter Zatko, who was fired by the company in January, told the Senate Judiciary Committee on Tuesday that Twitter executives’ ‘incentives led them to prioritize profits over security,’… Democrats and Republicans raised concerns about user data potentially being exposed to foreign intelligence agencies. Mr. Zatko at the hearing reiterated his claims that foreign agents working for Chinese and other governments may be employed at the company. Last month, a former Twitter employee was found guilty of spying for Saudi Arabia by accessing private user information in exchange for money…Twitter shareholders approved the takeover offer, with 98.6% of votes cast at a special meeting in favor of the deal, based on a preliminary tally of votes, the company said after polling closed Tuesday.” THE WALL STREET JOURNAL
Peloton Chair, Other Execs Exit, as Struggle Fitness Company Cycles Leadership
“Peloton Interactive said co-founder John Foley and other senior leaders are leaving the company in a management shake-up as the maker of connected exercise equipment races to turn itself around. Peloton has struggled with deepening losses this year after a pandemic-fueled spike in demand for its at-home workouts left the company with a glut of unsold bicycles when consumers returned to gyms and outdoor activities. The company’s shares have plunged more than 90% over the past year…[Barry] McCarthy, who took over as CEO in February, has now assembled a new Peloton leadership team with several executives from outside the fitness industry, including a finance chief he hired from Netflix Inc. Other longtime Peloton executives, including co-founder William Lynch, who was president, and Mr. Foley’s wife Jill Foley, who oversaw a push into apparel, left in February.” THE WALL STREET JOURNAL
Proxy Card Mandate Shifts Balance of Power In Board Seat Battles
“Universal proxy cards, mandated this month for use for the first time in U.S. corporate board elections, are promising to spice up elections for contested director seats. Gone are the blue and gold cards shareholders used for decades to vote for a single slate of board directors… Activist investors will benefit as shareholders gain new flexibility in changing a company’s business strategy by ushering in independent candidates. Companies’ exposure to activist campaigns focused on environmental, social and governance issues and proxy fights is expected to rise, offering an easier path for investors like Engine No. 1, which got three of its candidates elected at Exxon Mobil Corp. last year by securing backing from major investors such as BlackRock Inc....” ROLL CALL
BlackRock Takes Aim at Over-Boarded Directors
"BlackRock is clamping down on company directors in the US technology industry who sit on too many boards, as chief executive Larry Fink intensifies the fund group’s scrutiny of corporate governance. The world’s largest asset manager said in regulatory filings at the end of August that it had voted against the reappointment of Sanford Robertson to the board of Salesforce, where he is chair of the US software company’s governance committee... It also voted against Egon Durban, board director at Twitter, who sat on seven public company boards…the company’s stance diverges from rival asset manager Vanguard, which voted in favor of Robertson and Durban, underscoring the different approaches investors are taking to board compositions.” FINANCIAL TIMES
Fastest Way to Boost ESG in Latin American? More Women on Boards
“The framework for environmental stewardship, social responsibility and corporate governance, or ESG, remains a work in progress in Latin America. The region is starting to catch up, but adoption of ESG practices will require time and money… But there is a key component with the potential to bring high ESG returns at very low cost: increasing the share of women on the boards of directors of companies in the region. This is an ESG metric where Latin America does poorly at a global level. While women directors now occupy 20% of board seats of companies globally and 30% in advanced economies, in Latin America that number is closer to 11% of board seats.” AMERICAS QUARTERLY
African Development Bank Board Diversifies: 25% Seats Now Held By Women
“The African Development Bank has named five women as executive directors for a three-year term. In total, 12 executive directors were appointed, according to a statement from the Ivory Coast-based lender. The number of women increased to five from three, with the board made up of 20 people…. The board members are responsible for the general operations of the bank and are based at its headquarters in Abidjan, Ivory Coast’s largest city.” BLOOMBERG
Opinion: Board Composition is Key to ESG Engagement
“More than ever, pressure has grown for companies around the world to take action on ESG issues, and this pressure may potentially drive demands for meaningful changes, beginning with boards of directors. A company’s strategy is the reflection of its board. At the apex of the corporate governance system and given their growing involvement in corporate purpose and ESG corporate strategies, boards have become key when designing ESG actions…Although there is no ‘one-size-fits-all’ magic formula, some crucial factors should be considered: diversity, independence, and the presence of a sustainability committee. Research has identified these as the factors that are most closely associated to positive E&S performance... First, board diversity –in terms of gender, nationality, age, and functional expertise– appears to be the factor which correlates the most with higher E&S scores for firms…Sustainability committees are also relevant means to ensure companies meet their E&S goals. Generally, the board’s quality depends on the quality of its committees.” FORBES
Boards Play Active Part in Mitigating Cybersecurity Risk
“Since data breaches increased by 15.1% in 2021 compared to the previous year, mitigating cybersecurity risks is more critical than ever.…. Today, the board of directors is responsible for appointing tech-savvy members and protecting the organization from risk. It’s no easy task…It takes an average of 287 days for businesses to detect a data breach. Companies should consider these threats and work with their board to develop defense plans…Boards can no longer sit by the wayside and let IT handle the brunt of the work. Maintaining cybersecurity is not just a technical problem but also an organizational issue. With the power to give companies the tools and guidance they need to prevent cyber risks, boards are now the first line of defense against online threats.” SPICE WORKS
From the Boardspan Library
Overseeing Cyber Risk
"Cyber risk management is no longer just about preventing breaches. A good program can also help companies get back on their feet and mitigate financial and reputational damage when a breach occurs… Cyber threats are everywhere, and breaches make headlines on what seems like a daily basis. They also cost companies, in both dollars and in reputation. The threat environment is becoming more complex with an increasing number of threat actors, including nation states, using new and more sophisticated tactics. Add to this that during the COVID-19 pandemic, the corporate world embarked upon a rapid digital transformation and many employees started working remotely, increasing companies’ digital footprint—and their cyber risk profile... At the same time, expectations have risen. Even with a robust risk management program, a company can suffer a cyber breach or attack.” PWC via BOARDSPAN
